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Newpark Resources Reports First Quarter 2015 Results


News provided by

Newpark Resources, Inc.

Apr 30, 2015, 04:15 ET

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THE WOODLANDS, Texas, April 30, 2015 /PRNewswire/ -- 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.

"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. 

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.

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.


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%

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

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

Contacts: 

Brian Feldott


Director, Investor Relations


Newpark Resources, Inc. 


[email protected]


281-362-6800

SOURCE Newpark Resources, Inc.

Related Links

http://www.newpark.com

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