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| 8-K - FORM 8-K - NEWPARK RESOURCES INC | a201602013-8kxq4investorpr.htm |
N E W P A R K R E S O U R C E S P R E S E N TAT I O N
F E B R U A R Y 2 0 1 7
This presentation 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 future 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
and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, 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, Newpark’s 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, risks related to Newpark’s international
operations, operating hazards present in the oil and natural gas industry, Newpark’s ability to execute its
business strategy and make successful business acquisitions and capital investments, the availability of raw
materials and skilled personnel, Newpark’s market competition, compliance with legal and regulatory matters,
including environmental regulations, the availability of insurance and the risks and limitations of Newpark’s
insurance coverage, potential impairments of long-lived intangible assets, technological developments in
Newpark’s industry, cybersecurity breaches or business system disruptions, risks related to severe weather,
particularly in the U.S. Gulf Coast and risks related to the fluctuations in the market value of Newpark’s
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 its website at www.newpark.com.
F O R W A R D L O O K I N G S TAT E M E N T S
2
$909
$984
$1,042
$1,118
$677
$471
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2011 2012 2013 2014 2015 2016
84%
16%
2016 - Revenue by Segment
Operating Segments:
Fluids Systems
Mats and Integrated
Services
Customer markets:
Oil and Gas exploration
Mats expanding into utilities
and other non-exploration
markets
Key geographic markets:
North America
EMEA
Latin America
Asia Pacific
R
e
ve
n
u
e
s
($
m
ill
io
n
s)
Consolidated Revenues
Fluids Systems Mats and Integrated Services
C O M P A N Y O V E R V I E W
3
2016 Revenue by Region
45%
39%
9%
7%
U.S. EMEA/APAC Latin America Canada
G L O B A L S T R E N G T H
4
S T R E N G T H E N E D B Y O U R I N V E S T M E N T S
Mats: Completed Manufacturing 2015
and Technology Center 2016
Elevated capital campaign largely
completed
Infrastructure investments open new
markets and significantly enhance our
competitiveness
Reflects our commitment to be the global
leader in fluids and mats technology
5
Fluids: Gulf of Mexico Deepwater Shorebase
To Be Completed 2017
Fluids: Manufacturing Facility & Distribution Center
Completed 2016
38%
8%
43%
11%
U.S. Canada EMEA/APAC Latin America
Largest independent drilling
fluids provider
3rd largest drilling fluids
company worldwide*
Seek to capitalize on
competitive diversions to drive
further market share gains
Expanding global market share,
leveraging IOC/NOC
relationships
$799
$862
$926
$965
$581
$395
$0
$200
$400
$600
$800
$1,000
$1,200
2011 2012 2013 2014 2015 2016
Re
ve
n
u
e
s
($
m
il
lio
n
s)
Total Segment Revenues
2016 Revenue by Region
*Based on company data
F L U I D S S Y S T E M S - O V E R V I E W
6
F L U I D S S Y S T E M S - T E C H N O L O G Y
7
Proven drilling fluid systems designed to
enhance wellsite performance
Evolution® high-performance, water-based
technology for global applications
Fusion™ brine fluid system creates a
unique enhancement for shale basins
Kronos™ deepwater drilling fluid systems
offers operators a consistent fluid across a
wide temperature and pressure spectrum
Fluids Development
Driving continued advancements in
technology, bringing new chemistries to
enhance drilling efficiencies in challenging
environments
2,283
2,114
2,241
1,170
639
10%
11%
12%
13%
14%
15%
16%
-
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2016
NAM Rig Count Market Share
$585 $615
$654
$687
$352
$183
$0
$100
$200
$300
$400
$500
$600
$700
$800
2011 2012 2013 2014 2015 2016
Revenues impacted by drilling
activity and operators reducing
well expenditures
Service quality, focus and
organizational alignment driving
share gains in the market
Hold #2 market share position in
U.S. land*
Focused on expanding presence
in GOM in recovery
(1) Source: BHI and company data
Re
ve
n
u
e
(
$
m
il
lio
n
s)
North American Revenues
NAM Rig Count & Market Share(1)
*Based on company data
F L U I D S S Y S T E M S – N O R T H A M E R I C A
8
$214
$246
$272 $278
$229
$212
$0
$50
$100
$150
$200
$250
$300
$350
2011 2012 2013 2014 2015 2016
$113 $117
$137
$166 $164 $167
$76 $87
$99
$84
$47 $25
$42
$36 $28
$18
$5
2011 2012 2013 2014 2015 2016
EMEA LATAM APAC
International expansion is key to our
strategy
More stable than NAM, through the
current cycle
Longer term contracts
Largely IOC’s/NOC’s
Few competitors
Key contract awards have driven growth
Kuwait (KOC)
Algeria (Sonatrach)
Republic of Congo (ENI)
Uruguay ultra-deepwater (Total)
Albania (Shell)
Chile (ENAP)
Core EMEA region has remained stable,
despite currency headwinds (strong U.S.
dollar) in 2015 and 2016
International Revenues
Revenues by Region
$40
F L U I D S S Y S T E M S – I N T E R N AT I O N A L
9
$110
$122
$116
$153
$96
$76
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2011 2012 2013 2014 2015 2016
Leading provider of engineered worksite
solutions
Patented technology and size of
composite mat rental fleet provide
competitive advantage
Revenues include rentals and sale of
DURA-BASE composite mats
Mat sales targeted to international E&P
and non-oil and gas customers
Established core rental business in NAM
exploration market, where mats reduce
operator’s costs and improve
environmental protection during drilling
and completion phase
Seeking to accelerate growth by
expanding into new geographic markets
and industries
Total Segment Revenues
R
e
ve
n
u
e
s
($
m
ill
io
n
s)
23%
29%
34%
14% Mat Sales - Non-Exploration
Rental - Exploration
Rental - NAM Utilities & Pipeline
Rental - U.K. Utilities & Other
2016 Revenues by Market
M AT S & I N T E G R AT E D S E R V I C E S - O V E R V I E W
10
Transform wellsite offering to
system solution, driving lowest cost
to operators
Defender Spill Containment
System
Turning Mat
Other enhancements (lighting,
safety barriers, etc.)
Diversify beyond the wellsite
Accelerate penetration of non-
exploration markets, both
domestically and internationally
Commercialize differentiated system
enhancements, including EPZ
Grounding System® for the utility
industry
M AT S & I N T E G R AT E D S E R V I C E S – S T R AT E G Y A N D S Y S T E M S
11
F I N A N C I A L F O C U S
Short-Term Actions
Focused on managing cost structure
as NAM activity levels improve
Continuing efforts to optimize
working capital
Minimize capital investments
beyond deepwater project
Long-term Focus
Continue investing in strategic
capital projects
IOC/deepwater focus in fluids
Aggressively pursue non-E&P
market expansion in mats
Selectively seek to strengthen core
competencies during cycle,
including expanding technology
portfolio
$256
$183 $182 $179
$156
$209
$117
$97
$71 $68
20%
23%
26%
29%
32%
35%
$0
$50
$100
$150
$200
$250
$300
2012 2013 2014 2015 2016
Total Debt Net Debt Debt to Book Capital Ratio
Capital Structure
Protecting the Balance Sheet
Issued $100m of 5 year convertible bonds in Dec
2016, and retired $78m of debt
Revolving credit facility remains unused, providing
additional liquidity
12
A P P E N D I X
C O N S O L I D AT E D S TAT E M E N T S O F O P E R AT I O N S
14
Three Months Ended Twelve months ended
(In thousands, except per share data)
December 31,
2016
September 30,
2016
December 31,
2015
December 31,
2016
December 31,
2015
Revenues $ 137,083 $ 104,554 $ 150,587 $ 471,496 $ 676,865
Cost of revenues 124,167 99,293 141,941 437,836 599,013
Selling, general and administrative expenses 21,810 21,736 25,232 88,473 101,032
Other operating income, net (516 ) (1,420 ) (649 ) (4,345 ) (2,426 )
Impairments and other charges (180 ) — 78,345 6,745 78,345
Operating loss (8,198 ) (15,055 ) (94,282 ) (57,213 ) (99,099 )
Foreign currency exchange (gain) loss (270 ) 761 (374 ) (710 ) 4,016
Interest expense, net 2,636 2,127 2,503 9,866 9,111
Gain on extinguishment of debt 279 — — (1,615 ) —
Loss from operations before income taxes (10,843 ) (17,943 ) (96,411 ) (64,754 ) (112,226 )
Benefit for income taxes (10,786 ) (4,492 ) (13,315 ) (24,042 ) (21,398 )
Net loss $ (57 ) $ (13,451 ) $ (83,096 ) $ (40,712 ) $ (90,828 )
Calculation of EPS:
Net loss - basic $ (57 ) $ (13,451 ) $ (83,096 ) $ (40,712 ) $ (90,828 )
Assumed conversions of Convertible Notes
due 2017 —
—
—
—
—
Adjusted net loss - diluted $ (57 ) $ (13,451 ) $ (83,096 ) $ (40,712 ) $ (90,828 )
Basic - weighted average common shares
outstanding 84,066
83,998
83,072
83,697
82,722
Dilutive effect of stock options, restricted
stock and convertible notes —
—
—
—
—
Diluted - weighted average common shares
outstanding 84,066
83,998
83,072
83,697
82,722
Loss per common share - basic $ — $ (0.16 ) $ (1.00 ) $ (0.49 ) $ (1.10 )
Loss per common share - diluted $ — $ (0.16 ) $ (1.00 ) $ (0.49 ) $ (1.10 )
O P E R AT I N G S E G M E N T R E S U LT S
15
Three Months Ended
(In thousands)
December 31,
2016
September 30,
2016
December 31,
2015
Revenues
Fluids systems $ 111,560 $ 89,097 $ 130,125
Mats and integrated services 25,523 15,457 20,462
Total revenues $ 137,083 $ 104,554 $ 150,587
Operating income (loss)
Fluids systems (1) $ (7,505 ) $ (8,995 ) $ (83,599 )
Mats and integrated services (2) 6,134 882 2,875
Corporate office (3) (6,827 ) (6,942 ) (13,558 )
Operating loss $ (8,198 ) $ (15,055 ) $ (94,282 )
Segment operating margin
Fluids systems (6.7 %) (10.1 %) (64.2 %)
Mats and integrated services 24.0 % 5.7 % 14.1 %
C O N S O L I D AT E D B A L A N C E S H E E T S
16
(In thousands, except share data)
December 31,
2016
December 31,
2015
ASSETS
Cash and cash equivalents $ 87,878 $ 107,138
Receivables, net 214,307 206,364
Inventories 143,612 163,657
Prepaid expenses and other current assets 17,143 29,219
Total current assets 462,940 506,378
Property, plant and equipment, net 303,654 307,632
Goodwill 19,995 19,009
Other intangible assets, net 6,067 11,051
Deferred tax assets 1,747 1,821
Other assets 3,780 3,002
Total assets $ 798,183 $ 848,893
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current debt $ 83,368 $ 7,382
Accounts payable 65,281 72,211
Accrued liabilities 31,152 45,835
Total current liabilities 179,801 125,428
Long-term debt, less current portion 72,900 171,211
Deferred tax liabilities 38,743 26,368
Other noncurrent liabilities 6,196 5,627
Total liabilities 297,640 328,634
Common stock, $0.01 par value, 200,000,000 shares authorized and 99,843,094 and
99,377,391 shares issued, respectively 998
994
Paid-in capital 558,966 533,746
Accumulated other comprehensive loss (63,208 ) (58,276 )
Retained earnings 129,873 171,788
Treasury stock, at cost; 15,162,050 and 15,302,345 shares, respectively (126,086 ) (127,993 )
Total stockholders’ equity 500,543 520,259
Total liabilities and stockholders' equity $ 798,183 $ 848,893
C O N S O L I D AT E D S TAT E M E N T S O F C A S H F L O W
17
Twelve months ended December 31,
(In thousands) 2016 2015
Cash flows from operating activities:
Net loss $ (40,712 ) $ (90,828 )
Adjustments to reconcile net income to net cash provided by operations:
Impairments and other non-cash charges 12,523 75,508
Depreciation and amortization 37,955 43,917
Stock-based compensation expense 12,056 14,202
Provision for deferred income taxes 3,352 (503 )
Net provision for doubtful accounts 2,416 1,886
Gain on sale of assets (2,820 ) (1,364 )
Gain on extinguishment of debt (1,615 ) —
Excess tax benefit from stock-based compensation — (204 )
Change in assets and liabilities:
(Increase) decrease in receivables (1,699 ) 122,399
Decrease in inventories 16,044 21,309
Decrease in other assets 2,639 1,191
Decrease in accounts payable (5,213 ) (31,974 )
Decrease in accrued liabilities and other (23,831 ) (34,022 )
Net cash provided by operating activities 11,095 121,517
Cash flows from investing activities:
Capital expenditures (38,440 ) (69,404 )
Decrease (increase) in restricted cash 10,060 (17,485 )
Proceeds from sale of property, plant and equipment 4,540 2,523
Business acquisitions, net of cash acquired (4,420 ) —
Net cash used in investing activities (28,260 ) (84,366 )
Cash flows from financing activities:
Borrowings on lines of credit 6,437 11,036
Payments on lines of credit (14,269 ) (12,544 )
Proceeds from Convertible Notes due 2021 100,000 —
Purchase of Convertible Notes due 2017 (87,271 ) —
Debt issuance costs (5,403 ) (2,023 )
Other financing activities 357 (1,673 )
Proceeds from employee stock plans 725 553
Purchases of treasury stock (1,226 ) (2,283 )
Excess tax benefit from stock-based compensation — 204
Net cash used in financing activities (650 ) (6,730 )
Effect of exchange rate changes on cash (1,445 ) (8,335 )
Net increase (decrease) in cash and cash equivalents (19,260 ) 22,086
Cash and cash equivalents at beginning of year 107,138 85,052
Cash and cash equivalents at end of year $ 87,878 $ 107,138
E X P E R I E N C E D L E A D E R S H I P
• Paul Howes President & CEO
• Gregg Piontek Vice President & CFO
• Mark Airola SVP, GC & Admin Officer
• Bruce Smith President
Fluids Systems
• Matthew Lanigan President
Mats & Integrated Services
• Ida Ashley Vice President, Human Resources
18
M A N A G E M E N T B I O G R A P H I E S
Paul L. Howes, President & CEO: Paul joined Newpark’s Board of Directors and was appointed its Chief Executive
Officer in March 2006. In June 2006, Mr. Howes also was appointed as Newpark’s President. Mr. Howes’ career has
included experience in the defense industry, chemicals and plastics manufacturing, and the packaging industry. From
2002 until October 2005, he served as President and Chief Executive Officer of Astaris LLC, a primary chemicals
company headquartered in St. Louis, Missouri, with operations in North America, Europe and South America. Prior to
this, from 1997 until 2002, he served as Vice President and General Manager, Packaging Division,
for Flint Ink Corporation, a global ink company headquartered in Ann Arbor, Michigan with operations in North
America, Europe, Asia Pacific and Latin America.
Gregg S. Piontek, VP & CFO: Gregg joined Newpark in April 2007 and served as Vice President, Controller and Chief
Accounting Officer from April 2007 to October 2011. Prior to joining Newpark, Mr. Piontek was Vice President and
Chief Accounting Officer of Stewart & Stevenson LLC from 2006 to 2007, where he served as the lead executive
financial officer for the asset acquisition from Stewart & Stevenson Services, Inc. and $150 million public debt offering.
From 2001 to 2006, Mr. Piontek held the positions of Assistant Corporate Controller and Division Controller for Stewart
& Stevenson Services, Inc. Prior to that, Mr. Piontek served in various financials roles at General Electric and CNH Global
N.V., after beginning his career as an auditor for Deloitte & Touche LLP. Mr. Piontek is a Certified Public Accountant and
holds a bachelor degree in Accountancy from Arizona State University and a Master of Business Administration degree
from Marquette University.
Mark J. Airola, Sr. VP, GC & Admin Officer: Mark joined Newpark in October 2006 as its Vice President, General
Counsel and Chief Administrative Officer. Mr. Airola was named Senior Vice President in February of 2011. Prior to
joining Newpark, Mr. Airola was Assistant General Counsel and Chief Compliance Officer for BJ Services Company, a
leading provider of pressure pumping and other oilfield services to the petroleum industry, serving as an executive
officer since 2003. From 1988 to 1995, he held the position of Senior Litigation Counsel at Cooper Industries, Inc., a
global manufacturer of electrical products and tools, with initial responsibility for managing environmental regulatory
matters and litigation and subsequently managing the company’s commercial litigation.
19
Bruce C. Smith, Executive VP and President Fluids Systems: Bruce joined Newpark in April 1998 as Vice President,
International. Since October 2000, he has served as President of its subsidiary Newpark Drilling Fluids, L.P. Prior to
joining Newpark, Mr. Smith was the Managing Director of the U.K. operations of M-I Swaco, a competitor of Newpark
Drilling Fluids, where he was responsible for two business units, including their drilling fluids unit.
Matthew Lanigan, President Mats and Integrated Services: Matthew joined Newpark in April 2016, as President of
Newpark Mats & Integrated Services. Matthew began his professional career at ExxonMobil in Australia working on rigs
as a Drilling & Completions Engineer, progressing from there to Offshore Production Engineer and as a Marketer for
Crude & LPG. While pursuing his MBA, he accepted a position with GE in the Plastics division where he rose to the role
of Chief Marketing Officer before transferring to the Capital division of GE, based in the UK. His first opportunity to
work in the United States came with the Enterprise Client Group of GE's Capital division, where he worked in leadership
roles in Sales & Marketing. In 2011, he was appointed as the Director of Commercial Excellence for Asia Pacific, based in
Australia. In addition to growing revenue and market share, key responsibilities for this role included developing cross-
organizational synergies and market entry strategies.
Ida Ashley, VP, Human Resources: Ida Ashley joined Newpark in March 2015 as Vice President, Human
Resources. Ida has over 20 years of experience in Human Resources, 17 of which were specific to Oilfield
Services where she specialized in Employee Relations, Mergers & Acquisitions and International HR programs.
Ida has worked in a variety of HR leadership roles in Smith International, M-I SWACO and Schlumberger, her
role prior to joining Newpark was VP of HR, North America in Schlumberger. Originating from Smith
International, she had the unique opportunity to lead the HR integration project team during the
Schlumberger/Smith merger from August 2010 – December 2012. Ida earned her Masters of Science in Human
Resources from Houston Baptist University in 2000 and her Bachelors of Arts in Modern Languages from Texas
A&M in 1991.
M A N A G E M E N T B I O G R A P H I E S
20
F O CU S E D ON C U S TOME R ’ S N E E D S