Category: Oil & Gas

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 -- Newpark Resources, Inc. (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