Newpark Resources Reports Fourth Quarter 2017 Results

THE WOODLANDS, Texas, Feb. 8, 2018 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its fourth quarter ended December 31, 2017. Total revenues for the fourth quarter of 2017 were $204.4 million compared to $201.7 million in the third quarter of 2017 and $137.1 million in the fourth quarter of 2016. Income from continuing operations for the fourth quarter of 2017 was $7.9 million, or $0.09 per share, compared to $2.7 million, or $0.03 per share, in the third quarter of 2017, and a loss from continuing operations of ($0.1) million, or $0.00 per share, in the fourth quarter of 2016. Fourth quarter 2017 results from continuing operations included the impact of the following:

• $3.4 million net benefit to the provision for income taxes, reflecting our preliminary evaluation of the impact of U.S. tax reform enacted in December 2017.
• $0.7 million of pre-tax expenses ($0.5 million after-tax) in the Corporate Office, associated with the November 2017 acquisition of the Well Service Group and Utility Access Solutions.

The combined impact of the above items resulted in a $2.9 million increase in income from continuing operations ($0.03 per share) for the fourth quarter 2017. Net loss for the fourth quarter of 2017 was $9.5 million, or $0.11 per share, which includes a $17.4 million charge, net of tax, for the settlement of a pending litigation matter reported in discontinued operations, as described further below.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We're very pleased to report another solid quarter for both segments, posting consolidated revenues of $204 million and EBITDA of $20 million in the fourth quarter.  In Fluids, revenues pulled back modestly from the third quarter, driven largely by transitory softness in both U.S. and Canada drilling activity.  In addition, our sequential comparison was unfavorably impacted by elevated third quarter product sales to IOC's in the deepwater Gulf of Mexico, which we did not expect to recur in the fourth quarter.  The North America reduction was partially offset by a 6% sequential improvement internationally, as customer activity levels continue to strengthen in response to the improving outlook for commodity prices.  In addition, the fourth quarter benefitted from a deepwater well drilled with Petrobras in Brazil, using our Deepdrill™ water-based fluid system.  Despite the modest pullback in revenues, the Fluids segment operating margin remained relatively flat, coming in at 5% for the fourth quarter.

"The Mats business also posted another very strong quarter, which includes a $9 million revenue contribution from the mid-November acquisition of the Well Service Group and Utility Access Solutions. Mat sales pulled back modestly from the exceptionally strong results in the third quarter to $12 million in the fourth quarter, while the rental and service activity remained stable. With the impact of the acquisition, including increased depreciation and amortization expense and business integration costs, the mats segment operating margin came in at 28% for the fourth quarter," added Howes.  "Meanwhile, with the continued strengthening in commodity prices, we remain optimistic regarding the outlook for both segments in 2018."

Segment Results

The Fluids Systems segment generated revenues of $162.4 million in the fourth quarter of 2017 compared to $166.7 million in the third quarter of 2017 and $111.6 million in the fourth quarter of 2016. Segment operating income was $7.4 million in the fourth quarter of 2017, compared to $7.9 million in the third quarter of 2017 and a $7.5 million loss in the fourth quarter of 2016. Segment results for the fourth quarter of 2016 included $4.6 million of charges for asset impairments in the Asia Pacific region and Uruguay exit costs.

The Mats and Integrated Services segment generated revenues of $42.0 million in the fourth quarter of 2017 compared to $34.9 million in the third quarter of 2017 and $25.5 million in the fourth quarter of 2016. Segment operating income was $11.7 million in the fourth quarter of 2017, compared to $10.9 million in the third quarter of 2017 and $6.1 million in the fourth quarter of 2016.

Loss from Discontinued Operations, arising from Settlement of Pending Litigation

In March 2014, Newpark completed the sale of the Environmental Services business, which was historically reported as a third operating segment, and recorded a $22.1 million gain from disposal of discontinued operations, net of tax. As disclosed in previous filings, since late 2014, the Company has been a party to an ongoing lawsuit with the buyer, Ecoserv, LLC. Following the commencement of the trial in December 2017, Newpark reached a settlement with Ecoserv, under which Ecoserv will receive $22.0 million in cash, effectively reducing the sale price of the Environmental Services business by such amount in exchange for dismissal of the pending claims in the lawsuit, and release of any future claims related to the transaction.  The impact of this settlement results in a $17.4 million loss from disposal of discontinued operations, net of tax in 2017 to reduce the previously recognized gain from the sale of the Environmental Services business. The reduction in sale price will be funded, in part, through the release of $8.0 million that has been held in escrow since the March 2014 transaction.

Conference Call

Newpark has scheduled a conference call to discuss fourth quarter 2017 results and near-term operational outlook, which will be broadcast live over the Internet, on Friday, February 9, 2018 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 February 23, 2018 and may be accessed by dialing 201-612-7415 and using pass code 13675126#. 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 future 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, 2016, 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, risks related to the worldwide oil and natural gas industry, our customer concentration and reliance on the U.S. exploration and production market, risks related to our international operations, the cost and continued availability of borrowed funds including noncompliance with debt covenants, operating hazards present in the oil and natural gas industry, our ability to execute our business strategy and make successful business acquisitions and capital investments, the availability of raw materials and skilled personnel, our market competition, compliance with legal and regulatory matters, including environmental regulations, the availability of insurance and the risks and limitations of our insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, risks related to severe weather, particularly in the U.S. Gulf Coast, cybersecurity breaches or business system disruptions and risks related to the fluctuations in the market value of our common stock.  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.
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, 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/or that of other companies in our industry.  In addition, management uses these measures to evaluate operating performance, and 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.

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

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SOURCE Newpark Resources, Inc.