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, Texas, July 24, 2014 /PRNewswire/ -- 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.



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


Six Months Ended



June 30,


March 31,


June 30,


June 30,


June 30,

(In thousands, except per share data)


2014


2014


2013


2014


2013












Revenues


$ 272,466


$  242,824


$ 259,376


$ 515,290


$ 527,299












Cost of revenues


214,711


196,560


214,710


411,271


435,445












Selling, general and administrative expenses


27,981


25,523


23,248


53,504


45,699

Other operating income, net


(2,042)


(16)


(178)


(2,058)


(302)












Operating income 


31,816


20,757


21,596


52,573


46,457












Foreign currency exchange (gain) loss 


(1,805)


54


475


(1,751)


107

Interest expense, net


2,830


2,920


2,802


5,750


5,322












Income from continuing operations before income taxes


30,791


17,783


18,319


48,574


41,028

Provision for income taxes


10,462


6,041


6,460


16,503


14,302

Income from continuing operations 


20,329


11,742


11,859


32,071


26,726

Income from discontinued operations, net of tax 


-


1,152


3,805


1,152


6,313

Gain from disposal of discontinued operations, net of tax


-


22,117


-


22,117


-












Net income 


$   20,329


$    35,011


$   15,664


$   55,340


$   33,039























Income per common share -basic:











Income from continuing operations


$       0.24


$        0.14


$       0.14


$       0.38


$       0.32

Income from discontinued operations


-


0.27


0.05


0.28


0.07

Net income


$       0.24


$        0.41


$       0.19


$       0.66


$       0.39












Income per common share -diluted:











Income from continuing operations


$       0.21


$        0.13


$       0.13


$       0.34


$       0.29

Income from discontinued operations


-


0.23


0.04


0.23


0.06

Net income


$       0.21


$        0.36


$       0.17


$       0.57


$       0.35












Calculation of Diluted EPS:











Income from continuing operations


$   20,329


$    11,742


$   11,859


$   32,071


$   26,726

Assumed conversion of Senior Notes 


1,253


1,261


1,251


2,514


2,501

Adjusted income from continuing operations


$   21,582


$    13,003


$   13,110


$   34,585


$   29,227












Weighted average number of common shares outstanding-basic


83,010


84,743


84,813


83,872


84,459

Add:  Dilutive effect of  stock options and restricted stock awards












1,743


1,674


1,810


1,705


1,727

          Dilutive effect of Senior Notes 


15,682


15,682


15,682


15,682


15,682












Diluted weighted average number of common shares outstanding


100,435


102,099


102,305


101,259


101,868












Diluted income from continuing operations per common share


$       0.21


$        0.13


$       0.13


$       0.34


$       0.29













Newpark Resources, Inc.

Operating Segment Results

















(Unaudited)


Three Months Ended




June 30,


March 31,


June 30,

(In thousands)


2014


2014


2013









Revenues








Fluids systems 


$ 241,386


$  211,400


$ 233,964


Mats and integrated services


31,080


31,424


25,412


Total revenues


$ 272,466


$  242,824


$ 259,376









Operating income (loss) 








Fluids systems 


$  27,571


$    15,740


$  17,684


Mats and integrated services


13,653


13,373


10,341


Corporate office


(9,408)


(8,356)


(6,429)


Total operating income 


$  31,816


$    20,757


$  21,596









Segment operating margin








Fluids systems 


11.4%


7.4%


7.6%


Mats and integrated services


43.9%


42.6%


40.7%










Newpark Resources, Inc.

Consolidated Balance Sheets








(Unaudited)









June 30,


December 31,

(In thousands, except share data)


2014


2013








ASSETS






Cash and cash equivalents


$   56,753


$          65,840


Receivables, net


315,267


268,529


Inventories


199,129


189,680


Deferred tax asset


11,597


11,272


Prepaid expenses and other current assets


18,313


11,016


Assets of discontinued operations


-


13,103



Total current assets


601,059


559,440









Property, plant and equipment, net 


257,244


217,010


Goodwill


94,218


94,064


Other intangible assets, net 


21,254


25,900


Other assets


9,326


6,086


Assets of discontinued operations


-


65,917



Total assets


$ 983,101


$        968,417








LIABILITIES AND STOCKHOLDERS' EQUITY






Short-term debt


$   20,463


$          12,867


Accounts payable


102,755


88,586


Accrued liabilities


51,836


46,341


Liabilities of discontinued operations


-


5,957



Total current liabilities


175,054


153,751









Long-term debt, less current portion


172,754


172,786


Deferred tax liability


25,523


27,060


Other noncurrent liabilities


11,001


11,026


Liabilities of discontinued operations


-


22,740



Total liabilities


384,332


387,363









Commitments and contingencies 













Common stock, $0.01 par value, 200,000,000 shares authorized and 98,883,253 and 98,030,839 shares issued, respectively







989


980


Paid-in capital


512,010


504,675


Accumulated other comprehensive loss


(7,904)


(9,484)


Retained earnings 


215,678


160,338


Treasury stock, at cost; 14,781,353 and 10,832,845 shares, respectively 


(122,004)


(75,455)



Total stockholders' equity


598,769


581,054


Total liabilities and stockholders' equity


$ 983,101


$        968,417
















Newpark Resources, Inc.

Consolidated Statements of Cash Flows






(Unaudited)


Six Months Ended June 30,

(In thousands)


2014


2013

Cash flows from operating activities:





Net income


$ 55,340


$  33,039

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




Depreciation and amortization


20,301


21,836

Stock-based compensation expense


5,906


4,289

Provision for deferred income taxes


(13,788)


(278)

Net provision for doubtful accounts


438


220

Gain on sale of a business


(33,974)


-

Gain on sale of assets


(1,230)


(323)

Excess tax benefit from stock-based compensation


(903)


-

Change in assets and liabilities:





Increase in receivables


(38,919)


(18,442)

(Increase) decrease in inventories


(8,480)


4,055

Increase in other assets


(6,813)


(199)

Increase (decrease) in accounts payable


12,029


(1,237)

Increase in accrued liabilities and other


4,783


935

Net cash (used in) provided by operating activities


(5,310)


43,895






Cash flows from investing activities:





Capital expenditures


(56,727)


(37,417)

Proceeds from sale of property, plant and equipment


2,526


590

Proceeds from sale of a business


89,167


-

Net cash provided by (used in) investing activities


34,966


(36,827)






Cash flows from financing activities:





Borrowings on lines of credit


51,787


159,612

Payments on lines of credit


(45,170)


(158,679)

Other financing activities


(30)


(39)

Proceeds from employee stock plans


922


6,928

Purchase of treasury stock


(47,450)


(2,010)

Excess tax benefit from stock-based compensation


903


-

Net cash (used in) provided by financing activities


(39,038)


5,812






Effect of exchange rate changes on cash


295


(1,681)






Net (decrease) increase in cash and cash equivalents


(9,087)


11,199

Cash and cash equivalents at beginning of year


65,840


46,846






Cash and cash equivalents at end of period


$ 56,753


$  58,045






SOURCE Newpark Resources, Inc.



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