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): April 30, 2015
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.) |
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9320 Lakeside Blvd., Suite 100 |
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The Woodlands, TX |
77381 | |
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(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including area code: (281) 362-6800
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(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:
| |_| | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |_| | 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)) |
| |_| | 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 April 30, 2015, Newpark Resources, Inc. (the “Company”) issued a press release announcing financial information for the three months ended March 31, 2015. 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 months ended March 31, 2015 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.
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Exhibit No. |
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Description |
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99.1 |
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Press release issued by Newpark Resources, Inc. on April 30, 2015. |
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: May 1, 2015 |
By: |
/s/ Gregg S. Piontek |
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Gregg S. Piontek, Vice President and Chief Financial Officer |
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(Principal Financial Officer) |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1 |
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Press release issued by Newpark Resources, Inc. on April 30, 2015. |
Exhibit 99.1
NEWS RELEASE
| Contacts: | Brian Feldott | |
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Director, Investor Relations | |
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Newpark Resources, Inc. bfeldott@newpark.com |
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281-362-6800 |
FOR IMMEDIATE RELEASE
NEWPARK RESOURCES REPORTS FIRST QUARTER 2015 RESULTS
THE WOODLANDS, TX – APRIL 30, 2015 – 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.
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Newpark Resources, Inc. |
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Consolidated Statements of Operations |
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(Unaudited) |
Three Months Ended |
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March 31, |
December 31, |
March 31, |
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(In thousands, except per share data) |
2015 |
2014 |
2014 |
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Revenues |
$ | 208,464 | $ | 306,162 | $ | 242,824 | ||||||
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Cost of revenues |
176,634 | 237,067 | 196,560 | |||||||||
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Selling, general and administrative expenses |
25,978 | 30,390 | 25,523 | |||||||||
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Other operating expense (income), net |
(276 | ) | 114 | (16 | ) | |||||||
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Operating income |
6,128 | 38,591 | 20,757 | |||||||||
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Foreign currency exchange loss |
1,564 | 638 | 54 | |||||||||
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Interest expense, net |
2,255 | 2,360 | 2,920 | |||||||||
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Income from continuing operations before income taxes |
2,309 | 35,593 | 17,783 | |||||||||
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Provision for income taxes |
1,316 | 12,147 | 6,041 | |||||||||
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Income from continuing operations |
993 | 23,446 | 11,742 | |||||||||
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Income from discontinued operations, net of tax |
- | - | 1,152 | |||||||||
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Gain from disposal of discontinued operations, net of tax |
- | - | 22,117 | |||||||||
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Net income |
$ | 993 | $ | 23,446 | $ | 35,011 | ||||||
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Income per common share -basic: |
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Income from continuing operations |
$ | 0.01 | $ | 0.29 | $ | 0.14 | ||||||
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Income from discontinued operations |
- | - | 0.27 | |||||||||
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Net income |
$ | 0.01 | $ | 0.29 | $ | 0.41 | ||||||
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Income per common share -diluted: |
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Income from continuing operations |
$ | 0.01 | $ | 0.25 | $ | 0.13 | ||||||
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Income from discontinued operations |
- | - | 0.23 | |||||||||
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Net income |
$ | 0.01 | $ | 0.25 | $ | 0.36 | ||||||
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Calculation of Diluted EPS: |
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Income from continuing operations |
$ | 993 | $ | 23,446 | $ | 11,742 | ||||||
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Assumed conversion of Senior Notes |
- | 1,283 | 1,261 | |||||||||
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Adjusted income from continuing operations |
$ | 993 | $ | 24,729 | $ | 13,003 | ||||||
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Weighted average number of common shares outstanding-basic |
82,299 | 82,225 | 84,743 | |||||||||
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Add: Dilutive effect of stock options and restricted stock awards |
1,505 | 1,492 | 1,674 | |||||||||
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Dilutive effect of Senior Notes |
- | 15,682 | 15,682 | |||||||||
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Diluted weighted average number of common shares outstanding |
83,804 | 99,399 | 102,099 | |||||||||
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Diluted income from continuing operations per common share |
$ | 0.01 | $ | 0.25 | $ | 0.13 | ||||||
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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. |
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Newpark Resources, Inc. |
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Operating Segment Results |
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(Unaudited) |
Three Months Ended |
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March 31, |
December 31, |
March 31, |
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(In thousands) |
2015 |
2014 |
2014 |
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Revenues |
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Fluids systems |
$ | 171,902 | $ | 261,029 | $ | 211,400 | |||||||
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Mats and integrated services |
36,562 | 45,133 | 31,424 | ||||||||||
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Total revenues |
$ | 208,464 | $ | 306,162 | $ | 242,824 | |||||||
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Operating income (loss) |
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Fluids systems |
$ | (1,702 | ) | $ | 24,533 | $ | 15,740 | ||||||
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Mats and integrated services |
15,647 | 22,959 | 13,373 | ||||||||||
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Corporate office |
(7,817 | ) | (8,901 | ) | (8,356 | ) | |||||||
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Total operating income |
$ | 6,128 | $ | 38,591 | $ | 20,757 | |||||||
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Segment operating margin |
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Fluids systems |
(1.0% | ) | 9.4 | % | 7.4 | % | |||||||
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Mats and integrated services |
42.8 | % | 50.9 | % | 42.6 | % | |||||||
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Newpark Resources, Inc. |
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Consolidated Balance Sheets |
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(Unaudited) |
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March 31, |
December 31, |
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(In thousands, except share data) |
2015 |
2014 |
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ASSETS |
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Cash and cash equivalents |
$ | 91,692 | $ | 85,052 | ||||
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Receivables, net |
260,718 | 318,600 | ||||||
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Inventories |
183,821 | 196,556 | ||||||
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Deferred tax assets |
7,563 | 11,013 | ||||||
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Prepaid expenses and other current assets |
12,369 | 12,615 | ||||||
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Total current assets |
556,163 | 623,836 | ||||||
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Property, plant and equipment, net |
291,713 | 283,361 | ||||||
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Goodwill |
90,032 | 91,893 | ||||||
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Other intangible assets, net |
14,239 | 15,666 | ||||||
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Other assets |
7,022 | 5,366 | ||||||
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Total assets |
$ | 959,169 | $ | 1,020,122 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Short-term debt |
$ | 9,909 | $ | 11,648 | ||||
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Accounts payable |
77,917 | 108,242 | ||||||
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Accrued liabilities |
39,467 | 53,342 | ||||||
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Total current liabilities |
127,293 | 173,232 | ||||||
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Long-term debt, less current portion |
172,497 | 172,498 | ||||||
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Deferred tax liabilities |
35,849 | 37,694 | ||||||
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Other noncurrent liabilities |
10,707 | 11,240 | ||||||
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Total liabilities |
346,346 | 394,664 | ||||||
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Commitments and contingencies |
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Common stock, $0.01 par value, 200,000,000 shares authorized and 99,286,706 and 99,204,318 shares issued, respectively |
993 | 992 | ||||||
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Paid-in capital |
524,492 | 521,228 | ||||||
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Accumulated other comprehensive loss |
(49,201 | ) | (31,992 | ) | ||||
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Retained earnings |
263,609 | 262,616 | ||||||
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Treasury stock, at cost; 15,172,510 and 15,210,233 shares, respectively |
(127,070 | ) | (127,386 | ) | ||||
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Total stockholders’ equity |
612,823 | 625,458 | ||||||
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Total liabilities and stockholders' equity |
$ | 959,169 | $ | 1,020,122 | ||||
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Newpark Resources, Inc. |
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Consolidated Statements of Cash Flows |
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(Unaudited) |
Three Months Ended March 31, |
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(In thousands) |
2015 |
2014 |
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Cash flows from operating activities: |
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Net income |
$ | 993 | $ | 35,011 | ||||
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Adjustments to reconcile net income to net cash provided by operations: |
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Depreciation and amortization |
10,527 | 10,287 | ||||||
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Stock-based compensation expense |
2,964 | 2,840 | ||||||
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Provision for deferred income taxes |
1,775 | (13,108 | ) | |||||
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Net provision for doubtful accounts |
721 | 173 | ||||||
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Gain on sale of a business |
- | (33,974 | ) | |||||
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(Gain) loss on sale of assets |
11 | (362 | ) | |||||
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Excess tax benefit from stock-based compensation |
(16 | ) | - | |||||
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Change in assets and liabilities: |
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(Increase) decrease in receivables |
45,869 | (1,080 | ) | |||||
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(Increase) decrease in inventories |
7,620 | (9,229 | ) | |||||
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Increase in other assets |
(265 | ) | (3,858 | ) | ||||
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Decrease in accounts payable |
(29,353 | ) | (1,248 | ) | ||||
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Increase (decrease) in accrued liabilities and other |
(9,250 | ) | 18,142 | |||||
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Net cash provided by operating activities |
31,596 | 3,594 | ||||||
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Cash flows from investing activities: |
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Capital expenditures |
(18,505 | ) | (18,509 | ) | ||||
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Proceeds from sale of property, plant and equipment |
298 | 754 | ||||||
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Proceeds from sale of a business |
- | 89,167 | ||||||
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Net cash (used in) provided by investing activities |
(18,207 | ) | 71,412 | |||||
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Cash flows from financing activities: |
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Borrowings on lines of credit |
1,906 | 47,562 | ||||||
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Payments on lines of credit |
(2,394 | ) | (45,113 | ) | ||||
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Debt issuance costs |
(1,456 | ) | - | |||||
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Other financing activities |
(12 | ) | (13 | ) | ||||
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Proceeds from employee stock plans |
305 | 34 | ||||||
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Purchases of treasury stock |
- | (13,123 | ) | |||||
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Excess tax benefit from stock-based compensation |
16 | - | ||||||
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Net cash used in financing activities |
(1,635 | ) | (10,653 | ) | ||||
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Effect of exchange rate changes on cash |
(5,114 | ) | (6 | ) | ||||
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Net increase in cash and cash equivalents |
6,640 | 64,347 | ||||||
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Cash and cash equivalents at beginning of year |
85,052 | 65,840 | ||||||
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Cash and cash equivalents at end of period |
$ | 91,692 | $ | 130,187 | ||||
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