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 October 29, 2015 - 4:16 PM EDT
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Newpark Resources Reports Third Quarter 2015 Results

Company generates $25 million of operating cash flow; initiates additional cost reductions

THE WOODLANDS, Texas, Oct. 29, 2015 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its third quarter ended September 30, 2015.  Total revenues for the third quarter of 2015 were $154.2 million compared to $163.6 million in the second quarter and $297.0 million in the third quarter of 2014.  Net loss for the third quarter of 2015 was $4.5 million, or $0.05 per share, compared to a net loss of $4.3 million, or $0.05 per share, in the second quarter, and net income of $23.5 million, or $0.25 per diluted share, in the third quarter of 2014.  Third quarter 2015 results included the impact of the following:

  • $2.3 million of pre-tax charges ($1.5 million after-tax) associated with workforce reductions, predominately in North America.
  • $3.2 million of pre-tax foreign exchange losses ($3.2 million after-tax), substantially all of which is attributable to the re-valuation of inter-company balances due from our Brazilian subsidiary.
  • $0.4 million pre-tax charge and a $3.3 million benefit to the income tax provision ($2.9 million net after-tax benefit) associated with the forgiveness of a portion of the inter-company balances due from our Brazilian subsidiary.
  • $2.2 million benefit to the provision for income taxes associated with the release of U.S. tax reserves, following the expiration of statutes of limitation.

Combined, the above items resulted in a $5.9 million increase to pre-tax loss, but a $0.4 million benefit, after taxes.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "While we are encouraged by the continuing strength in cash flow, the challenging market environment again provided a strong headwind to third quarter results.  With the further softening in North American drilling activity over the past two months, our North American Fluids revenues declined slightly from second quarter levels. Meanwhile, our international Fluids revenues remained relatively in-line with the prior quarter and our expectations, with EMEA remaining our strongest performing region, benefitting from the continuing ramp-up of activities in Kuwait and Algeria.  In the Mats segment, as announced previously, we've seen a further softening in rental and services revenues in the weak commodity price environment, particularly in our largest rental market, the Northeast region.  We also experienced softness in the Gulf Coast region, and non-exploration revenues were negatively impacted by the completion of large rental projects, which led to a decline in our rental fleet utilization and an $8 million decline in rental and service revenues.

"In response to the continued weakness and near-term uncertainty in the North American market, we've initiated additional workforce reduction efforts, including an early retirement program within certain business units.  While we expect to see some relief from these cost actions in the near-term, a more meaningful improvement in operating results will need to be driven by an increase in revenue," added Howes.  "Fortunately, we continue to benefit from our strong balance sheet position, including $114 million of cash on-hand and continuing positive cash flow, which allows us to focus on developing new market opportunities in both segments, while preserving our organizational capabilities for the eventual recovery in drilling activity."

SEGMENT RESULTS

The Fluids Systems segment generated revenues of $138.8 million in the third quarter of 2015 compared to $140.3 million in the second quarter and $251.2 million in the third quarter of 2014.  Segment operating loss was $1.2 million in the third quarter of 2015, compared to a $0.2 million operating loss in the second quarter and operating income of $27.8 million in the third quarter of 2014.  The segment results for the third quarter of 2015 included a $2.0 million charge associated with workforce reductions and a $0.4 million charge associated with the forgiveness of inter-company balances due from our Brazilian subsidiary.

The Mats and Integrated Services segment generated revenues of $15.4 million in the third quarter of 2015 compared to $23.3 million in the second quarter and $45.7 million in the third quarter of 2014.  Segment operating loss was $0.1 million in the third quarter of 2015, which included a $0.2 million charge associated with workforce reductions, compared to operating income of $6.6 million in the second quarter, and $20.5 million in the third quarter of 2014. 

LEADERSHIP ANNOUNCEMENT

The Company announced that Tim Armand has been appointed to the role of Vice President of U.S. Offshore Operations within the Fluids Systems segment.  Mr. Armand joins Newpark after nearly 30 years of experience with Schlumberger, predominately in offshore operations.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss third quarter 2015 results, which will be broadcast live over the Internet, on Friday, October 30, 2015 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 November 13, 2015 and may be accessed by dialing (201) 612-7415 and using pass code 13621403.  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 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, 2014, 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, our customer concentration and cyclical nature of our industry, operating hazards inherent  in the oil and natural gas industry, our international operations, the cost and continued availability of borrowed funds, our ability to execute our business strategy and make successful business acquisitions and capital investments, the availability of raw materials and skilled personnel, the impact of restrictions on offshore drilling activity, our market competition, legal and regulatory matters, including environmental regulations, inherent limitations in insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, and the impact of severe weather, particularly in the U.S. Gulf Coast.  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.

Consolidated Statements of Operations












(Unaudited)


Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,


September 30,


September 30,

(In thousands, except per share data)


2015


2015


2014


2015


2014












Revenues


$        154,170


$        163,644


$        296,964


$        526,278


$        812,254












Cost of revenues


138,283


142,155


228,661


457,072


639,932












Selling, general and administrative expenses


25,859


23,963


28,754


75,800


82,258

Other operating (income) loss, net


(709)


(792)


117


(1,777)


(1,941)












Operating income (loss)


(9,263)


(1,682)


39,432


(4,817)


92,005












Foreign currency exchange (gain) loss


3,236


(410)


1,221


4,390


(530)

Interest expense, net


2,129


2,224


2,321


6,608


8,071












Income (loss) from continuing operations before income taxes


(14,628)


(3,496)


35,890


(15,815)


84,464

Provision for income taxes


(10,157)


758


12,398


(8,083)


28,901

Income (loss) from continuing operations 


(4,471)


(4,254)


23,492


(7,732)


55,563

Income from discontinued operations, net of tax


-


-


-


-


1,152

Gain from disposal of discontinued operations, net of tax


-


-


-


-


22,117












Net income (loss)


$          (4,471)


$          (4,254)


$          23,492


$          (7,732)


$          78,832























Income (loss) per common share -basic:











Income (loss) from continuing operations


$            (0.05)


$            (0.05)


$              0.29


$            (0.09)


$              0.67

Income from discontinued operations


-


-


-


-


0.28

Net income (loss)


$            (0.05)


$            (0.05)


$              0.29


$            (0.09)


$              0.95












Income (loss) per common share -diluted:











Income (loss) from continuing operations


$            (0.05)


$            (0.05)


$              0.25


$            (0.09)


$              0.59

Income from discontinued operations


-


-


-


-


0.23

Net income (loss)


$            (0.05)


$            (0.05)


$              0.25


$            (0.09)


$              0.82












Calculation of Diluted EPS:











Income (loss) from continuing operations


$          (4,471)


$          (4,254)


$          23,492


$          (7,732)


$          55,563

Assumed conversions of Senior Notes 


-


-


1,294


-


3,808

Adjusted income (loss) from continuing operations


$          (4,471)


$          (4,254)


$          24,786


$          (7,732)


$          59,371












Weighted average number of common shares outstanding-basic


82,990


82,529


82,055


82,606


83,260

Add:  Dilutive effect of stock options and restricted stock awards


-


-


1,550


-


 

1,715

           Dilutive effect of Senior Notes 


-


-


15,682


-


15,682












Diluted weighted average number of common shares outstanding


82,990


82,529


99,287


82,606


100,657












Diluted income (loss) from continuing operations per common share


$            (0.05)


$            (0.05)


$              0.25


$            (0.09)


$              0.59












Note: For the second quarter, third quarter, and first nine months of 2015, we excluded all potentially dilutive stock options and restricted stock as well as the assumed conversion of the Senior Notes in calculating diluted earnings per share due to the net losses incurred for these periods as the effect was anti-dilutive.

 

Newpark Resources, Inc.

Operating Segment Results

















(Unaudited)


Three Months Ended




September 30,


June 30,


September 30,

(In thousands)


2015


2015


2014









Revenues








Fluids systems 


$         138,765


$         140,344


$         251,234


Mats and integrated services


15,405


23,300


45,730


Total revenues


$         154,170


$         163,644


$         296,964









Operating income (loss) 








Fluids systems 


$           (1,246)


$             (223)


$           27,756


Mats and integrated services


(128)


6,555


20,541


Corporate office


(7,889)


(8,014)


(8,865)


   Total operating income (loss)


$           (9,263)


$           (1,682)


$           39,432









Segment operating margin








Fluids systems 


(0.9%)


(0.2%)


11.0%


Mats and integrated services


(0.8%)


28.1%


44.9%

 

Newpark Resources, Inc.

Consolidated Balance Sheets








(Unaudited)











September 30,


December 31,

(In thousands, except share data)


2015


2014








ASSETS






Cash and cash equivalents


$            113,850


$              85,052


Receivables, net


176,640


318,600


Inventories


176,828


196,556


Deferred tax assets


4,367


11,013


Prepaid expenses and other current assets


30,116


12,615



Total current assets


501,801


623,836









Property, plant and equipment, net 


302,404


283,361


Goodwill


89,749


91,893


Other intangible assets, net 


12,190


15,666


Other assets


6,526


5,366



Total assets


$            912,670


$         1,020,122








LIABILITIES AND STOCKHOLDERS' EQUITY






Short-term debt


$                5,913


$              11,648


Accounts payable


65,230


108,242


Accrued liabilities


42,895


53,342



Total current liabilities


114,038


173,232









Long-term debt, less current portion


172,497


172,498


Deferred tax liabilities


17,058


37,694


Other noncurrent liabilities


5,464


11,240



Total liabilities


309,057


394,664









Commitments and contingencies 













Common stock, $0.01 par value, 200,000,000 shares authorized and 99,371,066 and 99,204,318 shares issued, respectively


994


992


Paid-in capital


530,059


521,228


Accumulated other comprehensive loss


(54,339)


(31,992)


Retained earnings 


254,884


262,616


Treasury stock, at cost; 15,214,413 and 15,210,233 shares, respectively 

(127,985)


(127,386)



Total stockholders' equity


603,613


625,458


Total liabilities and stockholders' equity


$            912,670


$         1,020,122















Note: At September 30, 2015, Prepaid expenses and other current assets includes $15.5 million of restricted cash, which collateralize outstanding letters of credit.

 

Newpark Resources, Inc.

Consolidated Statements of Cash Flows






(Unaudited)


Nine Months Ended September 30,

(In thousands)


2015


2014

Cash flows from operating activities:





Net income (loss)


$            (7,732)


$            78,832

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





Depreciation and amortization


32,668


30,925

Stock-based compensation expense


10,514


9,092

Provision for deferred income taxes


(12,240)


(5,277)

Net provision for doubtful accounts


1,176


1,226

Gain on sale of a business


-


(33,974)

Gain on sale of assets


(940)


(1,351)

Excess tax benefit from stock-based compensation


-


(1,175)

Change in assets and liabilities:





(Increase) decrease in receivables


120,848


(60,348)

(Increase) decrease in inventories


11,190


(11,973)

Increase in other assets


(2,384)


(6,170)

Increase (decrease) in accounts payable


(38,772)


7,531

Increase (decrease) in accrued liabilities and other


(7,161)


15,544

Net cash provided by operating activities


107,167


22,882






Cash flows from investing activities:





Capital expenditures


(51,375)


(84,710)

Increase in restricted cash


(15,500)


-

Proceeds from sale of property, plant and equipment


1,864


3,144

Proceeds from sale of a business


-


89,766

Net cash (used in) provided by investing activities


(65,011)


8,200






Cash flows from financing activities:





Borrowings on lines of credit


7,178


54,665

Payments on lines of credit


(9,928)


(58,897)

Debt issuance costs


(1,763)


-

Other financing activities


(1,695)


(43)

Proceeds from employee stock plans


469


3,104

Purchases of treasury stock


(1,771)


(52,892)

Excess tax benefit from stock-based compensation


-


1,175

Net cash used in financing activities


(7,510)


(52,888)






Effect of exchange rate changes on cash


(5,848)


(2,644)






Net increase (decrease) in cash and cash equivalents


28,798


(24,450)

Cash and cash equivalents at beginning of year


85,052


65,840






Cash and cash equivalents at end of period


$          113,850


$            41,390

 

 

Contacts:   

Brian Feldott  


Director, Investor Relations


Newpark Resources, Inc. 


bfeldott@newpark.com


281-362-6800

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/newpark-resources-reports-third-quarter-2015-results-300168843.html

SOURCE Newpark Resources, Inc.


Source: PR Newswire (October 29, 2015 - 4:16 PM EDT)

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