Newpark Resources Reports 2014 First Quarter Results Mat rentals up 24% sequentially and 66% year over year

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.



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