Newpark Resources Reports Second Quarter 2019 Results

THE WOODLANDS, Texas, July 30, 2019 /PRNewswire/ -- Newpark Resources, Inc. 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.



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,

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.

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