Form 8-K NEWPARK RESOURCES INC For: Oct 29

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): October 29, 2015

 

NEWPARK RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

Delaware		1-2960		72-1123385
(State or other jurisdiction of incorporation)		(Commission  File Number)		(IRS Employer  Identification No.)

 

9320 Lakeside Blvd., Suite 100
The Woodlands, TX				77381
(Address of principal executive offices)				(Zip Code)

 

Registrant's telephone number, including area code: (281) 362-6800

 

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

|_|     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

|_|     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

|_|	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

|_|	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

 

 

Item 2.02.      Results of Operations and Financial Condition.

 

On October 29, 2015, Newpark Resources, Inc. (the “Company”) issued a press release announcing financial information for the three and nine months ended September 30, 2015. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

 

The information in Item 2.02 of this Current Report on Form 8-K and the information in the exhibit attached hereto announcing the Company’s earnings for the three and nine months ended September 30, 2015 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.

 

 

 

Item 9.01     Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit No.		Description
99.1		Press release issued by Newpark Resources, Inc. on October 29, 2015.

 

 

SIGNATURES

 

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	NEWPARK RESOURCES, INC.
Dated: October 30, 2015	By:	/s/ Gregg S. Piontek
	Gregg S. Piontek, Vice President and Chief Financial Officer
	(Principal Financial Officer)

 

  

EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		Press release issued by Newpark Resources, Inc. on October 29, 2015.

 

 

 

Exhibit 99.1

 

	NEWS RELEASE
	Contacts:		Brian Feldott  Director, Investor Relations Newpark Resources, Inc. [email protected] 281-362-6800

 FOR IMMEDIATE RELEASE 

 

NEWPARK RESOURCES REPORTS THIRD QUARTER 2015 RESULTS

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

 

THE WOODLANDS, TX – OCTOBER 29, 2015 – 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

 

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