Newpark Resources Reports First Quarter 2016 Results

THE WOODLANDS, Texas, April 28, 2016 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2016.  Total revenues for the first quarter of 2016 were $114.5 million compared to $150.6 million in the fourth quarter of 2015 and $208.5 million in the first quarter of 2015.  Net loss for the first quarter of 2016 was $13.3 million, or $0.16 per share, compared to a net loss of $83.1 million, or $1.00 per share, in the fourth quarter of 2015, and net income of $1.0 million, or $0.01 per diluted share, in the first quarter of 2015.  First quarter 2016 results included the impact of the following:

• $3.4 million of pre-tax charges ($2.2 million after-tax) associated with workforce reductions, predominately in North America.
• $1.9 million gain ($1.2 million after-tax) associated with the purchase of a portion of our convertible senior notes in the open market.

In addition, the first quarter 2016 results include a $1.6 million reduction in depreciation expense associated with rental mats in the Mats and Integrated Services segment, reflecting increases in estimated useful lives and residual values.  Combined, the two items above, along with the change in rental mat depreciation expense resulted in a net improvement of $0.1 million to pre-tax loss ($0.1 million after-tax).

Paul Howes, Newpark's President and Chief Executive Officer, stated, "With the continuing sharp  decline in North American drilling activity, the market environment proved to be challenging, leading to a 31% sequential decline in North American Fluid revenues in the first quarter.  Internationally, the market is also showing a greater impact of the prolonged weakness in commodity prices, causing customers to delay certain projects, and putting increased pressure on pricing.  International Fluids revenues declined by 16% sequentially, largely driven by the non-recurring nature of prior quarter product sales into the Republic of Congo, as well as the successful completion of the deepwater Black Sea project.  In the Mats segment, rental and service revenues increased by 17% sequentially, benefitting from a 50% increase in rental and service revenues from non-exploration markets.  Meanwhile, mat sales activity remained soft in the first quarter, leading to a 22% sequential decline in total segment revenues.

"In response to the continued weakness and near-term uncertainty in the North American market, we initiated additional cost reduction actions during the first quarter, including a temporary salary reduction for a significant number of North American employees, including executive officers, the suspension of the Company's matching contribution to the U.S. defined contribution plan, as well as a reduction in cash compensation paid to our Board of Directors, in order to further align our cost structure to the current activity levels," added Howes.  "While the timing of the eventual recovery in drilling activity remains uncertain, we fortunately continue to benefit from our strong balance sheet position, and remain focused on driving additional working capital reductions to preserve our liquidity through this challenging environment."

SEGMENT RESULTS

The Fluids Systems segment generated revenues of $98.7 million in the first quarter of 2016 compared to $130.1 million in the fourth quarter of 2015 and $171.9 million in the first quarter of 2015.  Segment operating loss was $15.2 million in the first quarter, compared to an $83.6 million operating loss in the fourth quarter of 2015 and $1.7 million in the first quarter of 2015.  The segment results for the first quarter of 2016 included a $3.2 million charge associated with workforce reductions.

The Mats and Integrated Services segment generated revenues of $15.9 million in the first quarter of 2016 compared to $20.5 million in the fourth quarter of 2015 and $36.6 million in the first quarter of 2015.  Segment operating income was $3.7 million in the first quarter of 2016 compared to operating income of $2.9 million in the fourth quarter of 2015, and $15.6 million in the first quarter of 2015. The first quarter of 2016 results include a $1.1 million gain from the sale of used mats from our rental fleet.  In addition, first quarter 2016 operating income benefitted from a $1.6 million reduction in depreciation expense associated with our rental mat fleet, reflecting increases in estimated useful lives and residual values. 

LIQUIDITY UPDATE

As of March 31, 2016, the Company had $82.5 million of cash, and no amounts drawn under its revolving credit facility.  As anticipated, no amounts are currently outstanding under this facility, however, with the further deterioration in the North American markets in recent months, we were unable to remain in compliance with the facility's financial covenants as of March 31, 2016.  We are currently in advanced discussions with the bank group regarding alternatives, which are likely to incorporate asset-based lending characteristics, rather than cash-flow driven capacity, to ensure access to additional liquidity through the market cycle, if needed.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss first quarter 2016 results, which will be broadcast live over the Internet, on Friday, April 29, 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 May 13, 2016 and may be accessed by dialing (201) 612-7415 and using pass code 13633681#.  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, 2015, 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, the cost and continued availability of borrowed funds including noncompliance with debt covenants and our ability to re-negotiate our existing revolving credit facility, our international operations, 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, legal and regulatory matters, including environmental regulations, inherent limitations in insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, our exposure to cybersecurity breaches or business system disruptions, 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.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/newpark-resources-reports-first-quarter-2016-results-300259429.html

SOURCE Newpark Resources, Inc.