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8-K - FORM 8-K - NEWPARK RESOURCES INCnr20150430_8k.htm

 

Exhibit 99.1

 

NEWS RELEASE

 

  Contacts:       Brian Feldott

 

 

Director, Investor Relations

 

 

Newpark Resources, Inc.

bfeldott@newpark.com

 

 

281-362-6800

              

FOR IMMEDIATE RELEASE

 

 

NEWPARK RESOURCES REPORTS FIRST QUARTER 2015 RESULTS

 

 

THE WOODLANDS, TX – APRIL 30, 2015 – Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2015. Total revenues for the first quarter of 2015 were $208.5 million compared to $306.2 million in the fourth quarter of 2014 and $242.8 million in the first quarter of 2014. Income from continuing operations for the first quarter of 2015 was $1.0 million, or $0.01 per diluted share, compared to $23.4 million, or $0.25 per diluted share, in the fourth quarter of 2014, and $11.7 million, or $0.13 per diluted share, in the first quarter of 2014.

 

First quarter 2015 operating results included $2.9 million of pre-tax charges associated with North American workforce reductions. In addition, due to the continued strengthening of the US Dollar, the first quarter 2015 results included $1.6 million of pre-tax foreign currency exchange losses, primarily attributable to the revaluation of inter-company balances due from our Brazilian subsidiary. Further, the foreign currency exchange loss created a pre-tax loss in our Brazilian subsidiary, for which the recording of a tax benefit is not permitted, resulting in an unusually high effective tax rate for the period. Combined, these items reduced first quarter net income by $0.04 per diluted share.

 

Paul Howes, Newpark’s President and Chief Executive Officer, stated, “The first quarter proved to be very challenging, particularly in the North American Fluids business. North American Fluids revenues were down 41% sequentially, reflecting the sharp reduction in customer drilling activity combined with the effects of weaker pricing, lower wholesale barite sales, and a weaker sales mix, as customers slowed their product purchases and used their on-hand inventory in anticipation of laying down rigs. In response to the sharp decline in customer activity levels, we initiated significant actions to right-size our organization, reducing our North American Fluids Systems workforce by more than 35% since the beginning of the year. Most of the reductions were completed toward the end of the first quarter, so minimal cost benefits were realized in the period. Outside of North America, customer activities and pricing have remained much more stable, although the continued strengthening of the U.S. Dollar has negatively impacted our revenues and profitability across all international regions.

 

 
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“Despite the challenges in North America, our mats business continued to perform exceptionally well, sustaining operating margins above the 40% level in the first quarter. While the business was impacted by the lower drilling activity and pricing compression in the period, we are continuing our efforts to diversify this business into non-exploration markets and new geographies.

 

“Meanwhile, our cash flow and liquidity position remain very strong, generating $32 million of operating cash flow in the quarter and ending the period with $92 million of cash on-hand. During the first quarter, we also expanded our U.S. revolving credit facility from $125 million to $200 million, and we currently have no borrowings outstanding under the facility. This strong balance sheet position provides us with exceptional flexibility to continue executing our long-term strategy, despite the challenging North American environment,” concluded Howes.

 

Segment Results

 

The Fluids Systems segment generated revenues of $171.9 million in the first quarter of 2015 compared to $261.0 million in the fourth quarter of 2014 and $211.4 million in the first quarter of 2014. Segment operating loss was $1.7 million in the first quarter of 2015, compared to operating income of $24.5 million (9.4% operating margin) in the fourth quarter of 2014 and $15.7 million (7.4% operating margin) in the first quarter of 2014. The segment results for the first quarter of 2015 included $2.6 million of pre-tax charges associated with workforce reductions.

 

The Mats and Integrated Services segment generated revenues of $36.6 million in the first quarter of 2015 compared to $45.1 million in the fourth quarter of 2014 and $31.4 million in the first quarter of 2014. Segment operating income was $15.6 million (42.8% operating margin) in the first quarter of 2015, compared to $23.0 million (50.9% operating margin) in the fourth quarter of 2014, and $13.4 million (42.6% operating margin) in the first quarter of 2014.

 

 
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CONFERENCE CALL

 

Newpark has scheduled a conference call to discuss first quarter 2015 results, which will be broadcast live over the Internet, on Friday, May 1, 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 15, 2015 and may be accessed by dialing (201) 612-7415 and using pass code 13605640. 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.

 

 
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Newpark Resources, Inc.

Consolidated Statements of Operations

 

(Unaudited)

 

Three Months Ended

 
   

March 31,

   

December 31,

   

March 31,

 

(In thousands, except per share data)

 

2015

   

2014

   

2014

 
                         

Revenues

  $ 208,464     $ 306,162     $ 242,824  
                         

Cost of revenues

    176,634       237,067       196,560  
                         

Selling, general and administrative expenses

    25,978       30,390       25,523  

Other operating expense (income), net

    (276 )     114       (16 )
                         

Operating income

    6,128       38,591       20,757  
                         

Foreign currency exchange loss

    1,564       638       54  

Interest expense, net

    2,255       2,360       2,920  
                         

Income from continuing operations before income taxes

    2,309       35,593       17,783  

Provision for income taxes

    1,316       12,147       6,041  

Income from continuing operations

    993       23,446       11,742  

Income from discontinued operations, net of tax

    -       -       1,152  

Gain from disposal of discontinued operations, net of tax

    -       -       22,117  
                         

Net income

  $ 993     $ 23,446     $ 35,011  
                         

Income per common share -basic:

                       

Income from continuing operations

  $ 0.01     $ 0.29     $ 0.14  

Income from discontinued operations

    -       -       0.27  

Net income

  $ 0.01     $ 0.29     $ 0.41  
                         

Income per common share -diluted:

                       

Income from continuing operations

  $ 0.01     $ 0.25     $ 0.13  

Income from discontinued operations

    -       -       0.23  

Net income

  $ 0.01     $ 0.25     $ 0.36  
                         

Calculation of Diluted EPS:

                       

Income from continuing operations

  $ 993     $ 23,446     $ 11,742  

Assumed conversion of Senior Notes

    -       1,283       1,261  

Adjusted income from continuing operations

  $ 993     $ 24,729     $ 13,003  
                         

Weighted average number of common shares outstanding-basic

    82,299       82,225       84,743  

Add: Dilutive effect of stock options and restricted stock awards

    1,505       1,492       1,674  

          Dilutive effect of Senior Notes

    -       15,682       15,682  
                         

Diluted weighted average number of common shares outstanding

    83,804       99,399       102,099  
                         

Diluted income from continuing operations per common share

  $ 0.01     $ 0.25     $ 0.13  

 

Note: For the first quarter of 2015, we excluded the assumed conversion of the Senior Notes in calculating diluted earnings per share as the effect was anti-dilutive for the period.

 

 

 
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Newpark Resources, Inc.

Operating Segment Results

 

(Unaudited)

 

Three Months Ended

 
     

March 31,

   

December 31,

   

March 31,

 

(In thousands)

 

2015

   

2014

   

2014

 
                           

Revenues

                       
 

Fluids systems

  $ 171,902     $ 261,029     $ 211,400  
 

Mats and integrated services

    36,562       45,133       31,424  
 

Total revenues

  $ 208,464     $ 306,162     $ 242,824  
                           

Operating income (loss)

                       
 

Fluids systems

  $ (1,702 )   $ 24,533     $ 15,740  
 

Mats and integrated services

    15,647       22,959       13,373  
 

Corporate office

    (7,817 )     (8,901 )     (8,356 )
 

Total operating income

  $ 6,128     $ 38,591     $ 20,757  
                           

Segment operating margin

                       
 

Fluids systems

    (1.0% )     9.4 %     7.4 %
 

Mats and integrated services

    42.8 %     50.9 %     42.6 %

 

 
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Newpark Resources, Inc.

Consolidated Balance Sheets

 

(Unaudited)

               
   

March 31,

   

December 31,

 

(In thousands, except share data)

 

2015

   

2014

 
                 

ASSETS

               

Cash and cash equivalents

  $ 91,692     $ 85,052  

Receivables, net

    260,718       318,600  

Inventories

    183,821       196,556  

Deferred tax assets

    7,563       11,013  

Prepaid expenses and other current assets

    12,369       12,615  

Total current assets

    556,163       623,836  
                 

Property, plant and equipment, net

    291,713       283,361  

Goodwill

    90,032       91,893  

Other intangible assets, net

    14,239       15,666  

Other assets

    7,022       5,366  

Total assets

  $ 959,169     $ 1,020,122  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Short-term debt

  $ 9,909     $ 11,648  

Accounts payable

    77,917       108,242  

Accrued liabilities

    39,467       53,342  

Total current liabilities

    127,293       173,232  
                 

Long-term debt, less current portion

    172,497       172,498  

Deferred tax liabilities

    35,849       37,694  

Other noncurrent liabilities

    10,707       11,240  

Total liabilities

    346,346       394,664  
                 

Commitments and contingencies

               
                 

Common stock, $0.01 par value, 200,000,000 shares authorized and 99,286,706 and 99,204,318 shares issued, respectively

    993       992  

Paid-in capital

    524,492       521,228  

Accumulated other comprehensive loss

    (49,201 )     (31,992 )

Retained earnings

    263,609       262,616  

Treasury stock, at cost; 15,172,510 and 15,210,233 shares, respectively

    (127,070 )     (127,386 )

Total stockholders’ equity

    612,823       625,458  

Total liabilities and stockholders' equity

  $ 959,169     $ 1,020,122  

 

 
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Newpark Resources, Inc.

Consolidated Statements of Cash Flows

 

(Unaudited)

 

Three Months Ended March 31,

 

(In thousands)

 

2015

   

2014

 

Cash flows from operating activities:

               

Net income

  $ 993     $ 35,011  

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

         

Depreciation and amortization

    10,527       10,287  

Stock-based compensation expense

    2,964       2,840  

Provision for deferred income taxes

    1,775       (13,108 )

Net provision for doubtful accounts

    721       173  

Gain on sale of a business

    -       (33,974 )

(Gain) loss on sale of assets

    11       (362 )

Excess tax benefit from stock-based compensation

    (16 )     -  

Change in assets and liabilities:

               

(Increase) decrease in receivables

    45,869       (1,080 )

(Increase) decrease in inventories

    7,620       (9,229 )

Increase in other assets

    (265 )     (3,858 )

Decrease in accounts payable

    (29,353 )     (1,248 )

Increase (decrease) in accrued liabilities and other

    (9,250 )     18,142  

Net cash provided by operating activities

    31,596       3,594  
                 

Cash flows from investing activities:

               

Capital expenditures

    (18,505 )     (18,509 )

Proceeds from sale of property, plant and equipment

    298       754  

Proceeds from sale of a business

    -       89,167  

Net cash (used in) provided by investing activities

    (18,207 )     71,412  
                 

Cash flows from financing activities:

               

Borrowings on lines of credit

    1,906       47,562  

Payments on lines of credit

    (2,394 )     (45,113 )

Debt issuance costs

    (1,456 )     -  

Other financing activities

    (12 )     (13 )

Proceeds from employee stock plans

    305       34  

Purchases of treasury stock

    -       (13,123 )

Excess tax benefit from stock-based compensation

    16       -  

Net cash used in financing activities

    (1,635 )     (10,653 )
                 

Effect of exchange rate changes on cash

    (5,114 )     (6 )
                 

Net increase in cash and cash equivalents

    6,640       64,347  

Cash and cash equivalents at beginning of year

    85,052       65,840  
                 

Cash and cash equivalents at end of period

  $ 91,692     $ 130,187  

 

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