Newpark Resources Reports 2014 First Quarter Results

Mat rentals up 24% sequentially and 66% year over year

Apr 24, 2014, 16:15 ET from Newpark Resources, Inc.

THE WOODLANDS, Texas, April 24, 2014 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2014.  Total revenues for the first quarter of 2014 were $242.8 million compared to $246.9 million in the fourth quarter of 2013 and $267.9 million in the first quarter of 2013.  Income from continuing operations for the first quarter of 2014 was $11.7 million, or $0.13 per diluted share, compared to $10.5 million, or $0.11 per diluted share, in the fourth quarter of 2013, and $14.9 million, or $0.16 per diluted share, in the first quarter of 2013. 

Discontinued operations in the first quarter of 2014 included a $22.1 million gain, or $0.22 per diluted share, from the March 2014 sale of the Environmental Services business.  Net income for the first quarter of 2014 was $35.0 million, or $0.36 per diluted share, which includes the gain on the sale.        

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We continue to see extremely strong demand in our mats rental business in the first quarter, with rental revenues reaching another quarterly record, up 24% sequentially and 66% year over year.  In response to the strong demand, we continue to focus on expanding our mats rental fleet, including in the UK. The construction of our previously announced capacity expansion to meet the increasing demand is now underway.  Revenues from our fluids systems segment were down slightly on a sequential basis, as the seasonal strength in Canada and recovery in the EMEA region were offset by declines in the U.S. market and Brazil.  The majority of the U.S. decline was attributable to our December 2013 sale of our completions services business and lower proppant sales in West Texas.  We continue to make significant progress with our Evolution® system, posting a record $48 million of revenues in the first quarter, surpassing the 2013 fourth quarter's record by 40%, marking a meaningful shift from oil-based mud to water-based fluids and helping to improve our fluids margins.

"Looking forward, with the sale of our Environmental Services business now complete, we believe we are well positioned to capitalize on growth opportunities in both our global drilling fluids markets and our mats markets and enhance shareholder value," concluded Howes.

SEGMENT RESULTS

The Fluids Systems segment generated revenues of $211.4 million in the first quarter of 2014 compared to $212.1 million in the fourth quarter of 2013 and $247.3 million in the first quarter of 2013.  Segment operating income was $15.7 million (7.4% operating margin) in the first quarter of 2014 compared to $15.2 million (7.1% operating margin) in the fourth quarter of 2013, which included a $2.7 million gain on the sale of completion services business, and $22.6 million (9.1% operating margin) in the first quarter of 2013.

The Mats and Integrated Services segment generated revenues of $31.4 million in the first quarter of 2014 compared to $34.9 million in the fourth quarter of 2013 and $20.6 million in the first quarter of 2013.  Segment operating income was $13.4 million (42.6% operating margin) in the first quarter of 2014 compared to $15.2 million (43.7% operating margin) in the fourth quarter of 2013 and $8.5 million (41.2% operating margin) in the first quarter of 2013. 

CONFERENCE CALL

Newpark has scheduled a conference call to discuss first quarter 2014 results, which will be broadcast live over the Internet, on Friday, April 25, 2014 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time.  To participate in the call, dial 480-629-9835 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 May 9, 2014 and may be accessed by dialing (303) 590-3030 and using pass code 4676373#.  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.

Contacts:

Gregg Piontek, VP & CFO

Newpark Resources, Inc.

281-362-6800

Ken Dennard, Managing Partner

Karen Roan, SVP

Dennard - Lascar Associates

713-529-6600

 

Newpark Resources, Inc.

Consolidated Statements of Operations

(Unaudited)

Three Months Ended

March 31,

December 31,

March 31,

(In thousands, except per share data)

2014

2013

2013

Revenues

$ 242,824

$ 246,925

$ 267,923

Cost of revenues

196,560

204,158

220,735

Selling, general and administrative expenses

25,523

24,112

22,451

Other operating income, net

(16)

(3,688)

(124)

Operating income 

20,757

22,343

24,861

Foreign currency exchange loss (gain)

54

737

(368)

Interest expense, net

2,920

3,229

2,520

Income from continuing operations before income taxes

17,783

18,377

22,709

Provision for income taxes

6,041

7,912

7,842

Income from continuing operations 

11,742

10,465

14,867

Income from discontinued operations, net of tax 

1,152

3,059

2,508

Gain from disposal of discontinued operations, net of tax

22,117

-

-

Net income 

$   35,011

$   13,524

$   17,375

Income per common share -basic:

Income from continuing operations

$       0.14

$       0.12

$       0.18

Income from discontinued operations

0.27

0.04

0.03

Net income

$       0.41

$       0.16

$       0.21

Income per common share -diluted:

Income from continuing operations

$       0.13

$       0.11

$       0.16

Income from discontinued operations

0.23

0.03

0.02

Net income

$       0.36

$       0.14

$       0.18

Calculation of Diluted EPS:

Income from continuing operations

$   11,742

$   10,465

$   14,867

Assumed conversion of Senior Notes 

1,261

1,110

1,250

Adjusted net income from continuing operations

$   13,003

$   11,575

$   16,117

Weighted average number of common shares outstanding-basic

84,743

85,669

84,100

Add:  Dilutive effect of  stock options and 

           restricted stock awards

1,674

1,738

1,572

           Dilutive effect of Senior Notes 

15,682

15,682

15,682

Diluted weighted average number of common shares outstanding

102,099

103,089

101,354

Diluted income from continuing operations per common share

$       0.13

$       0.11

$       0.16

 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)

Three Months Ended

March 31,

December 31,

March 31,

(In thousands)

2014

2013

2013

Revenues

Fluids systems 

$ 211,400

$ 212,069

$ 247,339

Mats and integrated services

31,424

34,856

20,584

Total revenues

$ 242,824

$ 246,925

$ 267,923

Operating income (loss) 

Fluids systems 

$  15,740

$  15,158

$  22,622

Mats and integrated services

13,373

15,228

8,480

Corporate office

(8,356)

(8,043)

(6,241)

Total operating income 

$  20,757

$  22,343

$  24,861

Segment operating margin

Fluids systems 

7.4%

7.1%

9.1%

Mats and integrated services

42.6%

43.7%

41.2%

 

Newpark Resources, Inc.

Consolidated Balance Sheets

(Unaudited)

March 31,

December 31,

(In thousands, except share data)

2014

2013

ASSETS

Cash and cash equivalents

$ 130,187

$   65,840

Receivables, net

276,082

268,529

Inventories

199,565

189,680

Deferred tax asset

11,750

11,272

Prepaid expenses and other current assets

15,034

11,016

Assets of discontinued operations

-

13,103

Total current assets

632,618

559,440

Property, plant and equipment, net 

227,050

217,010

Goodwill

93,781

94,064

Other intangible assets, net 

23,870

25,900

Other assets

9,813

6,086

Assets of discontinued operations

-

65,917

Total assets

$ 987,132

$ 968,417

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term debt

$   15,759

$   12,867

Accounts payable

88,328

88,586

Accrued liabilities

65,196

46,341

Liabilities of discontinued operations

-

5,957

Total current liabilities

169,283

153,751

Long-term debt, less current portion

172,771

172,786

Deferred tax liability

26,235

27,060

Other noncurrent liabilities

11,288

11,026

Liabilities of discontinued operations

-

22,740

Total liabilities

379,577

387,363

Commitments and contingencies 

Common stock, $0.01 par value, 200,000,000 shares authorized 

and 98,032,555 and 98,030,839 shares issued, respectively

980

980

Paid-in capital

507,820

504,675

Accumulated other comprehensive loss

(8,279)

(9,484)

Retained earnings 

195,349

160,338

Treasury stock, at cost; 11,904,275 and 10,832,845 shares, respectively 

(88,315)

(75,455)

Total stockholders' equity

607,555

581,054

Total liabilities and stockholders' equity

$ 987,132

$ 968,417

 

Newpark Resources, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended March 31,

(In thousands)

2014

2013

Cash flows from operating activities:

Net income

$   35,011

$ 17,375

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

Depreciation and amortization

10,287

10,954

Stock-based compensation expense

2,840

1,973

Provision for deferred income taxes

(13,108)

534

Net provision for doubtful accounts

173

208

Gain on sale of a business

(33,974)

-

Gain on sale of assets

(362)

(99)

Change in assets and liabilities:

Increase in receivables

(1,080)

(20,969)

Increase in inventories

(9,229)

(1,280)

Increase in other assets

(3,858)

(2,382)

(Decrease) increase in accounts payable

(1,248)

4,179

Increase in accrued liabilities and other

18,142

4,747

Net cash provided by operating activities

3,594

15,240

Cash flows from investing activities:

Capital expenditures

(18,509)

(16,127)

Proceeds from sale of property, plant and equipment

754

213

Proceeds from sale of a business

89,167

-

Net cash provided by (used in) investing activities

71,412

(15,914)

Cash flows from financing activities:

Borrowings on lines of credit

47,562

71,102

Payments on lines of credit

(45,113)

(78,748)

Other financing activities

(13)

(38)

Proceeds from employee stock plans

34

3,808

Purchase of treasury stock

(13,123)

-

Net cash used in financing activities

(10,653)

(3,876)

Effect of exchange rate changes on cash

(6)

(586)

Net increase (decrease) in cash and cash equivalents

64,347

(5,136)

Cash and cash equivalents at beginning of year

65,840

46,846

Cash and cash equivalents at end of period

$ 130,187

$ 41,710

 

Newpark Resources, Inc

Condensed Consolidated Statements of Operations

2013 Quarterly Results

Following the first quarter 2014 sale of the Environmental Services business, the operating results of the Environmental Services segment have been reclassified to Discontinued Operations for all historical periods.  The 2013 quarterly results below is provided for informational purposes, reflecting the discontinued operations reclassification of this business. 

(Unaudited)

Three Months Ended

(In thousands, except per share data)

March 31, 2013

June 30, 2013

September 30, 2013

December 31, 2013

Revenues

$ 267,923

$ 259,376

$ 268,132

$ 246,925

Cost of revenues

220,735

214,710

218,864

204,158

Selling, general and administrative expenses

22,451

23,248

23,846

24,112

Other operating income, net

(124)

(178)

(223)

(3,688)

Operating income 

24,861

21,596

25,645

22,343

Foreign currency exchange (gain) loss

(368)

475

975

737

Interest expense, net

2,520

2,802

2,728

3,229

Income from continuing operations before income taxes

22,709

18,319

21,942

18,377

Provision for income taxes

7,842

6,460

6,511

7,912

Income from continuing operations 

14,867

11,859

15,431

10,465

Income from discontinued operations, net of tax

2,508

3,805

3,329

3,059

Net income 

$   17,375

$   15,664

$   18,760

$   13,524

Income per common share -basic:

Income from continuing operations

$       0.18

$       0.14

$       0.18

$       0.12

Income from discontinued operations

0.03

0.05

0.04

0.04

Net income

$       0.21

$       0.19

$       0.22

$       0.16

Income per common share -diluted:

Income from continuing operations

$       0.16

$       0.13

$       0.16

$       0.11

Income from discontinued operations

0.02

0.04

0.04

0.03

Net income

$       0.18

$       0.17

$       0.20

$       0.14

 

SOURCE Newpark Resources, Inc.



RELATED LINKS

http://www.newpark.com