July 30, 2019 - 4:15 PM EDT
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Newpark Resources Reports Second Quarter 2019 Results

Company reports second quarter cash flow from operating activities of $32 million; free cash flow of $30 million

THE WOODLANDS, Texas, July 30, 2019 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) ("Newpark" or the "Company") today announced results for its second quarter ended June 30, 2019. Total revenues for the second quarter of 2019 were $216.4 million compared to $211.5 million for the first quarter of 2019 and $236.3 million for the second quarter of 2018. Net income for the second quarter of 2019 was $4.3 million, or $0.05 per diluted share, compared to $1.3 million, or $0.01 per diluted share, for the first quarter of 2019, and $10.8 million, or $0.12 per diluted share, for the second quarter of 2018.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "Despite continued softness in the U.S. oil and gas market and the impact of Spring break-up in Canada, we are pleased to report that our global Fluids Systems revenues increased by 7% sequentially, to $173 million. U.S. Fluids revenues improved 14% sequentially, to $117 million, primarily driven by a $9 million revenue increase from the deepwater Gulf of Mexico, as our offshore market penetration efforts gain traction. Outside of North America, international Fluids revenues also rebounded nicely, increasing 14% sequentially to $50 million, driven by improvements across several key markets," added Howes. "Benefiting from the stronger revenues, operating cost efficiencies following our recent international contract transitions, as well as our continuing margin improvement initiatives in our U.S. business, Fluids Systems segment operating income improved sequentially to a 7% segment operating margin in the second quarter.

"In our Mats and Integrated Services segment, the continued slowdown in the U.S. E&P market is serving to further validate our strategic focus on penetrating key non-E&P markets. We are encouraged by the progress we are making in diversifying our business, as we re-allocate assets to support our energy infrastructure market penetration efforts, including the electrical transmission and distribution, and pipeline construction and maintenance sectors. Second quarter segment revenues declined 14% sequentially to $44 million, primarily reflecting the impact of weakness in E&P customer activity.  Meanwhile, heavy rainfalls and flooding in certain areas resulted in delays of scheduled energy infrastructure projects. Segment revenues were further impacted by delays in anticipated international direct mat sales, as deliveries shifted into the third quarter," added Howes. "In the face of the current market challenges, our mats business continues to exhibit operating discipline, delivering a 21% operating margin in the second quarter. Further, our expanding schedule of rental projects in the electrical transmission and distribution market is expected to provide a benefit to the mats business as we progress through the second half of the year and into 2020.

"Meanwhile, our consistent cash flow generation and strong balance sheet continues to differentiate Newpark from many oilfield service companies," added Howes. "During the second quarter, we continued to return excess capital through our share repurchase program, using $10 million to purchase outstanding shares and increasing our total first half 2019 purchases to two million shares."

Segment Results

The Fluids Systems segment generated revenues of $172.5 million for the second quarter of 2019 compared to $160.7 million for the first quarter of 2019 and $179.7 million for the second quarter of 2018. Segment operating income was $12.2 million for the second quarter of 2019 compared to $3.9 million for the first quarter of 2019 and $13.3 million for the second quarter of 2018.

The Mats and Integrated Services segment generated revenues of $43.9 million for the second quarter of 2019 compared to $50.8 million for the first quarter of 2019 and $56.5 million for the second quarter of 2018. Segment operating income was $9.3 million for the second quarter of 2019 compared to $13.5 million for the first quarter of 2019 and $14.9 million for the second quarter of 2018.

Conference Call

Newpark has scheduled a conference call to discuss second quarter 2019 results and its near-term operational outlook, which will be broadcast live over the Internet, on Wednesday, July 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 August 14, 2019 and may be accessed by dialing 201-612-7415 and using pass code 13692003#. 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.

Contact:

Gregg Piontek


Senior Vice President and Chief Financial Officer


Newpark Resources, Inc.


[email protected] 


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,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

Revenues

$

216,412



$

211,473



$

236,262



$

427,885



$

463,555


Cost of revenues

177,933



174,976



188,480



352,909



374,935


Selling, general and administrative expenses

28,037



30,742



28,708



58,779



55,662


Other operating (income) loss, net

(472)



76



(69)



(396)



(23)


Operating income

10,914



5,679



19,143



16,593



32,981












Foreign currency exchange (gain) loss

990



(1,062)



458



(72)



683


Interest expense, net

3,523



3,656



3,691



7,179



6,991


Income before income taxes

6,401



3,085



14,994



9,486



25,307












Provision for income taxes

2,095



1,803



4,148



3,898



7,239


Net income

$

4,306



$

1,282



$

10,846



$

5,588



$

18,068












Calculation of EPS:










Net income - basic and diluted

$

4,306



$

1,282



$

10,846



$

5,588



$

18,068












Weighted average common shares outstanding – basic

89,806



90,111



89,703



89,958



89,400


Dilutive effect of stock options and restricted stock awards

1,900



2,267



2,823



2,082



2,730


Dilutive effect of 2021 Convertible Notes





1,265





636


Weighted average common shares outstanding - diluted

91,706



92,378



93,791



92,040



92,766












Net income per common share - basic:

$

0.05



$

0.01



$

0.12



$

0.06



$

0.20


Net income per common share - diluted:

$

0.05



$

0.01



$

0.12



$

0.06



$

0.19



 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)



Three Months Ended


Six Months Ended

(In thousands)

June 30,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

Revenues










Fluids systems

$

172,544



$

160,653



$

179,738



$

333,197



$

357,117


Mats and integrated services

43,868



50,820



56,524



94,688



106,438


Total revenues

$

216,412



$

211,473



$

236,262



$

427,885



$

463,555












Operating income (loss) (1)










Fluids systems

$

12,184



$

3,874



$

13,327



$

16,058



$

23,804


Mats and integrated services

9,276



13,538



14,853



22,814



26,939


Corporate office

(10,546)



(11,733)



(9,037)



(22,279)



(17,762)


Total operating income

$

10,914



$

5,679



$

19,143



$

16,593



$

32,981












Segment operating margin










Fluids systems

7.1

%


2.4

%


7.4

%


4.8

%


6.7

%

Mats and integrated services

21.1

%


26.6

%


26.3

%


24.1

%


25.3

%



(1)

Corporate office and Fluids Systems operating income (loss) for the three months ended March 31, 2019 includes charges of $3.4 million and $1.1 million, respectively, related to the modification of the Company's retirement policy and severance costs.

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(In thousands, except share data)

June 30,
2019


December 31,
2018

ASSETS




Cash and cash equivalents

$

49,035



$

56,118


Receivables, net

249,197



254,394


Inventories

193,464



196,896


Prepaid expenses and other current assets

23,671



15,904


Total current assets

515,367



523,312






Property, plant and equipment, net

316,597



316,293


Operating lease assets

27,365




Goodwill

43,889



43,832


Other intangible assets, net

23,285



25,160


Deferred tax assets

4,632



4,516


Other assets

3,363



2,741


Total assets

$

934,498



$

915,854






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

5,657



$

2,522


Accounts payable

96,359



90,607


Accrued liabilities

42,205



48,797


Total current liabilities

144,221



141,926






Long-term debt, less current portion

156,655



159,225


Noncurrent operating lease liabilities

21,850




Deferred tax liabilities

36,936



37,486


Other noncurrent liabilities

8,707



7,536


Total liabilities

368,369



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

618,626



617,276


Accumulated other comprehensive loss

(67,873)



(67,673)


Retained earnings

153,395



148,802


Treasury stock, at cost (16,858,005 and 15,530,952 shares, respectively)

(139,086)



(129,788)


Total stockholders' equity

566,129



569,681


Total liabilities and stockholders' equity

$

934,498



$

915,854


 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Six Months Ended June 30,

(In thousands)

2019


2018

Cash flows from operating activities:




Net income

$

5,588



$

18,068


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




Depreciation and amortization

23,070



22,755


Stock-based compensation expense

6,874



4,848


Provision for deferred income taxes

(1,514)



243


Net provision for doubtful accounts

789



1,229


Gain on sale of assets

(5,128)



(371)


Amortization of original issue discount and debt issuance costs

2,973



2,643


Change in assets and liabilities:




(Increase) decrease in receivables

6,583



(1,185)


(Increase) decrease in inventories

3,868



(21,459)


Increase in other assets

(5,058)



(3,417)


Increase in accounts payable

6,207



6,659


Decrease in accrued liabilities and other

(10,012)



(9,326)


Net cash provided by operating activities

34,240



20,687






Cash flows from investing activities:




Capital expenditures

(23,866)



(24,458)


Proceeds from sale of property, plant and equipment

5,708



920


Refund of proceeds from sale of a business



(13,974)


Business acquisitions, net of cash acquired



(249)


Net cash used in investing activities

(18,158)



(37,761)






Cash flows from financing activities:




Borrowings on lines of credit

135,952



203,716


Payments on lines of credit

(141,317)



(171,796)


Debt issuance costs

(917)



(11)


Proceeds from employee stock plans

1,090



3,700


Purchases of treasury stock

(17,365)



(3,074)


 Other financing activities

2,758



2,515


Net cash provided by (used in) financing activities

(19,799)



35,050






Effect of exchange rate changes on cash

(125)



(2,926)






Net increase (decrease) in cash, cash equivalents, and restricted cash

(3,842)



15,050


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

64,266



65,460


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

$

60,424



$

80,510



 

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 calculated in accordance with GAAP to the non-GAAP financial measure of the Company's EBITDA:


Consolidated

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

Net income (GAAP) (1)

$

4,306



$

1,282



$

10,846



$

5,588



$

18,068


Interest expense, net

3,523



3,656



3,691



7,179



6,991


Provision for income taxes

2,095



1,803



4,148



3,898



7,239


Depreciation and amortization

11,632



11,438



11,484



23,070



22,755


EBITDA (non-GAAP) (1)

$

21,556



$

18,179



$

30,169



$

39,735



$

55,053



(1)

Net income and EBITDA for the three months ended March 31, 2019 include $4.0 million of pre-tax charges associated with the modification of the Company's retirement policy and $0.5 million related to severance costs.


Fluids Systems

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

Operating income (GAAP) (1)

$

12,184



$

3,874



$

13,327



$

16,058



$

23,804


Depreciation and amortization

5,201



5,076



5,317



10,277



10,607


EBITDA (non-GAAP) (1)

17,385



8,950



18,644



26,335



34,411


Revenues

172,544



160,653



179,738



333,197



357,117


Operating Margin (GAAP)

7.1

%


2.4

%


7.4

%


4.8

%


6.7

%

EBITDA Margin (non-GAAP)

10.1

%


5.6

%


10.4

%


7.9

%


9.6

%



(1)

Operating income and EBITDA for the three months ended March 31, 2019 include $1.1 million of pre-tax charges associated with the modification of the Company's retirement policy and severance costs.

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)


Mats and Integrated Services

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

Operating income (GAAP)

$

9,276



$

13,538



$

14,853



$

22,814



$

26,939


Depreciation and amortization

5,409



5,365



5,248



10,774



10,361


EBITDA (non-GAAP)

14,685



18,903



20,101



33,588



37,300


Revenues

43,868



50,820



56,524



94,688



106,438


Operating Margin (GAAP)

21.1

%


26.6

%


26.3

%


24.1

%


25.3

%

EBITDA Margin (non-GAAP)

33.5

%


37.2

%


35.6

%


35.5

%


35.0

%

Free Cash Flow

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

Consolidated

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2019


March 31,
2019


June 30,
2018


June 30,
2019


June 30,
2018

Net cash provided by operating activities (GAAP)

$

31,971



$

2,269



$

20,554



$

34,240



$

20,687


Capital expenditures

(6,399)



(17,467)



(13,762)



(23,866)



(24,458)


Proceeds from sale of property, plant and equipment

3,937



1,771



345



5,708



920


Free Cash Flow (non-GAAP)

$

29,509



$

(13,427)



$

7,137



$

16,082



$

(2,851)



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,
2019


December 31,
2018

Current debt

$

5,657



$

2,522


Long-term debt, less current portion

156,655



159,225


Total Debt

162,312



161,747


Total stockholders' equity

566,129



569,681


Total Capital

$

728,441



$

731,428






Ratio of Total Debt to Capital

22.3

%


22.1

%





Total Debt

$

162,312



$

161,747


Less: cash and cash equivalents

(49,035)



(56,118)


Net Debt

113,277



105,629


Total stockholders' equity

566,129



569,681


Total Capital, Net of Cash

$

679,406



$

675,310






Ratio of Net Debt to Capital

16.7

%


15.6

%


 

Cision View original content:http://www.prnewswire.com/news-releases/newpark-resources-reports-second-quarter-2019-results-300893293.html

SOURCE Newpark Resources, Inc.


Source: PR Newswire (July 30, 2019 - 4:15 PM EDT)

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