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| 8-K - FORM 8-K - NEWPARK RESOURCES INC | nr20140723_8k.htm |
Exhibit 99.1
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NEWPARK RESOURCES REPORTS NET INCOME OF $0.21 PER DILUTED SHARE FOR THE SECOND QUARTER OF 2014
Fluids segment posts 14% sequential revenue growth and
segment margin improves to double-digits
THE WOODLANDS, TX – JULY 24, 2014 – Newpark Resources, Inc. (NYSE: NR) today announced results for its second quarter ended June 30, 2014. Total revenues for the second quarter of 2014 were $272.5 million compared to $242.8 million in the first quarter of 2014 and $259.4 million in the second quarter of 2013. Income from continuing operations for the second quarter of 2014 was $20.3 million, or $0.21 per diluted share, compared to $11.7 million, or $0.13 per diluted share, in the first quarter of 2014, and $11.9 million, or $0.13 per diluted share, in the second quarter of 2013. The second quarter 2014 results include $1.2 million of pre-tax gains, or $0.01 per diluted share, from the sale of real estate.
Paul Howes, Newpark’s President and Chief Executive Officer, stated, “We are very pleased with the solid performance from both our fluids and mats segments. In the fluids business, U.S. revenues grew 20% sequentially as the momentum we experienced at the end of the first quarter continued into the second quarter, reflecting broad-based gains across most regions, along with strong demand for wholesale barite and a deepwater well in the Gulf of Mexico. Internationally, our EMEA revenues increased sharply, including $7 million in contributions from new contract start-ups in the Black Sea and India. These revenue gains, along with our continued success in penetrating the market with new technologies, including our family of Evolution® drilling fluid systems, have helped drive our fluids segment margins back into the double-digits.
“Meanwhile, our mats business continued to perform at a high level. Strong rental demand and the continuing expansion of our rental fleet contributed to a 13% sequential increase in rental revenues and enabled us to maintain margins above 40%.
“We’ve also continued to execute on our share repurchase program, purchasing an additional $20 million of outstanding shares and bringing our total year-to-date purchases to 4.3 million shares at an average price of $11.70,” concluded Howes.
SEGMENT RESULTS
The Fluids Systems segment generated revenues of $241.4 million in the second quarter of 2014 compared to $211.4 million in the first quarter of 2014 and $234.0 million in the second quarter of 2013. Segment operating income was $27.6 million (11.4% operating margin) in the second quarter of 2014, which includes a $0.6 million gain on the sale of real estate, compared to $15.7 million (7.4% operating margin) in the first quarter of 2014 and $17.7 million (7.6% operating margin) in the second quarter of 2013.
The Mats and Integrated Services segment generated revenues of $31.1 million in the second quarter of 2014 compared to $31.4 million in the first quarter of 2014 and $25.4 million in the second quarter of 2013. Segment operating income was $13.7 million (43.9% operating margin) in the second quarter of 2014, which includes a $0.6 million gain on the sale of real estate, compared to $13.4 million (42.6% operating margin) in the first quarter of 2014 and $10.3 million (40.7% operating margin) in the second quarter of 2013.
CONFERENCE CALL
Newpark has scheduled a conference call to discuss second quarter 2014 results, which will be broadcast live over the Internet, on Friday, July 25, 2014 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (719) 457-2627 and ask for the Newpark Resources 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 August 8, 2014 and may be accessed by dialing (719) 457-0820 and using pass code 7386100#. 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 drilling fluids and temporary worksites and access roads for 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, 2013, as well as others, could cause results to differ materially from those stated. These risk factors include, but are not limited to, our ability to execute our business strategy and make successful business acquisitions and capital investments, operating hazards inherent in the oil and natural gas industry, our international operations, the availability of raw materials and skilled personnel, the impact of restrictions on offshore drilling activity, our customer concentration and cyclical nature of our industry, our market competition, the cost and continued availability of borrowed funds, 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
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(Unaudited) |
Three Months Ended |
Six Months Ended |
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June 30, |
March 31, |
June 30, |
June 30, |
June 30, |
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(In thousands, except per share data) |
2014 |
2014 |
2013 |
2014 |
2013 |
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Revenues |
$ | 272,466 | $ | 242,824 | $ | 259,376 | $ | 515,290 | $ | 527,299 | ||||||||||
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Cost of revenues |
214,711 | 196,560 | 214,710 | 411,271 | 435,445 | |||||||||||||||
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Selling, general and administrative expenses |
27,981 | 25,523 | 23,248 | 53,504 | 45,699 | |||||||||||||||
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Other operating income, net |
(2,042 | ) | (16 | ) | (178 | ) | (2,058 | ) | (302 | ) | ||||||||||
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Operating income |
31,816 | 20,757 | 21,596 | 52,573 | 46,457 | |||||||||||||||
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Foreign currency exchange (gain) loss |
(1,805 | ) | 54 | 475 | (1,751 | ) | 107 | |||||||||||||
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Interest expense, net |
2,830 | 2,920 | 2,802 | 5,750 | 5,322 | |||||||||||||||
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Income from continuing operations before income taxes |
30,791 | 17,783 | 18,319 | 48,574 | 41,028 | |||||||||||||||
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Provision for income taxes |
10,462 | 6,041 | 6,460 | 16,503 | 14,302 | |||||||||||||||
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Income from continuing operations |
20,329 | 11,742 | 11,859 | 32,071 | 26,726 | |||||||||||||||
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Income from discontinued operations, net of tax |
- | 1,152 | 3,805 | 1,152 | 6,313 | |||||||||||||||
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Gain from disposal of discontinued operations, net of tax |
- | 22,117 | - | 22,117 | - | |||||||||||||||
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Net income |
$ | 20,329 | $ | 35,011 | $ | 15,664 | $ | 55,340 | $ | 33,039 | ||||||||||
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Income per common share -basic: |
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Income from continuing operations |
$ | 0.24 | $ | 0.14 | $ | 0.14 | $ | 0.38 | $ | 0.32 | ||||||||||
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Income from discontinued operations |
- | 0.27 | 0.05 | 0.28 | 0.07 | |||||||||||||||
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Net income |
$ | 0.24 | $ | 0.41 | $ | 0.19 | $ | 0.66 | $ | 0.39 | ||||||||||
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Income per common share -diluted: |
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Income from continuing operations |
$ | 0.21 | $ | 0.13 | $ | 0.13 | $ | 0.34 | $ | 0.29 | ||||||||||
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Income from discontinued operations |
- | 0.23 | 0.04 | 0.23 | 0.06 | |||||||||||||||
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Net income |
$ | 0.21 | $ | 0.36 | $ | 0.17 | $ | 0.57 | $ | 0.35 | ||||||||||
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Calculation of Diluted EPS: |
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Income from continuing operations |
$ | 20,329 | $ | 11,742 | $ | 11,859 | $ | 32,071 | $ | 26,726 | ||||||||||
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Assumed conversion of Senior Notes |
1,253 | 1,261 | 1,251 | 2,514 | 2,501 | |||||||||||||||
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Adjusted income from continuing operations |
$ | 21,582 | $ | 13,003 | $ | 13,110 | $ | 34,585 | $ | 29,227 | ||||||||||
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Weighted average number of common shares outstanding-basic |
83,010 | 84,743 | 84,813 | 83,872 | 84,459 | |||||||||||||||
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Add: Dilutive effect of stock options and restricted stock awards |
1,743 | 1,674 | 1,810 | 1,705 | 1,727 | |||||||||||||||
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Dilutive effect of Senior Notes |
15,682 | 15,682 | 15,682 | 15,682 | 15,682 | |||||||||||||||
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Diluted weighted average number of common shares outstanding |
100,435 | 102,099 | 102,305 | 101,259 | 101,868 | |||||||||||||||
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Diluted income from continuing operations per common share |
$ | 0.21 | $ | 0.13 | $ | 0.13 | $ | 0.34 | $ | 0.29 | ||||||||||
Newpark Resources, Inc.
Operating Segment Results
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(Unaudited) |
Three Months Ended |
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June 30, |
March 31, |
June 30, |
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(In thousands) |
2014 |
2014 |
2013 |
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Revenues |
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Fluids systems |
$ | 241,386 | $ | 211,400 | $ | 233,964 | ||||||
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Mats and integrated services |
31,080 | 31,424 | 25,412 | |||||||||
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Total revenues |
$ | 272,466 | $ | 242,824 | $ | 259,376 | ||||||
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Operating income (loss) |
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Fluids systems |
$ | 27,571 | $ | 15,740 | $ | 17,684 | ||||||
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Mats and integrated services |
13,653 | 13,373 | 10,341 | |||||||||
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Corporate office |
(9,408 | ) | (8,356 | ) | (6,429 | ) | ||||||
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Total operating income |
$ | 31,816 | $ | 20,757 | $ | 21,596 | ||||||
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Segment operating margin |
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Fluids systems |
11.4 | % | 7.4 | % | 7.6 | % | ||||||
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Mats and integrated services |
43.9 | % | 42.6 | % | 40.7 | % | ||||||
Newpark Resources, Inc.
Consolidated Balance Sheets
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(Unaudited) |
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June 30, |
December 31, |
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(In thousands, except share data) |
2014 |
2013 |
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ASSETS |
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Cash and cash equivalents |
$ | 56,753 | $ | 65,840 | ||||
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Receivables, net |
315,267 | 268,529 | ||||||
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Inventories |
199,129 | 189,680 | ||||||
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Deferred tax asset |
11,597 | 11,272 | ||||||
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Prepaid expenses and other current assets |
18,313 | 11,016 | ||||||
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Assets of discontinued operations |
- | 13,103 | ||||||
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Total current assets |
601,059 | 559,440 | ||||||
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Property, plant and equipment, net |
257,244 | 217,010 | ||||||
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Goodwill |
94,218 | 94,064 | ||||||
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Other intangible assets, net |
21,254 | 25,900 | ||||||
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Other assets |
9,326 | 6,086 | ||||||
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Assets of discontinued operations |
- | 65,917 | ||||||
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Total assets |
$ | 983,101 | $ | 968,417 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Short-term debt |
$ | 20,463 | $ | 12,867 | ||||
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Accounts payable |
102,755 | 88,586 | ||||||
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Accrued liabilities |
51,836 | 46,341 | ||||||
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Liabilities of discontinued operations |
- | 5,957 | ||||||
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Total current liabilities |
175,054 | 153,751 | ||||||
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Long-term debt, less current portion |
172,754 | 172,786 | ||||||
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Deferred tax liability |
25,523 | 27,060 | ||||||
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Other noncurrent liabilities |
11,001 | 11,026 | ||||||
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Liabilities of discontinued operations |
- | 22,740 | ||||||
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Total liabilities |
384,332 | 387,363 | ||||||
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Commitments and contingencies |
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Common stock, $0.01 par value, 200,000,000 shares authorized and 98,883,253 and 98,030,839 shares issued, respectively |
989 | 980 | ||||||
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Paid-in capital |
512,010 | 504,675 | ||||||
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Accumulated other comprehensive loss |
(7,904 | ) | (9,484 | ) | ||||
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Retained earnings |
215,678 | 160,338 | ||||||
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Treasury stock, at cost; 14,781,353 and 10,832,845 shares, respectively |
(122,004 | ) | (75,455 | ) | ||||
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Total stockholders’ equity |
598,769 | 581,054 | ||||||
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Total liabilities and stockholders' equity |
$ | 983,101 | $ | 968,417 | ||||
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
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(Unaudited) |
Six Months Ended June 30, |
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(In thousands) |
2014 |
2013 |
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Cash flows from operating activities: |
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Net income |
$ | 55,340 | $ | 33,039 | ||||
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Adjustments to reconcile net income to net cash provided by operations: |
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Depreciation and amortization |
20,301 | 21,836 | ||||||
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Stock-based compensation expense |
5,906 | 4,289 | ||||||
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Provision for deferred income taxes |
(13,788 | ) | (278 | ) | ||||
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Net provision for doubtful accounts |
438 | 220 | ||||||
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Gain on sale of a business |
(33,974 | ) | - | |||||
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Gain on sale of assets |
(1,230 | ) | (323 | ) | ||||
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Excess tax benefit from stock-based compensation |
(903 | ) | - | |||||
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Change in assets and liabilities: |
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Increase in receivables |
(38,919 | ) | (18,442 | ) | ||||
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(Increase) decrease in inventories |
(8,480 | ) | 4,055 | |||||
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Increase in other assets |
(6,813 | ) | (199 | ) | ||||
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Increase (decrease) in accounts payable |
12,029 | (1,237 | ) | |||||
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Increase in accrued liabilities and other |
4,783 | 935 | ||||||
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Net cash (used in) provided by operating activities |
(5,310 | ) | 43,895 | |||||
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Cash flows from investing activities: |
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Capital expenditures |
(56,727 | ) | (37,417 | ) | ||||
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Proceeds from sale of property, plant and equipment |
2,526 | 590 | ||||||
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Proceeds from sale of a business |
89,167 | - | ||||||
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Net cash provided by (used in) investing activities |
34,966 | (36,827 | ) | |||||
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Cash flows from financing activities: |
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Borrowings on lines of credit |
51,787 | 159,612 | ||||||
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Payments on lines of credit |
(45,170 | ) | (158,679 | ) | ||||
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Other financing activities |
(30 | ) | (39 | ) | ||||
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Proceeds from employee stock plans |
922 | 6,928 | ||||||
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Purchase of treasury stock |
(47,450 | ) | (2,010 | ) | ||||
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Excess tax benefit from stock-based compensation |
903 | - | ||||||
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Net cash (used in) provided by financing activities |
(39,038 | ) | 5,812 | |||||
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Effect of exchange rate changes on cash |
295 | (1,681 | ) | |||||
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Net (decrease) increase in cash and cash equivalents |
(9,087 | ) | 11,199 | |||||
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Cash and cash equivalents at beginning of year |
65,840 | 46,846 | ||||||
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Cash and cash equivalents at end of period |
$ | 56,753 | $ | 58,045 | ||||
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