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Newpark Resources Reports Second Quarter 2018 Results

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Newpark Resources Reports Second Quarter 2018 Results

Company reports revenues of $236 million, earnings of $0.12 per diluted share

PR Newswire

THE WOODLANDS, Texas, July 26, 2018 /PRNewswire/ -- Newpark Resources, Inc. (NYSE:NR) today announced results for its second quarter ended June 30, 2018. Total revenues for the second quarter of 2018 were $236.3 million compared to $227.3 million in the first quarter of 2018 and $183.0 million in the second quarter of 2017. Net income for the second quarter of 2018 was $10.8 million, or $0.12 per diluted share, compared to $7.2 million, or $0.08 per diluted share, in the first quarter of 2018, and $1.6 million, or $0.02 per diluted share, in the second quarter of 2017.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We're very pleased to report another solid quarter, with both segments continuing to make meaningful strides in the execution of our long-term strategy. Consolidated revenues increased 4% sequentially to $236 million in the second quarter, driven by continued growth in the U.S. across both operating segments.

"In Fluids, second quarter revenues for the segment came in at $180 million, a 1% sequential improvement. Revenue gains in the U.S., including increases in both land and Gulf of Mexico activities, fully offset the seasonal impact of Spring break-up in Canada. International revenues also rose modestly, benefitting primarily from the Woodside project in offshore Australia," added Howes. "Meanwhile, we also made progress in our efforts to improve our Fluids operating margin, which increased to 7.4% in the second quarter, driven primarily by the impact of a strong sales mix in our international business, along with the increase in revenues.

"In the Mats business, we continue to see the benefits from our market diversification strategy, where revenues improved sequentially in both E&P and non-E&P market sectors. Second quarter Mats revenues came in at a quarterly record of $57 million, reflecting a 13% improvement from the first quarter, while operating margin improved to 26.3%. The sequential revenue gains reflect broad-based improvements across most targeted markets, both in the U.S. and Europe, as revenues remain evenly balanced between E&P and non-E&P end markets," added Howes. "In an effort to support our ongoing expansion into new markets, we've invested an additional $7 million during the second quarter to expand our mat rental fleet."

Segment Results

The Fluids Systems segment generated revenues of $179.7 million in the second quarter of 2018 compared to $177.4 million in the first quarter of 2018 and $150.6 million in the second quarter of 2017. Segment operating income was $13.3 million in the second quarter of 2018 compared to $10.5 million in the first quarter of 2018 and $5.9 million in the second quarter of 2017.

The Mats and Integrated Services segment generated revenues of $56.5 million in the second quarter of 2018 compared to $49.9 million in the first quarter of 2018 and $32.4 million in the second quarter of 2017. Segment operating income was $14.9 million in the second quarter of 2018 compared to $12.1 million in the first quarter of 2018 and $11.4 million in the second quarter of 2017.

Conference Call

Newpark has scheduled a conference call to discuss second quarter 2018 results and near-term operational outlook, which will be broadcast live over the Internet, on Friday, July 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 August 10, 2018 and may be accessed by dialing 201-612-7415 and using pass code 13680711#. 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 of 1995, as amended. 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. 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 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, our ability to replace existing contracts, 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 or the impact of tariffs on the cost of such raw materials, the availability of 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. We assume no obligation to update, amend or clarify publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities laws. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this news release might not occur.

 

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)








Three Months Ended


Six Months Ended

(In thousands, except per share data)


June 30,
 2018


March 31,
 2018


June 30,
 2017


June 30,
 2018


June 30,
 2017

Revenues


$

236,262



$

227,293



$

183,020



$

463,555



$

341,711


Cost of revenues


188,480



186,455



148,431



374,935



278,021


Selling, general and administrative expenses


28,708



26,954



26,630



55,662



52,027


Other operating (income) loss, net


(69)



46



(9)



(23)



(51)


Operating income


19,143



13,838



7,968



32,981



11,714













Foreign currency exchange loss


458



225



534



683



926


Interest expense, net


3,691



3,300



3,441



6,991



6,659


Income from operations before income taxes


14,994



10,313



3,993



25,307



4,129













Provision for income taxes


4,148



3,091



2,361



7,239



3,480


Net income


$

10,846



$

7,222



$

1,632



$

18,068



$

649
























Calculation of EPS:











Net income - basic and diluted


$

10,846



$

7,222



$

1,632



$

18,068



$

649













Weighted average common shares outstanding - basic


89,703



89,094



84,653



89,400



84,404


Dilutive effect of stock options and restricted stock awards


2,823



2,637



2,662



2,730



2,695


Dilutive effect of 2021 Convertible Notes


1,265







636




Weighted average common shares outstanding - diluted


93,791



91,731



87,315



92,766



87,099













Income per common share - basic


$

0.12



$

0.08



$

0.02



$

0.20



$

0.01


Income per common share - diluted


$

0.12



$

0.08



$

0.02



$

0.19



$

0.01


 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)








Three Months Ended


Six Months Ended

(In thousands)


June 30,
 2018


March 31,
 2018


June 30,
 2017


June 30,
 2018


June 31,
2017

Revenues











Fluids systems


$

179,738



$

177,379



$

150,623



$

357,117



$

286,673


Mats and integrated services


56,524



49,914



32,397



106,438



55,038


Total revenues


$

236,262



$

227,293



$

183,020



$

463,555



$

341,711













Operating income (loss)











Fluids systems


$

13,327



$

10,477



$

5,863



$

23,804



$

12,215


Mats and integrated services


14,853



12,086



11,419



26,939



17,821


Corporate office


(9,037)



(8,725)



(9,314)



(17,762)



(18,322)


Operating income


$

19,143



$

13,838



$

7,968



$

32,981



$

11,714













Segment operating margin











Fluids systems


7.4

%


5.9

%


3.9

%


6.7

%


4.3

%

Mats and integrated services


26.3

%


24.2

%


35.2

%


25.3

%


32.4

%

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)





(In thousands, except share data)

June 30,
 2018


December 31,
 2017

ASSETS




Cash and cash equivalents

$

71,722



$

56,352


Receivables, net

252,154



265,866


Inventories

189,571



165,336


Prepaid expenses and other current assets

20,492



17,483


Total current assets

533,939



505,037






Property, plant and equipment, net

316,062



315,320


Goodwill

44,020



43,620


Other intangible assets, net

27,622



30,004


Deferred tax assets

4,484



4,753


Other assets

3,587



3,982


Total assets

$

929,714



$

902,716






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

3,584



$

1,518


Accounts payable

93,254



88,648


Accrued liabilities

39,769



68,248


Total current liabilities

136,607



158,414






Long-term debt, less current portion

193,636



158,957


Deferred tax liabilities

36,158



31,580


Other noncurrent liabilities

8,590



6,285


Total liabilities

374,991



355,236






Common stock, $0.01 par value (200,000,000 shares authorized and 106,071,255 and 104,571,839 shares issued, respectively)

1,061



1,046


Paid-in capital

611,667



603,849


Accumulated other comprehensive loss

(63,097)



(53,219)


Retained earnings

134,589



123,375


Treasury stock, at cost (15,513,806 and 15,366,504 shares, respectively)

(129,497)



(127,571)


Total stockholders' equity

554,723



547,480


Total liabilities and stockholders' equity

$

929,714



$

902,716


 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)




Six Months Ended June 30,

(In thousands)

2018


2017

Cash flows from operating activities:




Net income

$

18,068



$

649


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




Depreciation and amortization

22,755



19,244


Stock-based compensation expense

4,848



5,874


Provision for deferred income taxes

243



(3,672)


Net provision for doubtful accounts

1,229



1,412


Gain on sale of assets

(371)



(1,266)


Amortization of original issue discount and debt issuance costs

2,643



2,679


Change in assets and liabilities:




  Increase in receivables

(1,185)



(48,612)


  Increase in inventories

(21,459)



(10,500)


  Increase in other assets

(3,417)



(2,773)


  Increase in accounts payable

6,659



15,590


  Increase (decrease) in accrued liabilities and other

(9,326)



43,685


Net cash provided by operating activities

20,687



22,310






Cash flows from investing activities:




Capital expenditures

(24,458)



(16,644)


Refund of proceeds from sale of a business

(13,974)




Proceeds from sale of property, plant and equipment

920



1,222


  Business acquisitions, net of cash acquired

(249)




Net cash used in investing activities

(37,761)



(15,422)






Cash flows from financing activities:




Borrowings on lines of credit

203,716




Payments on lines of credit

(171,796)




Debt issuance costs

(11)



(335)


Proceeds from employee stock plans

3,700



1,517


Purchases of treasury stock

(3,074)



(2,382)


 Other financing activities

2,515



2,333


Net cash provided by financing activities

35,050



1,133






Effect of exchange rate changes on cash

(2,926)



2,017






Net increase in cash, cash equivalents, and restricted cash

15,050



10,038


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

65,460



95,299


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

$

80,510



$

105,337


 

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,
2018


March 31,
 2018


June 30,
2017


June 30,
2018


June 30,
2017

Net income (GAAP)

$

10,846



$

7,222



$

1,632



$

18,068



$

649


Interest expense, net

3,691



3,300



3,441



6,991



6,659


Provision for income taxes

4,148



3,091



2,361



7,239



3,480


Depreciation and amortization

11,484



11,271



9,857



22,755



19,244


EBITDA (non-GAAP)

$

30,169



$

24,884



$

17,291



$

55,053



$

30,032


 

Fluids Systems

Three Months Ended


Six Months Ended

(In thousands)

June 30,
2018


March 31,
 2018


June 30,
2017


June 30,
2018


June 30,
2017

Operating income (GAAP)

$

13,327



$

10,477



$

5,863



$

23,804



$

12,215


Depreciation and amortization

5,317



5,290



5,513



10,607



10,681


EBITDA (non-GAAP)

18,644



15,767



11,376



34,411



22,896


Revenues

179,738



177,379



150,623



357,117



286,673


Operating Margin (GAAP)

7.4

%


5.9

%


3.9

%


6.7

%


4.3

%

EBITDA Margin (non-GAAP)

10.4

%


8.9

%


7.6

%


9.6

%


8.0

%

 

Mats and Integrated Services

Three Months Ended


Six Month Ended

(In thousands)

June 30,
2018


March 31,
 2018


June 30,
2017


June 30,
2018


June 30,
2017

Operating income (GAAP)

$

14,853



$

12,086



$

11,419



$

26,939



$

17,821


Depreciation and amortization

5,248



5,114



3,534



10,361



7,013


EBITDA (non-GAAP)

20,101



17,200



14,953



37,300



24,834


Revenues

56,524



49,914



32,397



106,438



55,038


Operating Margin (GAAP)

26.3

%


24.2

%


35.2

%


25.3

%


32.4

%

EBITDA Margin (non-GAAP)

35.6

%


34.5

%


46.2

%


35.0

%


45.1

%

 

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)

June 30, 2018


December 31, 2017

Current debt

$

3,584



$

1,518


Long-term debt, less current portion

193,636



158,957


Total Debt

197,220



160,475


Total stockholders' equity

554,723



547,480


Total Capital

$

751,943



$

707,955






Ratio of Total Debt to Capital

26.2

%


22.7

%









Total Debt

$

197,220



$

160,475


Less: cash and cash equivalents

(71,722)



(56,352)


Net Debt

125,498



104,123


Total stockholders' equity

554,723



547,480


Total Capital, Net of Cash

$

680,221



$

651,603






Ratio of Net Debt to Capital

18.4

%


16.0

%

 

Contacts:

Gregg Piontek
Senior Vice President and Chief Financial Officer
Newpark Resources, Inc.
gpiontek@newpark.com  
281-362-6800

 

Cision View original content:http://www.prnewswire.com/news-releases/newpark-resources-reports-second-quarter-2018-results-300687371.html

SOURCE Newpark Resources, Inc.

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