Newpark Resources Reports Fourth Quarter 2020 Results

Consolidated Revenues Increase 35% Sequentially; Debt Reduced by $15 Million

THE WOODLANDS, Texas, Feb. 11, 2021 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) ("Newpark" or the "Company") today announced results for its fourth quarter ended December 31, 2020. Total revenues for the fourth quarter of 2020 were $129.7 million compared to $96.4 million for the third quarter of 2020 and $189.5 million for the fourth quarter of 2019. Net loss for the fourth quarter of 2020 was $18.4 million, or ($0.20) per share, compared to net loss of $23.9 million, or ($0.26) per share, for the third quarter of 2020, and net loss of $17.1 million, or ($0.19) per share, for the fourth quarter of 2019.

Fourth quarter 2020 operating results include the impact of $11.2 million of net pre-tax charges, all in the Fluids Systems segment ($11.1 million after-tax, $0.12 per share), primarily related to our previously-announced exit from Brazil, including $11.7 million of pre-tax charges for the non-cash recognition of cumulative foreign currency translation losses. Third quarter 2020 operating results include the impact of $4.7 million of pre-tax charges, substantially all in the Fluids Systems segment ($3.9 million after-tax, $0.04 per share), primarily related to the impairment of certain fixed assets and other non-cash charges. Fourth quarter 2019 operating results include the impact of $18.1 million of pre-tax charges, primarily in the Fluids Systems segment ($16.8 million after-tax, $0.19 per share), primarily related to the impairment of goodwill and other non-cash charges.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "2020 was a year in which companies around the world faced unprecedented challenges. I'm extremely proud of the resilience of our entire organization as we continued to advance our market diversification efforts. Although the combination of the oil & gas industry dislocation and the prolonged COVID-related headwinds impacted our operations for much of the year, we began to see these headwinds subside late in the year as revenues improved 35% sequentially to $130 million for the fourth quarter.

"Our Industrial Solutions segment, which includes our Site and Access Solutions business (formerly Mats and Integrated Services) as well as the recent start-up of industrial blending operations, contributed $50 million of revenues and an operating margin of 19%. Site and Access Solutions revenues increased $14 million, or 49% sequentially, primarily reflecting an $8 million increase in direct sales, driven by improving demand from the utility sector. In addition, rental and services revenues improved by $6 million sequentially, benefitting from elevated utility sector demand along the Gulf Coast, supporting repairs of hurricane-damaged electrical infrastructure, as well as the early-stage impact of a broader recovery in utility industry infrastructure projects following the COVID-related disruptions experienced for much of 2020. Industrial blending operations provided an $8 million revenue contribution to the fourth quarter, reflecting a full quarter's production of disinfectant and cleaning products."

Howes continued, "Our Fluids Systems segment posted fourth quarter 2020 revenues of $79 million, reflecting a 17% sequential improvement. The sequential improvement in Fluids Systems revenues includes an $8 million increase from North America land operations, primarily reflecting the impact of improving market conditions. Revenues from the Gulf of Mexico improved $4 million sequentially as customer activities in the prior quarter were negatively impacted by extensive weather-related disruptions. Internationally, while activity in key markets within Europe and the Middle East continue to face COVID-related headwinds, revenues improved $2 million sequentially, driven by a rebound in activity in North Africa. The Fluids operating loss in the fourth quarter was $20.1 million, which includes $11.2 million of charges, primarily related to our exit from Brazil.

"The consistent generation of Free Cash Flow through all phases of industry cycles remains a high priority, and I'm extremely pleased with our performance on that front. During the fourth quarter, we generated $15 million of cash from operations, while leveraging our capital-light business model to maintain strong Free Cash Flow generation, which led to a $15 million reduction in total debt. The fourth quarter contribution brings our full year 2020 cash from operations to $56 million, yielding Free Cash Flow of $52 million and leading to a $73 million reduction in our total outstanding debt. We ended 2020 with a total debt balance of $87 million, reflecting our lowest debt balance in more than 20 years," concluded Howes.

Segment Name Change and Results
As part of the Company's strategic efforts to leverage our core competencies into industrial end-markets and further diversify our revenue streams, we began producing disinfectant and industrial cleaning products in the second quarter of 2020. The ramp-up in production was completed by the end of the third quarter of 2020, which effectively repositioned our chemical blending operation located in Conroe, Texas from primarily supporting the oil and gas fluids markets to fully supporting industrial end-markets. With this transition completed, beginning in the fourth quarter of 2020, the assets and operating results associated with these industrial blending operations have been reported prospectively along with Site and Access Solutions (formerly Mats and Integrated Services) in the newly-defined Industrial Solutions segment.

The Fluids Systems segment generated revenues of $79.4 million for the fourth quarter of 2020 compared to $67.7 million for the third quarter of 2020, which included $2.6 million of revenues from industrial blending, and $134.6 million for the fourth quarter of 2019. Segment operating loss was $20.1 million for the fourth quarter of 2020 compared to $19.0 million for the third quarter of 2020 and $18.1 million for the fourth quarter of 2019. Operating loss for the fourth quarter of 2020 includes $11.2 million of net charges, primarily related to our exit from Brazil including $11.7 million of charges for the non-cash recognition of cumulative foreign currency translation losses. Operating loss for the third quarter of 2020 includes $4.5 million of charges, primarily related to the impairment of certain fixed assets and other non-cash charges. Operating loss for the fourth quarter of 2019 includes $17.0 million of charges, primarily related to impairment of goodwill and other non-cash charges.

The Industrial Solutions segment generated revenues of $50.3 million for the fourth quarter of 2020, which includes $7.5 million of revenues from industrial blending, compared to $28.7 million for the third quarter of 2020 and $54.9 million for the fourth quarter of 2019. Segment operating income was $9.5 million for the fourth quarter of 2020 compared to operating loss of $0.1 million for the third quarter of 2020 and operating income of $14.6 million for the fourth quarter of 2019.

Conference Call
Newpark has scheduled a conference call to discuss fourth quarter 2020 results and its near-term operational outlook, which will be broadcast live over the Internet, on Friday, February 12, 2021 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 Resources 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 February 26, 2021 and may be accessed by dialing 201-612-7415 and using pass code 13715265#. 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 geographically diversified supplier providing products, as well as rentals and services to a variety of industries, including oil and gas exploration, electrical transmission & distribution, pipeline, renewable energy, petrochemical, construction, and other industries. 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 of 1995, as amended. All statements other than statements of historical facts are forward-looking statements. Words such as "will," "may," "could," "would," "should," "anticipates," "believes," "estimates," "expects," "plans," "intends," and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them. These statements are not guarantees that our expectations will prove to be correct 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, 2019, and its Quarterly Reports on Form 10-Q as well as others, could cause actual plans or results to differ materially from those expressed in, or implied by, these statements. These risk factors include, but are not limited to, risks related to the COVID-19 pandemic; the worldwide oil and natural gas industry; our customer concentration and reliance on the U.S. exploration and production market; our international operations; our ability to attract, retain and develop qualified leaders, key employees and skilled personnel; the availability of raw materials; our cost and continued availability of borrowed funds, including noncompliance with debt covenants; operating hazards present in the oil and natural gas industry and substantial liability claims, including catastrophic well incidents; our ability to execute our business strategy and make successful business acquisitions and capital investments; our market competition; our contracts that can be terminated or downsized by our customers without penalty; our product offering expansion; our compliance with environmental laws and regulations; our legal compliance; the inherent limitations of insurance coverage; income taxes; the potential impairments of goodwill and long-lived intangible assets; technological developments and intellectual property in our industry; severe weather, natural disasters, and seasonality; cybersecurity breaches or business system disruptions; and fluctuations in the market value of our publicly traded securities, including our ability to maintain compliance with the New York Stock Exchange's continued listing requirements. We assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by securities laws. 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 


Senior Vice President and
Chief Financial Officer 


Newpark Resources, Inc. 


gpiontek@newpark.com 


281-362-6800

 

 

Newpark Resources, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 


Three Months Ended


Twelve Months Ended

(In thousands, except per share data)

December
31,

2020


September
30,

2020


December
31,

2019


December
31,

2020


December
31,

2019

Revenues

$

129,705



$

96,424



$

189,471



$

492,625



$

820,119


Cost of revenues

115,583



99,301



162,400



473,258



684,738


Selling, general and administrative expenses

20,374



20,597



27,598



86,604



113,394


Other operating (income) loss, net

(1,424)



(820)



537



(3,330)



170


Impairments

11,689



3,038



11,422



14,727



11,422


Operating income (loss)

(16,517)



(25,692)



(12,486)



(78,634)



10,395












Foreign currency exchange (gain) loss

35



580



(1,572)



3,378



(816)


Interest expense, net

2,462



2,411



3,562



10,986



14,369


Gain on extinguishment of debt







(419)




Loss before income taxes

(19,014)



(28,683)



(14,476)



(92,579)



(3,158)












Provision (benefit) for income taxes

(580)



(4,813)



2,617



(11,883)



9,788


Net loss

$

(18,434)



$

(23,870)



$

(17,093)



$

(80,696)



$

(12,946)












Calculation of EPS:










Net loss - basic and diluted

$

(18,434)



$

(23,870)



$

(17,093)



$

(80,696)



$

(12,946)












Weighted average common shares outstanding -
basic

90,624



90,535



89,543



90,198



89,782


Dilutive effect of stock options and restricted
stock awards










Dilutive effect of Convertible Notes










Weighted average common shares outstanding -
diluted

90,624



90,535



89,543



90,198



89,782












Net loss per common share - basic:

$

(0.20)



$

(0.26)



$

(0.19)



$

(0.89)



$

(0.14)


Net loss per common share - diluted:

$

(0.20)



$

(0.26)



$

(0.19)



$

(0.89)



$

(0.14)






















 

 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)

 


Three Months Ended


Twelve Months Ended

(In thousands)

December
31,

2020


September
30,

2020


December
31,

2019


December
31,

2020


December
31,

2019

Revenues










Fluids systems

$

79,430



$

67,711



$

134,573



$

354,608



$

620,317


Industrial solutions

50,275



28,713



54,898



138,017



199,802


Total revenues

$

129,705



$

96,424



$

189,471



$

492,625



$

820,119












Operating income (loss) (1)










Fluids systems

$

(20,119)



$

(18,957)



$

(18,137)



$

(66,403)



$

3,814


Industrial solutions

9,531



(139)



14,603



13,459



47,466


Corporate office

(5,929)



(6,596)



(8,952)



(25,690)



(40,885)


Total operating income (loss)

$

(16,517)



$

(25,692)



$

(12,486)



$

(78,634)



$

10,395












Segment operating margin










Fluids systems

(25.3)

%


(28.0)

%


(13.5)

%


(18.7)

%


0.6

%

Industrial solutions

19.0

%


(0.5)

%


26.6

%


9.8

%


23.8

%
















(1)  See tables below for charges included.













 

Operating results include the impact of the following pre-tax charges:





Consolidated

Three Months Ended


Twelve Months Ended

(In thousands)

December
31,

2020


September
30,

2020


December
31,

2019


December
31,

2020


December
31,

2019

Brazil exit impairment - Recognition of
cumulative foreign currency translation losses

$

11,689



$



$



$

11,689



$


Goodwill impairment





11,422





11,422


Inventory write-downs

359



990



1,881



10,345



1,881


Severance costs

442



351



2,213



4,313



3,365


Property, plant and equipment impairments



3,038





3,038




Facility exit costs and other

(1,288)



286



2,631



(201)



2,631


Modification of retirement policy









3,953



$

11,202



$

4,665



$

18,147



$

29,184



$

23,252


 

Fluids Systems

Three Months Ended


Twelve Months Ended

(In thousands)

December
31,

2020


September
30,

2020


December
31,

2019


December
31,

2020


December
31,

2019

Brazil exit impairment - Recognition of
cumulative foreign currency translation losses

$

11,689



$



$



$

11,689



$


Goodwill impairment





11,422





11,422


Inventory write-downs

359



990



1,881



10,345



1,881


Severance costs

442



189



1,112



3,729



2,264


Property, plant and equipment impairments



3,038





3,038




Facility exit costs and other

(1,288)



286



2,631



(201)



2,631


Modification of retirement policy









605



$

11,202



$

4,503



$

17,046



$

28,600



$

18,803


 

 

Newpark Resources, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(In thousands, except share data)

December 31,
2020


December 31,
2019

ASSETS




Cash and cash equivalents

$

24,197



$

48,672


Receivables, net

141,045



216,714


Inventories

147,857



196,897


Prepaid expenses and other current assets

15,081



16,526


Total current assets

328,180



478,809






Property, plant and equipment, net

277,696



310,409


Operating lease assets

30,969



32,009


Goodwill

42,444



42,332


Other intangible assets, net

25,428



29,677


Deferred tax assets

1,706



3,600


Other assets

2,769



3,243


Total assets

$

709,192



$

900,079






LIABILITIES AND STOCKHOLDERS' EQUITY




Current debt

$

67,472



$

6,335


Accounts payable

49,252



79,777


Accrued liabilities

36,934



42,750


Total current liabilities

153,658



128,862






Long-term debt, less current portion

19,690



153,538


Noncurrent operating lease liabilities

25,068



26,946


Deferred tax liabilities

13,368



34,247


Other noncurrent liabilities

9,376



7,841


Total liabilities

221,160



351,434






Common stock, $0.01 par value (200,000,000 shares authorized and 107,587,786 and
106,696,719 shares issued, respectively)

1,076



1,067


Paid-in capital

627,031



620,626


Accumulated other comprehensive loss

(54,172)



(67,947)


Retained earnings

50,937



134,119


Treasury stock, at cost (16,781,150 and 16,958,418 shares, respectively)

(136,840)



(139,220)


Total stockholders' equity

488,032



548,645


Total liabilities and stockholders' equity

$

709,192



$

900,079


 

 

Newpark Resources, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 



Twelve Months Ended December 31,

(In thousands)

2020


2019

Cash flows from operating activities:




Net loss

$

(80,696)



$

(12,946)


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




Impairments and other non-cash charges

25,072



11,422


Depreciation and amortization

45,314



47,144


Stock-based compensation expense

6,578



11,640


Provision for deferred income taxes

(18,850)



(4,250)


Credit loss expense

1,427



1,792


Gain on sale of assets

(6,531)



(10,801)


Gain on extinguishment of debt

(419)




Amortization of original issue discount and debt issuance costs

5,152



6,188


Change in assets and liabilities:




  Decrease in receivables

70,994



40,182


  Decrease in inventories

39,889



699


  Increase in other assets

(686)



(1,032)


  Decrease in accounts payable

(29,457)



(8,318)


  Decrease in accrued liabilities and other

(1,996)



(9,434)


Net cash provided by operating activities

55,791



72,286






Cash flows from investing activities:




Capital expenditures

(15,794)



(44,806)


Business acquisitions, net of cash acquired



(18,692)


Proceeds from sale of property, plant and equipment

12,399



13,734


Net cash used in investing activities

(3,395)



(49,764)






Cash flows from financing activities:




Borrowings on lines of credit

173,794



327,983


Payments on lines of credit

(221,781)



(335,613)


Purchases of Convertible Notes

(29,124)




Debt issuance costs



(1,214)


Proceeds from employee stock plans



1,314


Purchases of treasury stock

(333)



(21,737)


Other financing activities

(497)



(259)


Net cash used in financing activities

(77,941)



(29,526)






Effect of exchange rate changes on cash

(970)



(399)






Net decrease in cash, cash equivalents, and restricted cash

(26,515)



(7,403)


Cash, cash equivalents, and restricted cash at beginning of period

56,863



64,266


Cash, cash equivalents, and restricted cash at end of period

$

30,348



$

56,863



Newpark Resources, Inc.
Non-GAAP Reconciliations
(Unaudited)

To help understand the Company's financial performance, the Company has supplemented its financial results that it provides in accordance with generally accepted accounting principles ("GAAP") with non-GAAP financial measures. Such financial measures include earnings before interest, taxes, depreciation and amortization ("EBITDA"), EBITDA Margin, Free Cash Flow, Net Debt, and the Ratio of Net Debt to Capital.

We believe these non-GAAP financial measures are frequently used by investors, securities analysts and other parties in the evaluation of our performance and liquidity with that of other companies in our industry. Management uses these measures to evaluate our operating performance, liquidity and capital structure. In addition, our incentive compensation plan measures performance based on our consolidated EBITDA, along with other factors. The methods we use to produce these non-GAAP financial measures may differ from methods used by other companies. These measures should be considered in addition to, not as a substitute for, financial measures prepared in accordance with GAAP.

EBITDA and EBITDA Margin

The following tables reconcile the Company's net income (loss) or segment operating income (loss) calculated in accordance with GAAP to the non-GAAP financial measure of EBITDA:

Consolidated

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Net income (loss) (GAAP) (1)

$

(18,434)



$

(23,870)



$

(17,093)



$

(80,696)



$

(12,946)


Interest expense, net

2,462



2,411



3,562



10,986



14,369


Provision (benefit) for income
taxes

(580)



(4,813)



2,617



(11,883)



9,788


Depreciation and amortization

11,128



11,271



12,253



45,314



47,144


EBITDA (non-GAAP) (1)

$

(5,424)



$

(15,001)



$

1,339



$

(36,279)



$

58,355



(1)  See table above for charges included.

 

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)

 



Fluids Systems

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Operating income (loss) (GAAP) (1)

$

(20,119)



$

(18,957)



$

(18,137)



$

(66,403)



$

3,814


Depreciation and amortization

4,869



5,227



5,691



20,555



21,202


EBITDA (non-GAAP) (1)

(15,250)



(13,730)



(12,446)



(45,848)



25,016


Revenues

79,430



67,711



134,573



354,608



620,317


Operating Margin (GAAP)

(25.3)

%


(28.0)

%


(13.5)

%


(18.7)

%


0.6

%

EBITDA Margin (non-GAAP)

(19.2)

%


(20.3)

%


(9.2)

%


(12.9)

%


4.0

%


(1)  See table above for charges included.

 

Industrial Solutions

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Operating income (loss) (GAAP)

$

9,531



$

(139)



$

14,603



$

13,459



$

47,466


Depreciation and amortization

5,186



4,916



5,505



20,427



21,763


EBITDA (non-GAAP)

14,717



4,777



20,108



33,886



69,229


Revenues

50,275



28,713



54,898



138,017



199,802


Operating Margin (GAAP)

19.0

%


(0.5)

%


26.6

%


9.8

%


23.8

%

EBITDA Margin (non-GAAP)

29.3

%


16.6

%


36.6

%


24.6

%


34.6

%



Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)

Free Cash Flow

The following table reconciles the Company's net cash provided by operating activities calculated in accordance with GAAP to the non-GAAP financial measure of the Company's free cash flow:

Consolidated

Three Months Ended


Twelve Months Ended

(In thousands)

December 31,
2020


September 30,
2020


December 31,
2019


December 31,
2020


December 31,
2019

Net cash provided by operating
activities (GAAP)

$

15,498



$

15,280



$

19,100



$

55,791



$

72,286


Capital expenditures

(1,185)



(3,954)



(9,003)



(15,794)



(44,806)


Proceeds from sale of property,
plant and equipment

1,902



2,534



6,618



12,399



13,734


Free Cash Flow (non-GAAP)

$

16,215



$

13,860



$

16,715



$

52,396



$

41,214


Ratio of Net Debt to Capital

The following table reconciles the Company's ratio of total debt to capital calculated in accordance with GAAP to the non-GAAP financial measure of the Company's ratio of net debt to capital:

(In thousands)

December 31,
2020


December 31,
2019

Current debt

$

67,472



$

6,335


Long-term debt, less current portion

19,690



153,538


Total Debt

87,162



159,873


Total stockholders' equity

488,032



548,645


Total Capital

$

575,194



$

708,518






Ratio of Total Debt to Capital

15.2

%


22.6

%





Total Debt

$

87,162



$

159,873


Less: cash and cash equivalents

(24,197)



(48,672)


Net Debt

62,965



111,201


Total stockholders' equity

488,032



548,645


Total Capital, Net of Cash

$

550,997



$

659,846






Ratio of Net Debt to Capital

11.4

%


16.9

%

 

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SOURCE Newpark Resources, Inc.

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