UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 13, 2014
NEWPARK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
1-2960 |
72-1123385 |
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(State or other jurisdiction |
(Commission |
(IRS Employer |
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of incorporation) |
File Number) |
Identification No.) |
| 2700 Research Forest Drive, Suite 100 | 77381 | |
| The Woodlands, TX | (Zip Code) | |
| (Address of principal executive offices) |
Registrant's telephone number, including area code: (281) 362-6800
______________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On February 13, 2014, Newpark Resources, Inc. (the “Company”) issued a press release announcing financial information for the three and twelve months ended December 31, 2013. The press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K and the information in the exhibit attached hereto announcing the Company’s earnings for the three and twelve months ended December 31, 2013 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
99.1 Press release issued by Newpark Resources, Inc. on February 13, 2014.
Exhibit No.
Description
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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NEWPARK RESOURCES, INC. |
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Dated: February 14, 2014 |
By: /s/Gregg S. Piontek |
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Gregg S. Piontek, Vice President and Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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EXHIBIT INDEX
| Exhibit No. | Description | |
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99.1 |
Press release issued by Newpark Resources, Inc. on February 13, 2014. |
Exhibit 99.1
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NEWS RELEASE | ||
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Contacts: |
Gregg Piontek, VP & CFO 281-362-6800 | ||
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FOR IMMEDIATE RELEASE |
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Ken Dennard, Managing Partner Karen Roan, SVP Dennard ▪ Lascar Associates 713-529-6600 | |
NEWPARK RESOURCES REPORTS 2013 FOURTH QUARTER
AND FULL YEAR RESULTS
Reports fourth quarter 2013 net income of $0.14 per diluted share
Increases share repurchase authorization from $50 million to $100 million
THE WOODLANDS, TX – FEBRUARY 13, 2014 – Newpark Resources, Inc. (NYSE: NR) today announced results for its fourth quarter and year ended December 31, 2013. Total revenues for the fourth quarter of 2013 were $262.5 million compared to $270.3 million in the fourth quarter of 2012. Net income for the fourth quarter of 2013 was $13.5 million, or $0.14 per diluted share, compared to $11.2 million, or $0.12 per diluted share, in the fourth quarter of 2012.
Fourth quarter 2013 results include a pre-tax gain of $2.7 million ($0.02 per diluted share) associated with the sale of assets within the U.S.-based completion services business. In addition, the fourth quarter was negatively impacted by a tax rate of 40%, primarily driven by operating losses generated in Brazil during the quarter, for which the recording of a tax benefit is not permitted. Brazil’s fourth quarter results also include $1.0 million ($0.01 per diluted share) of charges for value added tax assessments and restructuring charges.
For the full year 2013, total revenues were $1.107 billion compared to $1.038 billion in 2012. Net income for 2013 was $65.3 million, or $0.69 per diluted share, compared to $60.0 million, or $0.62 per diluted share, in 2012.
Paul Howes, Newpark’s President and Chief Executive Officer, stated, “We produced a record year in terms of revenues and cash flow, in spite of challenges we faced in our drilling fluids segment during the fourth quarter. Fourth quarter results were negatively impacted primarily by reduced activity with four key customers across three regions. In the U.S, we also experienced a slowdown in customer activity in November and December, partly due to difficult weather conditions, as well as year-end budget constraints by some customers. Outside of the U.S., Canada experienced the anticipated seasonal improvement, while the temporary weakness in the EMEA region this quarter was expected. Brazil’s unfavorable sales mix was unexpected in the fourth quarter, and we are taking steps to manage through a tougher environment there.
“Moving to the operational highlights, we recently signed a new four year contract with Cairn Energy valued at approximately $40 million to deliver drilling fluids products and solids control equipment into India starting in the second half of 2014. Also, we are pleased with our progress on Evolution, with fourth quarter revenues reaching a new record of $34 million, bringing full year Evolution revenues to $120 million. Our Evolution products are experiencing success both domestically and internationally, and we have completed several successful wells in the international arena.
“Additionally, our mats segment produced another strong performance, with rental revenues reaching another quarterly record, benefitting from increased usage of our mats through all phases of exploration. Rental revenues increased nearly 50% from a year ago and 5% sequentially. We also completed an acquisition in the U.K. during the fourth quarter, a significant step in our strategy to expand our mat rental business in the international market. This acquisition brings us a base of operations from which to expand into the European market. As we have stated previously, we desire to diversify our mats business outside the U.S. market where we see growth opportunities. This acquisition is also important as it will serve to help fill the capacity of our new manufacturing facility that is nearing the construction phase.
“In summary, we are pleased to report another record revenue and cash flow year, while at the same time returning capital to shareholders to enhance shareholder value,” concluded Howes.
Acquisitions and divestitures
The Company announced the acquisition of Terrafirma Roadways (“Terrafirma”), a provider of temporary roadways and worksites based in the United Kingdom. The acquisition was completed in December 2013 for total cash consideration of $6.8 million. Prior to the acquisition, Terrafirma had been operating as a partner to Newpark since 2008 in developing a rental business with Durabase® composite mats, primarily focused in the utility industry in the U.K.
The Company also announced that the divesture of the U.S.-based completion services business was completed during the fourth quarter. The completion services business generated $3.3 million of revenues and $2.6 million of operating income during the fourth quarter of 2013, including a $2.7 million gain on the sale of assets.
As previously announced, subsequent to the fourth quarter, Newpark entered into a definitive agreement to sell its Environmental Services business to ecoserv, LLC. Under the terms of the agreement, Newpark will receive $100 million in cash, subject to adjustment based on working capital conveyed at closing.
SHARE REPURCHASE PROGRAM AUTHORIZATION INCREASED TO $100 MILLION
Subject to completion of the Environmental Services divestiture, the Company’s Board of Directors has amended the previously announced $50 million share repurchase program, doubling the repurchase authorization to $100 million. Since the program’s original authorization in April of 2013, a total of 1.4 million outstanding shares of Newpark common stock have been repurchased to date, at an average cost of $12.00 per share.
Segment Results
The Fluids Systems segment generated revenues of $212.1 million in the fourth quarter of 2013 compared to $229.3 million in the fourth quarter of 2012. Segment operating income was $15.2 million (7.1% operating margin), which includes the $2.7 million gain from the divestiture of the completion services business, in the fourth quarter of 2013 compared to $17.7 million (7.7% operating margin) in the fourth quarter of 2012.
The Mats and Integrated Services segment generated revenues of $34.9 million in the fourth quarter of 2013 compared to $26.6 million in the fourth quarter of 2012. Segment operating income was $15.2 million (43.7% operating margin) in the fourth quarter of 2013 compared to $10.8 million (40.8% operating margin) in the fourth quarter of 2012.
The Environmental Services segment generated revenues of $15.6 million in the fourth quarter of 2013 compared to $14.4 million in the fourth quarter of 2012. Segment operating income was $4.3 million (27.5% operating margin) in the fourth quarter of 2013 compared to $3.4 million (23.9% operating margin) in the fourth quarter of 2012.
CONFERENCE CALL
Newpark has scheduled a conference call to discuss fourth quarter 2013 results, which will be broadcast live over the Internet, on Friday, February 14, 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 February 28, 2014 and may be accessed by dialing (303) 590-3030 and using pass code 4663753#. 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, temporary worksites and access roads for oilfield and other commercial markets, and environmental waste treatment solutions. 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, 2012, 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, our customers’ activity levels in exploration and drilling, operating hazards inherent in the oil and natural gas industry, particularly offshore, our international operations, the availability of raw materials and skilled personnel, 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.
Newpark Resources, Inc.
Consolidated Statements of Operations
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(Unaudited) |
Three Months Ended |
Twelve Months Ended |
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December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
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(In thousands, except per share data) |
2013 |
2013 |
2012 |
2013 |
2012 |
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Revenues |
$ | 262,509 | $ | 285,708 | $ | 270,328 | $ | 1,107,357 | $ | 1,038,019 | ||||||||||
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Cost of revenues |
214,313 | 230,206 | 219,817 | 900,169 | 846,529 | |||||||||||||||
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Selling, general and administrative expenses |
25,253 | 25,433 | 24,217 | 99,530 | 86,352 | |||||||||||||||
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Other operating income, net |
(3,688 | ) | (232 | ) | 43 | (4,560 | ) | (759 | ) | |||||||||||
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Operating income |
26,631 | 30,301 | 26,251 | 112,218 | 105,897 | |||||||||||||||
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Foreign currency exchange loss |
736 | 975 | 333 | 1,818 | 749 | |||||||||||||||
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Interest expense, net |
3,229 | 2,728 | 2,403 | 11,279 | 9,740 | |||||||||||||||
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Income from operations before income taxes |
22,666 | 26,598 | 23,515 | 99,121 | 95,408 | |||||||||||||||
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Provision for income taxes |
9,142 | 7,838 | 12,322 | 33,798 | 35,376 | |||||||||||||||
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Net income |
$ | 13,524 | $ | 18,760 | $ | 11,193 | $ | 65,323 | $ | 60,032 | ||||||||||
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Income per common share -basic: |
$ | 0.16 | $ | 0.22 | $ | 0.13 | $ | 0.77 | $ | 0.69 | ||||||||||
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Income per common share -diluted: |
$ | 0.14 | $ | 0.20 | $ | 0.12 | $ | 0.69 | $ | 0.62 | ||||||||||
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Calculation of Diluted EPS: |
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Net income |
$ | 13,524 | $ | 18,760 | $ | 11,193 | $ | 65,323 | $ | 60,032 | ||||||||||
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Assumed conversion of Senior Notes |
1,162 | 1,374 | 927 | 5,098 | 4,868 | |||||||||||||||
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Adjusted net income |
$ | 14,686 | $ | 20,134 | $ | 12,120 | $ | 70,421 | $ | 64,900 | ||||||||||
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Weighted average number of common shares outstanding-basic |
85,669 | 85,775 | 84,602 | 85,095 | 87,522 | |||||||||||||||
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Add: Dilutive effect of stock options and restricted stock awards |
1,738 | 1,503 | 903 | 1,767 | 876 | |||||||||||||||
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Dilutive effect of Senior Notes |
15,682 | 15,682 | 15,682 | 15,682 | 15,682 | |||||||||||||||
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Diluted weighted average number of common shares outstanding |
103,089 | 102,960 | 101,187 | 102,544 | 104,080 | |||||||||||||||
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Income per common share - diluted |
$ | 0.14 | $ | 0.20 | $ | 0.12 | $ | 0.69 | $ | 0.62 | ||||||||||
Newpark Resources, Inc.
Operating Segment Results
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(Unaudited) |
Three Months Ended |
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December 31, |
September 30, |
December 31, |
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(In thousands) |
2013 |
2013 |
2012 |
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Revenues |
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Fluids systems |
$ | 212,069 | $ | 233,020 | $ | 229,329 | |||||||
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Mats and integrated services |
34,856 | 35,112 | 26,612 | ||||||||||
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Environmental services |
15,584 | 17,576 | 14,387 | ||||||||||
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Total revenues |
$ | 262,509 | $ | 285,708 | $ | 270,328 | |||||||
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Operating income (loss) |
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Fluids systems |
$ | 15,158 | $ | 17,140 | $ | 17,714 | |||||||
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Mats and integrated services |
15,228 | 15,345 | 10,845 | ||||||||||
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Environmental services |
4,288 | 4,656 | 3,444 | ||||||||||
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Corporate office |
(8,043 | ) | (6,840 | ) | (5,752 | ) | |||||||
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Total operating income |
$ | 26,631 | $ | 30,301 | $ | 26,251 | |||||||
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Segment operating margin |
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Fluids systems |
7.1 | % | 7.4 | % | 7.7 | % | |||||||
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Mats and integrated services |
43.7 | % | 43.7 | % | 40.8 | % | |||||||
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Environmental services |
27.5 | % | 26.5 | % | 23.9 | % | |||||||
Newpark Resources, Inc.
Consolidated Balance Sheets
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(Unaudited) |
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December 31, |
December 31, |
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(In thousands, except share data) |
2013 |
2012 |
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ASSETS |
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Cash and cash equivalents |
$ | 65,840 | $ | 46,846 | ||||||
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Receivables, net |
280,445 | 323,439 | ||||||||
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Inventories |
189,680 | 209,734 | ||||||||
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Deferred tax asset |
11,874 | 11,596 | ||||||||
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Prepaid expenses and other current assets |
11,601 | 12,441 | ||||||||
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Total current assets |
559,440 | 604,056 | ||||||||
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Property, plant and equipment, net |
279,342 | 253,990 | ||||||||
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Goodwill |
94,064 | 87,388 | ||||||||
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Other intangible assets, net |
29,244 | 41,018 | ||||||||
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Other assets |
6,327 | 8,089 | ||||||||
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Total assets |
$ | 968,417 | $ | 994,541 | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Short-term debt |
$ | 12,867 | $ | 2,599 | ||||||
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Accounts payable |
93,001 | 114,377 | ||||||||
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Accrued liabilities |
47,884 | 42,620 | ||||||||
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Total current liabilities |
153,752 | 159,596 | ||||||||
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Long-term debt, less current portion |
172,786 | 256,832 | ||||||||
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Deferred tax liability |
39,509 | 46,348 | ||||||||
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Other noncurrent liabilities |
21,316 | 18,187 | ||||||||
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Total liabilities |
387,363 | 480,963 | ||||||||
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Commitments and contingencies |
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Common stock, $0.01 par value, 200,000,000 shares authorized and 98,030,839 and 95,733,677 shares issued, respectively |
980 | 957 | ||||||||
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Paid-in capital |
504,675 | 484,962 | ||||||||
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Accumulated other comprehensive loss |
(9,484 | ) | (734 | ) | ||||||
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Retained earnings |
160,338 | 95,015 | ||||||||
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Treasury stock, at cost; 10,832,845 and 10,115,951 shares, respectively |
(75,455 | ) | (66,622 | ) | ||||||
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Total stockholders’ equity |
581,054 | 513,578 | ||||||||
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Total liabilities and stockholders' equity |
$ | 968,417 | $ | 994,541 | ||||||
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
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(Unaudited) |
Year Ended December 31, |
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(In thousands) |
2013 |
2012 |
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Cash flows from operating activities: |
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Net income |
$ | 65,323 | $ | 60,032 | ||||
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Adjustments to reconcile net income to net cash provided by operations: |
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Impairment charges |
176 | 443 | ||||||
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Depreciation and amortization |
44,198 | 32,821 | ||||||
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Stock-based compensation expense |
9,699 | 7,103 | ||||||
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Provision for deferred income taxes |
(7,832 | ) | 1,358 | |||||
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Net provision for doubtful accounts |
416 | 1,709 | ||||||
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(Gain) loss on sale of assets |
(3,178 | ) | 724 | |||||
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Excess tax benefit from stock-based compensation |
(2,146 | ) | - | |||||
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Change in assets and liabilities: |
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Decrease in receivables |
32,172 | 23,565 | ||||||
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Decrease (increase) in inventories |
16,431 | (28,758 | ) | |||||
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Decrease (increase) in other assets |
4,574 | (641 | ) | |||||
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(Decrease) increase in accounts payable |
(17,733 | ) | 13,702 | |||||
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Increase (decrease) in accrued liabilities and other |
9,803 | (1,813 | ) | |||||
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Net cash provided by operating activities |
151,903 | 110,245 | ||||||
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Cash flows from investing activities: |
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Capital expenditures |
(67,929 | ) | (43,955 | ) | ||||
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Proceeds from sale of property, plant and equipment |
1,313 | 863 | ||||||
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Proceeds from sale of a business |
13,329 | - | ||||||
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Business acquisitions, net of cash acquired |
(6,776 | ) | (53,075 | ) | ||||
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Net cash used in investing activities |
(60,063 | ) | (96,167 | ) | ||||
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Cash flows from financing activities: |
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Borrowings on lines of credit |
254,390 | 364,426 | ||||||
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Payments on lines of credit |
(328,086 | ) | (296,944 | ) | ||||
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Other financing activities |
(25 | ) | (40 | ) | ||||
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Proceeds from employee stock plans |
8,328 | 1,059 | ||||||
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Post-closing payment for business acquisition |
- | (11,892 | ) | |||||
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Excess tax benefit from stock-based compensation |
2,146 | - | ||||||
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Purchase of treasury stock |
(9,281 | ) | (50,756 | ) | ||||
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Net cash (used in) provided by financing activities |
(72,528 | ) | 5,853 | |||||
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Effect of exchange rate changes on cash |
(318 | ) | 1,668 | |||||
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Net increase in cash and cash equivalents |
18,994 | 21,599 | ||||||
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Cash and cash equivalents at beginning of year |
46,846 | 25,247 | ||||||
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Cash and cash equivalents at end of year |
$ | 65,840 | $ | 46,846 | ||||
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