8-K
NPK International Inc. (NPKI)
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): May 2, 2023
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-02960 | 72-1123385 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
| 9320 Lakeside Boulevard, | Suite 100 | |
| --- | --- | --- |
| The Woodlands, | Texas | 77381 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (281) 362-6800
| Not Applicable |
|---|
(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) | |||
| --- | --- | ☐ | 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)) | |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | NR | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 2, 2023, Newpark Resources, Inc. (the “Company”) issued a press release announcing financial information for the three months ended March 31, 2023. 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 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.
Use of Non-GAAP Financial Information
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, 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. Applicable reconciliations to the nearest GAAP financial measure of each non-GAAP financial measure are included in the attached Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release issued by Newpark Resources, Inc. on May2, 2023 |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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.
| NEWPARK RESOURCES, INC. | |||
|---|---|---|---|
| (Registrant) | |||
| Date: | May 2, 2023 | By: | /s/ Gregg S. Piontek |
| Gregg S. Piontek | |||
| Senior Vice President and Chief Financial Officer | |||
| (Principal Financial Officer) |
Document
Exhibit 99.1
 |
NEWS RELEASE | ||
|---|---|---|---|
| Contacts: | Gregg Piontek<br>Senior Vice President and Chief Financial Officer<br>Newpark Resources, Inc.<br>gpiontek@newpark.com<br>281-362-6800 | ||
| FOR IMMEDIATE RELEASE |
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, TX – May 2, 2023 – 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 seriesTM 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 NR@dennardlascar.com.
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.
Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (In thousands, except per share data) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | |||
| Revenues | $ | 200,030 | $ | 225,159 | $ | 176,438 |
| Cost of revenues | 164,738 | 186,980 | 150,988 | |||
| Selling, general and administrative expenses | 25,410 | 24,648 | 24,433 | |||
| Other operating (income) loss, net | (261) | (3,995) | 50 | |||
| Operating income | 10,143 | 17,526 | 967 | |||
| Foreign currency exchange loss | 319 | 2,332 | 64 | |||
| Interest expense, net | 2,089 | 2,321 | 1,206 | |||
| Income (loss) before income taxes | 7,735 | 12,873 | (303) | |||
| Provision (benefit) for income taxes | 2,115 | 3,881 | (2,824) | |||
| Net income | $ | 5,620 | $ | 8,992 | $ | 2,521 |
| Calculation of EPS: | ||||||
| Net income - basic and diluted | $ | 5,620 | $ | 8,992 | $ | 2,521 |
| Weighted average common shares outstanding - basic | 88,573 | 92,324 | 92,118 | |||
| Dilutive effect of stock options and restricted stock awards | 1,997 | 1,156 | 1,821 | |||
| Weighted average common shares outstanding - diluted | 90,570 | 93,480 | 93,939 | |||
| Net income per common share - basic: | $ | 0.06 | $ | 0.10 | $ | 0.03 |
| Net income per common share - diluted: | $ | 0.06 | $ | 0.10 | $ | 0.03 |
Newpark Resources, Inc.
Operating Segment Results
(Unaudited)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | ||||||
| Revenues | |||||||||
| Fluids Systems | $ | 144,174 | $ | 167,705 | $ | 141,014 | |||
| Industrial Solutions | 55,856 | 57,454 | 35,424 | ||||||
| Industrial Blending | — | — | — | ||||||
| Total revenues | $ | 200,030 | $ | 225,159 | $ | 176,438 | |||
| Operating income (loss) | |||||||||
| Fluids Systems | $ | 3,466 | $ | 4,828 | $ | 3,374 | |||
| Industrial Solutions | 14,483 | 17,751 | 6,358 | ||||||
| Industrial Blending | — | 2,322 | (886) | ||||||
| Corporate office | (7,806) | (7,375) | (7,879) | ||||||
| Total operating income (loss) | $ | 10,143 | $ | 17,526 | $ | 967 | |||
| Segment operating margin | |||||||||
| Fluids Systems | 2.4 | % | 2.9 | % | 2.4 | % | |||
| Industrial Solutions | 25.9 | % | 30.9 | % | 17.9 | % | |||
| Industrial Blending | NM | NM | NM |
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:
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | |||
| Revenues | ||||||
| Excalibar | $ | — | $ | 11,922 | $ | 14,346 |
| Gulf of Mexico | — | 8,011 | 2,694 | |||
| Total revenues | $ | — | $ | 19,933 | $ | 17,040 |
| Operating income (loss) | ||||||
| Excalibar | $ | (77) | $ | 1,127 | $ | 833 |
| Gulf of Mexico | (2,311) | (4,023) | (2,617) | |||
| Total operating income (loss) | $ | (2,388) | $ | (2,896) | $ | (1,784) |
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands, except share data) | March 31,<br>2023 | December 31, 2022 | ||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 23,618 | $ | 23,182 |
| Receivables, net | 212,694 | 242,247 | ||
| Inventories | 149,989 | 149,571 | ||
| Prepaid expenses and other current assets | 9,962 | 10,966 | ||
| Total current assets | 396,263 | 425,966 | ||
| Property, plant and equipment, net | 194,626 | 193,099 | ||
| Operating lease assets | 22,605 | 23,769 | ||
| Goodwill | 47,174 | 47,110 | ||
| Other intangible assets, net | 19,471 | 20,215 | ||
| Deferred tax assets | 2,402 | 2,275 | ||
| Other assets | 2,330 | 2,441 | ||
| Total assets | $ | 684,871 | $ | 714,875 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current debt | $ | 23,158 | $ | 22,438 |
| Accounts payable | 92,600 | 93,633 | ||
| Accrued liabilities | 37,763 | 46,871 | ||
| Total current liabilities | 153,521 | 162,942 | ||
| Long-term debt, less current portion | 78,041 | 91,677 | ||
| Noncurrent operating lease liabilities | 18,859 | 19,816 | ||
| Deferred tax liabilities | 7,692 | 8,121 | ||
| Other noncurrent liabilities | 9,529 | 9,291 | ||
| Total liabilities | 267,642 | 291,847 | ||
| Common stock, $0.01 par value (200,000,000 shares authorized and 111,456,999 and 111,451,999 shares issued, respectively) | 1,115 | 1,115 | ||
| Paid-in capital | 643,004 | 641,266 | ||
| Accumulated other comprehensive loss | (65,187) | (67,186) | ||
| Retained earnings | 8,109 | 2,489 | ||
| Treasury stock, at cost (25,129,909 and 21,751,232 shares, respectively) | (169,812) | (154,656) | ||
| Total stockholders’ equity | 417,229 | 423,028 | ||
| Total liabilities and stockholders' equity | $ | 684,871 | $ | 714,875 |
Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended March 31, | ||||
|---|---|---|---|---|
| (In thousands) | 2023 | 2022 | ||
| Cash flows from operating activities: | ||||
| Net income | $ | 5,620 | $ | 2,521 |
| Adjustments to reconcile net income to net cash provided by operations: | ||||
| Depreciation and amortization | 7,895 | 10,452 | ||
| Stock-based compensation expense | 1,738 | 1,468 | ||
| Provision for deferred income taxes | (726) | (5,202) | ||
| Credit loss expense | 272 | 185 | ||
| Gain on sale of assets | (554) | (1,606) | ||
| Amortization of original issue discount and debt issuance costs | 138 | 178 | ||
| Change in assets and liabilities: | ||||
| Decrease in receivables | 27,287 | 5,795 | ||
| Increase in inventories | (3,870) | (14,812) | ||
| Decrease in other assets | 1,098 | 17 | ||
| Increase (decrease) in accounts payable | (1,233) | 11,246 | ||
| Decrease in accrued liabilities and other | (8,221) | (7,452) | ||
| Net cash provided by operating activities | 29,444 | 2,790 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (6,972) | (7,621) | ||
| Proceeds from divestitures | 7,153 | — | ||
| Proceeds from sale of property, plant and equipment | 740 | 575 | ||
| Net cash provided by (used in) investing activities | 921 | (7,046) | ||
| Cash flows from financing activities: | ||||
| Borrowings on lines of credit | 76,447 | 69,188 | ||
| Payments on lines of credit | (90,212) | (65,202) | ||
| Purchases of treasury stock | (15,006) | (4) | ||
| Other financing activities | (1,499) | (2,711) | ||
| Net cash provided by (used in) financing activities | (30,270) | 1,271 | ||
| Effect of exchange rate changes on cash | 375 | (376) | ||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 470 | (3,361) | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 25,061 | 29,489 | ||
| Cash, cash equivalents, and restricted cash at end of period | $ | 25,531 | $ | 26,128 |
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:
| Consolidated | Three Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | |||||||||||
| Net income (loss) (GAAP) | $ | 5,620 | $ | 8,992 | $ | 2,521 | ||||||||
| Gain on divestitures | — | (3,596) | — | |||||||||||
| Facility exit costs and other | 2,292 | 1,303 | — | |||||||||||
| Severance costs | 955 | 216 | 367 | |||||||||||
| Tax expense (benefit) on adjustments | (682) | (318) | (77) | |||||||||||
| Tax benefit on restructuring of certain subsidiary legal entities | — | — | (3,111) | |||||||||||
| Adjusted net income (loss) (non-GAAP) | $ | 8,185 | $ | 6,597 | $ | (300) | Adjusted net income (loss) (non-GAAP) | $ | 8,185 | $ | 6,597 | $ | (300) | |
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| Weighted average common shares outstanding - basic | 88,573 | 92,324 | 92,118 | |||||||||||
| Dilutive effect of stock options and restricted stock awards | 1,997 | 1,156 | — | |||||||||||
| Weighted average common shares outstanding - diluted | 90,570 | 93,480 | 92,118 | |||||||||||
| Adjusted net income (loss) per common share - diluted (non-GAAP): | $ | 0.09 | $ | 0.07 | $ | — |
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:
| Consolidated | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | |||
| Net income (GAAP) | $ | 5,620 | $ | 8,992 | $ | 2,521 |
| Interest expense, net | 2,089 | 2,321 | 1,206 | |||
| Provision (benefit) for income taxes | 2,115 | 3,881 | (2,824) | |||
| Depreciation and amortization | 7,895 | 8,351 | 10,452 | |||
| EBITDA (non-GAAP) | 17,719 | 23,545 | 11,355 | |||
| Gain on divestitures | — | (3,596) | — | |||
| Facility exit costs and other | 2,292 | 1,303 | — | |||
| Severance costs | 955 | 216 | 367 | |||
| Adjusted EBITDA (non-GAAP) | $ | 20,966 | $ | 21,468 | $ | 11,722 |
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 | |||||
|---|---|---|---|---|---|---|
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | |||
| Net cash provided by operating activities (GAAP) | $ | 29,444 | $ | 3,072 | $ | 2,790 |
| Capital expenditures | (6,972) | (10,553) | (7,621) | |||
| Proceeds from sale of property, plant and equipment | 740 | 720 | 575 | |||
| Free Cash Flow (non-GAAP) | $ | 23,212 | $ | (6,761) | $ | (4,256) |
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:
| Fluids Systems | Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | ||||||
| Revenues | $ | 144,174 | $ | 167,705 | $ | 141,014 | |||
| Operating income (GAAP) | $ | 3,466 | $ | 4,828 | $ | 3,374 | |||
| Depreciation and amortization | 1,975 | 2,358 | 4,057 | ||||||
| EBITDA (non-GAAP) | 5,441 | 7,186 | 7,431 | ||||||
| Gain on divestiture | — | (971) | — | ||||||
| Facility exit costs and other | 2,292 | 1,000 | — | ||||||
| Severance costs | 955 | 163 | 152 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | 8,688 | $ | 7,378 | $ | 7,583 | |||
| Operating Margin (GAAP) | 2.4 | % | 2.9 | % | 2.4 | % | |||
| Adjusted EBITDA Margin (non-GAAP) | 6.0 | % | 4.4 | % | 5.4 | % | |||
| Industrial Solutions | Three Months Ended | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | ||||||
| Revenues | $ | 55,856 | $ | 57,454 | $ | 35,424 | |||
| Operating income (GAAP) | $ | 14,483 | $ | 17,751 | $ | 6,358 | |||
| Depreciation and amortization | 5,257 | 5,482 | 5,442 | ||||||
| EBITDA (non-GAAP) | 19,740 | 23,233 | 11,800 | ||||||
| Severance costs | — | 53 | 68 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | 19,740 | $ | 23,286 | $ | 11,868 | |||
| Operating Margin (GAAP) | 25.9 | % | 30.9 | % | 17.9 | % | |||
| Adjusted EBITDA Margin (non-GAAP) | 35.3 | % | 40.5 | % | 33.5 | % | |||
| Industrial Blending | Three Months Ended | ||||||||
| --- | --- | --- | --- | --- | --- | --- | |||
| (In thousands) | March 31,<br>2023 | December 31, 2022 | March 31,<br>2022 | ||||||
| Revenues | $ | — | $ | — | $ | — | |||
| Operating income (loss) (GAAP) | $ | — | $ | 2,322 | $ | (886) | |||
| Depreciation and amortization | — | — | 270 | ||||||
| EBITDA (non-GAAP) | — | 2,322 | (616) | ||||||
| Gain on divestiture | — | (2,625) | — | ||||||
| Facility exit costs and other | — | 303 | — | ||||||
| Severance costs | — | — | 148 | ||||||
| Adjusted EBITDA (non-GAAP) | $ | — | $ | — | $ | (468) |
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin - Trailing Twelve Months (“TTM”)
| Consolidated | Three Months Ended | TTM | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | June 30,<br>2022 | September 30,<br>2022 | December 31, 2022 | March 31,<br>2023 | March 31,<br>2023 | ||||||||||
| Net income (GAAP) | $ | (7,752) | $ | (24,595) | $ | 8,992 | $ | 5,620 | $ | (17,735) | |||||
| Interest expense, net | 1,638 | 1,875 | 2,321 | 2,089 | 7,923 | ||||||||||
| Provision (benefit) for income taxes | 480 | 2,834 | 3,881 | 2,115 | 9,310 | ||||||||||
| Depreciation and amortization | 10,111 | 9,696 | 8,351 | 7,895 | 36,053 | ||||||||||
| EBITDA (non-GAAP) | 4,477 | (10,190) | 23,545 | 17,719 | 35,551 | ||||||||||
| Impairments and other charges | 7,905 | 29,417 | — | — | 37,322 | ||||||||||
| Gain on divestiture | — | — | (3,596) | — | (3,596) | ||||||||||
| Facility exit costs and other | 761 | 388 | 1,303 | 2,292 | 4,744 | ||||||||||
| Severance costs | 153 | — | 216 | 955 | 1,324 | ||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 13,296 | $ | 19,615 | $ | 21,468 | $ | 20,966 | $ | 75,345 | |||||
| Fluids Systems | Three Months Ended | TTM | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | June 30,<br>2022 | September 30,<br>2022 | December 31, 2022 | March 31,<br>2023 | March 31,<br>2023 | ||||||||||
| Revenues | $ | 145,261 | $ | 168,621 | $ | 167,705 | $ | 144,174 | $ | 625,761 | |||||
| Operating income (GAAP) | $ | 425 | $ | (24,193) | $ | 4,828 | $ | 3,466 | $ | (15,474) | |||||
| Depreciation and amortization | 3,862 | 3,598 | 2,358 | 1,975 | 11,793 | ||||||||||
| EBITDA (non-GAAP) | 4,287 | (20,595) | 7,186 | 5,441 | (3,681) | ||||||||||
| Impairments and other charges | — | 29,417 | — | — | 29,417 | ||||||||||
| Gain on divestiture | — | — | (971) | — | (971) | ||||||||||
| Facility exit costs and other | — | — | 1,000 | 2,292 | 3,292 | ||||||||||
| Severance costs | 84 | — | 163 | 955 | 1,202 | ||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 4,371 | $ | 8,822 | $ | 7,378 | $ | 8,688 | $ | 29,259 | |||||
| Operating Margin (GAAP) | 0.3 | % | (14.3) | % | 2.9 | % | 2.4 | % | (2.5) | % | |||||
| Adjusted EBITDA Margin (non-GAAP) | 3.0 | % | 5.2 | % | 4.4 | % | 6.0 | % | 4.7 | % | |||||
| Industrial Solutions | Three Months Ended | TTM | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | June 30,<br>2022 | September 30,<br>2022 | December 31, 2022 | March 31,<br>2023 | March 31,<br>2023 | ||||||||||
| Revenues | $ | 48,883 | $ | 51,232 | $ | 57,454 | $ | 55,856 | $ | 213,425 | |||||
| Operating income (GAAP) | $ | 9,754 | $ | 10,036 | $ | 17,751 | $ | 14,483 | $ | 52,024 | |||||
| Depreciation and amortization | 5,362 | 5,367 | 5,482 | 5,257 | 21,468 | ||||||||||
| EBITDA (non-GAAP) | 15,116 | 15,403 | 23,233 | 19,740 | 73,492 | ||||||||||
| Severance costs | 93 | — | 53 | — | 146 | ||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 15,209 | $ | 15,403 | $ | 23,286 | $ | 19,740 | $ | 73,638 | |||||
| Operating Margin (GAAP) | 20.0 | % | 19.6 | % | 30.9 | % | 25.9 | % | 24.4 | % | |||||
| Adjusted EBITDA Margin (non-GAAP) | 31.1 | % | 30.1 | % | 40.5 | % | 35.3 | % | 34.5 | % |
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:
| (In thousands) | March 31,<br>2023 | December 31, 2022 | ||||
|---|---|---|---|---|---|---|
| Current debt | $ | 23,158 | $ | 22,438 | ||
| Long-term debt, less current portion | 78,041 | 91,677 | ||||
| Total Debt | 101,199 | 114,115 | ||||
| Total stockholders’ equity | 417,229 | 423,028 | ||||
| Total Capital | $ | 518,428 | $ | 537,143 | ||
| Ratio of Total Debt to Capital | 19.5 | % | 21.2 | % | ||
| Total Debt | $ | 101,199 | $ | 114,115 | ||
| Less: cash and cash equivalents | (23,618) | (23,182) | ||||
| Net Debt | 77,581 | 90,933 | ||||
| Total stockholders’ equity | 417,229 | 423,028 | ||||
| Total Capital, Net of Cash | $ | 494,810 | $ | 513,961 | ||
| Ratio of Net Debt to Capital | 15.7 | % | 17.7 | % |
12