NEWPARK RESOURCES REPORTS FIRST QUARTER 2023 RESULTS

Company reports net income of $0.06 per diluted share; Adjusted Net Income of $0.09 per diluted share

Cash flow from operating activities of $29 million; Free Cash Flow of $23 million

Industrial Solutions revenues increased 58% year-over-year

THE WOODLANDS, Texas, May 2, 2023 /PRNewswire/ -- Newpark Resources, Inc. (NYSE:NR) ("Newpark" or the "Company") today announced results for its first quarter ended March 31, 2023. Total revenues for the first quarter of 2023 were $200.0 million compared to $225.2 million for the fourth quarter of 2022 and $176.4 million for the first quarter of 2022. Net income for the first quarter of 2023 was $5.6 million, or $0.06 per diluted share. Net income was $9.0 million, or $0.10 per diluted share, for the fourth quarter of 2022, and $2.5 million, or $0.03 per diluted share, for the first quarter of 2022. Adjusted Net Income for the first quarter of 2023 was $0.09 per diluted share and Adjusted EBITDA was $21.0 million, as compared to Adjusted Net Income of $0.07 per diluted share and Adjusted EBITDA of $21.5 million in the fourth quarter of 2022, and Adjusted Net Loss of $0.00 per share and Adjusted EBITDA of $11.7 million in the first quarter of 2022.

Matthew Lanigan, Newpark's President and Chief Executive Officer, stated, "Our first quarter continued the momentum from the fourth quarter, marked by solid performance both financially, and against our stated key initiatives. We also continued to return significant value to shareholders through the repurchase of nearly 4% of our outstanding shares in the quarter.

"Our Industrial Solutions segment delivered the strongest first quarter revenue performance in our history, validating the strength of our offering and the robustness of market demand. The utilities and industrial end-markets contributed nearly 80% of our first quarter Industrial Solutions revenues, and we are pleased with our progress to solidify Newpark as a leader in the development of sustainable technologies and services, supporting the energy transition. First quarter 2023 Industrial Solutions revenues included a $36 million contribution from rental and services and $19 million of product sales, resulting in segment operating income of $14.5 million and Adjusted EBITDA of $19.7 million for the quarter. Benefitting from 58% year-over-year revenue growth, the segment has delivered $213 million of revenues, $52 million of operating income and $74 million of Adjusted EBITDA over the trailing 12-month period. Additionally, we are pleased to highlight that we began to ramp up production of our new DURA-BASE^® 800 series^TM mat in the first quarter, which fully integrates with our existing DURA-BASE format and offers a nearly 15% reduction in weight, therefore driving further efficiency in transportation costs and associated carbon emissions without impacting product performance."

Lanigan continued, "With the effect of the fourth quarter divestitures within the U.S., Fluids Systems delivered revenues of $144 million, operating income of $3.5 million and Adjusted EBITDA of $8.7 million in the first quarter. The first quarter included $69 million of revenues from U.S. land markets, $19 million from Canada, and $56 million from international operations, which included a quarterly record of $53 million from the EMEA region. Corporate office expense increased to $7.8 million in the first quarter, which includes nearly $1 million related to strategic planning activities and an organizational design project.

"Following the end of the first quarter, we've implemented several organizational changes to reduce the overhead structure for the evolving business, intended to streamline operational support, remove layers of management and simplify our business support activities to drive decision-making closer to the customer, particularly within Fluids Systems and the Corporate office. These recent actions are expected to generate $6 million of annualized recurring cost savings, with the benefits being realized over the next few quarters.

"Regarding cash flows, we had a very solid start to the year, reflecting the benefits of our recent divestitures and the ongoing business transformation. Cash flows from operating activities was $29 million for the quarter, driving Free Cash Flow of $23 million. Total capital expenditures were $7 million, roughly 95% of which was directed to support our Industrial Solutions expansion in the utilities sector. The usage of our Free Cash Flow and proceeds from divestitures was fairly balanced, with $15 million being used to reduce debt and another $15 million used to repurchase shares," added Lanigan.

"As we look ahead to the second quarter, we expect Industrial Solutions to deliver modest year-over-year revenue growth, which puts the segment on track to deliver mid-to-upper teens percentage revenue growth for the full year 2023. Fluids Systems is expected to pull back roughly 15% sequentially in the second quarter, reflecting the Canada seasonality and our ongoing efforts to focus on key markets.  We expect strong Free Cash Flow generation in the second quarter, including continued robust EBITDA generation in Industrial Solutions along with reductions in Fluids Systems working capital. During the month of April, we completed $5 million of additional share repurchases and our outstanding share count now stands at 85 million shares, a reduction of nearly 10% within the past six months," concluded Lanigan.

Strategic Actions Update

As part of the Company's previously disclosed strategic portfolio review, which focused on identifying opportunities for value-creating options in the portfolio, several strategic actions were completed in the fourth quarter of 2022. These actions included the exit of the Industrial Blending business and sale of associated assets, the sale of the Excalibar U.S. mineral grinding business, and the exit of the Gulf of Mexico Fluids operations. During the first quarter of 2023, $21 million of cash was generated primarily from the winddown of the retained working capital from these transactions.

Following these divestiture transactions, Fluids Systems is meaningfully simplified, with operations primarily in North America land and EMEA regions. As of March 31, 2023, the segment has nearly $220 million of net working capital, primarily inventory and receivables, which represents roughly 85% of the segment's net capital employed.

We continue to evaluate our portfolio, as we streamline operations, monetize working capital in areas that no longer demonstrate a clear pathway to generate sufficient returns, and prioritize investment for high-return growth opportunities.

Segment Results

The Industrial Solutions segment generated revenues of $55.9 million for the first quarter of 2023 compared to $57.5 million for the fourth quarter of 2022 and $35.4 million for the first quarter of 2022. Segment operating income was $14.5 million for the first quarter of 2023 compared to $17.8 million for the fourth quarter of 2022 and $6.4 million for the first quarter of 2022.

The Fluids Systems segment generated revenues of $144.2 million for the first quarter of 2023 compared to $167.7 million for the fourth quarter of 2022 and $141.0 million for the first quarter of 2022. Segment operating income was $3.5 million for the first quarter of 2023 compared to operating income of $4.8 million for the fourth quarter of 2022 and $3.4 million for the first quarter of 2022. The Fluids Systems operating income for the first quarter of 2023 includes $3.2 million in charges primarily related to facility exit and severance costs. The Fluids Systems operating income for the fourth quarter of 2022 included a $1.0 million pre-tax gain related to the Excalibar sale, as well as $1.2 million in charges primarily related to facility exit and severance costs.

Conference Call

Newpark has scheduled a conference call to discuss first quarter of 2023 results and its near-term operational outlook, which will be broadcast live over the Internet, on Wednesday, May 3, 2023 at 9:30 a.m. Eastern Time / 8:30 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 May 17, 2023 and may be accessed by dialing 201-612-7415 and using pass code 13737710#. Also, an archive of the webcast will be available shortly after the call at www.newpark.com for 90 days. Please submit any questions for management prior to the call via email to [email protected].

Newpark Resources, Inc. is a geographically diversified supplier providing environmentally-sensitive 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, 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 worldwide oil and natural gas industry; our ability to generate internal growth; economic and market conditions that may impact our customers' future spending; our customer concentration and reliance on the U.S. exploration and production market; our international operations; the ongoing conflict between Russia and Ukraine; operating hazards present in the oil and natural gas and utilities industries and substantial liability claims, including catastrophic well incidents; our contracts that can be terminated or downsized by our customers without penalty; our product offering and market expansion; our ability to attract, retain, and develop qualified leaders, key employees, and skilled personnel; our expanding services in the utilities sector, which may require unionized labor; the price and availability of raw materials; inflation; capital investments, business acquisitions, and joint ventures; our market competition; technological developments and intellectual property; severe weather, natural disasters, and seasonality; public health crises, epidemics, and pandemics; our cost and continued availability of borrowed funds, including noncompliance with debt covenants; environmental laws and regulations; our legal compliance; the inherent limitations of insurance coverage; income taxes; cybersecurity breaches or business system disruptions; our strategic actions; our divestitures; activist stockholders that may attempt to effect changes at our Company or acquire control over our Company; share repurchases; and our amended and restated bylaws, which could limit our stockholders' ability to obtain what such stockholders believe to be a favorable judicial forum for disputes with us or our directors, officers or other employees. 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.

 

 

Summarized operating results (including charges in the Fluids Systems non-GAAP reconciliation table) of our now exited Excalibar business and Gulf of Mexico operations, both included in the Fluids Systems segment historical results, are shown in the following tables:

 

 

 

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 Adjusted Net Income (Loss), Adjusted Net Income (Loss) Per Common Share, earnings before interest, taxes, depreciation and amortization ("EBITDA"), Adjusted EBITDA, Free Cash Flow, Adjusted 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 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.

Adjusted Net Income (Loss) and Adjusted Net Income (Loss) Per Common Share

The following tables reconcile the Company's net income (loss) and net income (loss) per common share calculated in accordance with GAAP to the non-GAAP financial measures of adjusted net income (loss) and adjusted net income (loss) per common share:

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)

EBITDA and Adjusted EBITDA

The following table reconciles the Company's net income calculated in accordance with GAAP to the non-GAAP financial measures of EBITDA and Adjusted EBITDA:

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:

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

The following tables reconcile the Company's segment operating income calculated in accordance with GAAP to the non-GAAP financial measures of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin:

 

 

 

Newpark Resources, Inc.

Non-GAAP Reconciliations (Continued)

(Unaudited)

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin - Trailing Twelve Months ("TTM")

 

 

 

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.