Newpark Resources Reports Second Quarter 2018 Results
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. [email protected] 281-362-6800 |
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SOURCE Newpark Resources, Inc.