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): February 17, 2022
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 February 17, 2022, Newpark Resources, Inc. (the “Company”) issued a press release announcing financial information for the three months and twelve months ended December 31, 2021. 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 earnings before interest, taxes, depreciation and amortization (“EBITDA”), EBITDA Margin, Free Cash Flow, 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 February 17, 2022 |
| 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: | February 17, 2022 | 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 FOURTH QUARTER 2021 RESULTS
Revenues improve 18% sequentially; Fluids Systems returns to profitability
Company provides update on ongoing strategic portfolio review
THE WOODLANDS, TX – February 17, 2022 – Newpark Resources, Inc. (NYSE: NR) (“Newpark” or the “Company”) today announced results for its fourth quarter ended December 31, 2021. Total revenues for the fourth quarter of 2021 were $179.6 million compared to $151.8 million for the third quarter of 2021 and $129.7 million for the fourth quarter of 2020. Net loss for the fourth quarter of 2021 was $3.7 million, or ($0.04) per share, compared to net loss of $10.5 million, or ($0.11) per share, for the third quarter of 2021, and net loss of $18.4 million, or ($0.20) per share, for the fourth quarter of 2020.
Fourth quarter 2021 operating results include $0.02 per share in after-tax charges including the impact of $0.9 million of pre-tax restructuring related charges in the Fluids Systems segment and $0.9 million of incremental pre-tax expenses in the Industrial Solutions segment related to a multi-year sales tax audit and insurance reserves.
Paul Howes, Newpark’s Chief Executive Officer, stated, “Our fourth quarter results reflect the benefit of our continued expansion in the power transmission market, as well as the improving market dynamics in the global oil and gas sector. Consolidated revenues increased 18% sequentially to $180 million in the fourth quarter, benefiting from strong growth in both the Industrial Solutions and Fluids Systems segments.
“The Industrial Solutions segment generated $52 million of revenues in the fourth quarter, reflecting an 18% sequential improvement, benefiting from the anticipated year-end strength for Site and Access Solutions product sales into the utilities sector. The Industrial Solutions segment operating margin declined modestly to 16% in the fourth quarter, impacted by the anticipated headwind from elevated raw materials costs and the lack of industrial blending production volume, as well as the elevated expenses associated with the sales tax audit and insurance reserves.”
Howes continued, “The Fluids Systems segment revenues also improved 18% sequentially, driven by broad-based growth across most of our key markets. In North America, revenues improved by 17% sequentially to $83 million, including 21% sequential growth from both U.S. land and Canada. These improvements were partially offset by a $2 million decline in the Gulf of Mexico, driven by further project delays with a primary customer experiencing drillship mechanical issues. International revenues improved 21% sequentially to $45 million in the fourth quarter, driven primarily by increased activities in North Africa. As a result of the revenue improvement and ongoing cost reduction efforts, the Fluids Systems segment returned to positive operating income, despite incurring the restructuring charges. Corporate office expenses were also elevated in the fourth quarter, primarily reflecting higher long-term incentive expense driven by the Company’s share price performance relative to our peer group, as well as increased legal and professional expenses, primarily attributable to M&A activity and the restructuring of certain subsidiary legal entities within Europe.
“Regarding cash flows, operating activities used cash of $17 million in the fourth quarter, including a $35 million increase in receivables driven by the higher revenue level. Receivable DSO’s remained elevated in the fourth quarter, due in part to the timing of large projects and product sales within the quarter, though we expect DSO’s will normalize in the first quarter and provide a favorable tailwind for cash generation,” added Howes. “Net cash used in investing activities were $10 million in the fourth quarter, including $13 million to fund a strategic acquisition in the Industrial Solutions segment which expands our geographic reach in the Northeast and strengthens our utility industry customer base.”
Strategic Review Update
As part of the ongoing business and portfolio review, the Company announced that the Board of Directors recently approved two near-term actions intended to enhance liquidity available for investment in higher returning businesses, as the Company remains focused on taking the necessary steps to improve returns on invested capital and enhance long-term value for shareholders. These actions include winding down our industrial blending operations in the next few months and pursuing the sale of the industrial blending and warehouse facility and related equipment located in Conroe, Texas. Industrial blending contributed $9 million of revenues in 2021 while incurring a $2 million operating loss and ended the year with roughly $20 million of net capital employed. As a result of the plan to exit and dispose of the assets used in the Industrial Blending business, we may incur pre-tax charges in the range of approximately $4 million to $8 million primarily related to the non-cash impairment of long-lived assets, which we expect to recognize in the first quarter of 2022.
Second, the Company will explore strategic options for the U.S. mineral grinding business, which supplies ground barite and other minerals to the U.S. Fluids Systems business, as well as to third parties in the oil and gas and industrial markets. The mineral grinding business contributed total third-party revenues of $36 million in 2021 yielding approximately break-even operating income and ended the year with $47 million of net capital employed, including roughly $25 million of net working capital.
Segment Results
The Fluids Systems segment generated revenues of $127.9 million for the fourth quarter of 2021 compared to $108.0 million for the third quarter of 2021 and $79.4 million for the fourth quarter of 2020. Segment operating income was $0.9 million for the fourth quarter of 2021 compared to an operating loss of $6.6 million for the third quarter of 2021 and an operating loss of $20.1 million for the fourth quarter of 2020. Operating income for the fourth quarter of 2021 includes $0.9 million of charges primarily related to facility exit and severance costs. Operating loss for the third quarter of 2021 includes $4.0 million of charges primarily related to self-insured costs associated with Hurricane Ida damage to our Fourchon, Louisiana Fluids Systems operating base, facility exit, and severance costs. Operating loss for the fourth quarter of 2020 includes $11.2 million of net charges, primarily related to our exit from Brazil including $11.7 million of charges for the non-cash recognition of cumulative foreign currency translation losses.
The Industrial Solutions segment generated revenues of $51.7 million for the fourth quarter of 2021 compared to $43.8 million for the third quarter of 2021 and $50.3 million for the fourth quarter of 2020. Segment operating income was $8.4 million for the fourth quarter of 2021 compared to operating income of $8.1 million for the third quarter of 2021 and operating income of $9.5 million for the fourth quarter of 2020. Operating income for the fourth quarter of 2021 includes $0.9 million of incremental pre-tax expenses related to a multi-year sales tax audit and insurance reserves.
Conference Call
Newpark has scheduled a conference call to discuss fourth quarter 2021 results and its near-term operational outlook, which will be broadcast live over the Internet, on Friday, February 18, 2022 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 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 March 4, 2022 and may be accessed by dialing 201-612-7415 and using pass code 13726215#. 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 geographically diversified supplier providing 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 for the year ended December 31, 2020, 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 COVID-19 pandemic; the worldwide oil and natural gas industry; our customer concentration and reliance on the U.S. exploration and production market; our international operations; operating hazards present in the oil and natural gas industry and substantial liability claims, including catastrophic well incidents; our contracts that can be terminated or downsized by our customers without penalty; our product offering expansion; our ability to attract, retain and develop qualified leaders, key employees and skilled personnel; the availability of raw materials; business acquisitions and capital investments; our market competition; technological developments and intellectual property in our industry; severe weather, natural disasters, and seasonality; 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 ability to maintain compliance with the New York Stock Exchange’s continued listing requirements; 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. There can be no assurances that the ongoing portfolio review will result in any transaction, and no specific timeline has been established for the completion of the portfolio review. 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 | Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||
| Revenues | $ | 179,563 | $ | 151,797 | $ | 129,705 | $ | 614,781 | $ | 492,625 |
| Cost of revenues | 153,182 | 132,273 | 115,583 | 529,552 | 473,258 | |||||
| Selling, general and administrative expenses | 26,690 | 23,864 | 20,374 | 94,445 | 86,604 | |||||
| Other operating (income) loss, net | (250) | 1,723 | (1,424) | (391) | (3,330) | |||||
| Impairments | — | — | 11,689 | — | 14,727 | |||||
| Operating loss | (59) | (6,063) | (16,517) | (8,825) | (78,634) | |||||
| Foreign currency exchange (gain) loss | (314) | 25 | 35 | (397) | 3,378 | |||||
| Interest expense, net | 2,057 | 2,176 | 2,462 | 8,805 | 10,986 | |||||
| (Gain) loss on extinguishment of debt | — | 210 | — | 1,000 | (419) | |||||
| Loss before income taxes | (1,802) | (8,474) | (19,014) | (18,233) | (92,579) | |||||
| Provision (benefit) for income taxes | 1,879 | 2,011 | (580) | 7,293 | (11,883) | |||||
| Net loss | $ | (3,681) | $ | (10,485) | $ | (18,434) | $ | (25,526) | $ | (80,696) |
| Calculation of EPS: | ||||||||||
| Net loss - basic and diluted | $ | (3,681) | $ | (10,485) | $ | (18,434) | $ | (25,526) | $ | (80,696) |
| Weighted average common shares outstanding - basic | 92,043 | 91,932 | 90,624 | 91,460 | 90,198 | |||||
| Dilutive effect of stock options and restricted stock awards | — | — | — | — | — | |||||
| Dilutive effect of Convertible Notes | — | — | — | — | — | |||||
| Weighted average common shares outstanding - diluted | 92,043 | 91,932 | 90,624 | 91,460 | 90,198 | |||||
| Net loss per common share - basic: | $ | (0.04) | $ | (0.11) | $ | (0.20) | $ | (0.28) | $ | (0.89) |
| Net loss per common share - diluted: | $ | (0.04) | $ | (0.11) | $ | (0.20) | $ | (0.28) | $ | (0.89) |
Newpark Resources, Inc.
Operating Segment Results
(Unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Revenues | |||||||||||||||
| Fluids Systems | $ | 127,892 | $ | 107,955 | $ | 79,430 | $ | 420,789 | $ | 354,608 | |||||
| Industrial Solutions | 51,671 | 43,842 | 50,275 | 193,992 | 138,017 | ||||||||||
| Total revenues | $ | 179,563 | $ | 151,797 | $ | 129,705 | $ | 614,781 | $ | 492,625 | |||||
| Operating income (loss) | |||||||||||||||
| Fluids Systems (1) | $ | 932 | $ | (6,646) | $ | (20,119) | $ | (19,012) | $ | (66,403) | |||||
| Industrial Solutions (2) | 8,357 | 8,103 | 9,531 | 39,733 | 13,459 | ||||||||||
| Corporate office | (9,348) | (7,520) | (5,929) | (29,546) | (25,690) | ||||||||||
| Total operating loss | $ | (59) | $ | (6,063) | $ | (16,517) | $ | (8,825) | $ | (78,634) | |||||
| Segment operating margin | |||||||||||||||
| Fluids Systems | 0.7 | % | (6.2) | % | (25.3) | % | (4.5) | % | (18.7) | % | |||||
| Industrial Solutions | 16.2 | % | 18.5 | % | 19.0 | % | 20.5 | % | 9.8 | % |
(1)Fluids Systems operating results include the impact of the following pre-tax charges:
| Fluids Systems | Three Months Ended | Twelve Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||
| Fourchon, Louisiana hurricane-related costs | $ | — | $ | 2,596 | $ | — | $ | 2,596 | $ | — |
| Facility exit costs and other | 708 | 1,691 | (1,288) | 2,399 | (201) | |||||
| Severance costs | 152 | 564 | 442 | 1,329 | 3,729 | |||||
| Kenedy, Texas facility fire insurance settlement | — | (849) | — | (849) | — | |||||
| Brazil exit impairment - Recognition of cumulative foreign currency translation losses | — | — | 11,689 | — | 11,689 | |||||
| Inventory write-downs | — | — | 359 | — | 10,345 | |||||
| Property, plant and equipment impairments | — | — | — | — | 3,038 | |||||
| $ | 860 | $ | 4,002 | $ | 11,202 | $ | 5,475 | $ | 28,600 |
(2) Industrial Solutions operating income for the three months ended December 31, 2021 includes $0.9 million of incremental pre-tax expenses related to a multi-year sales tax audit and insurance reserves. Industrial Solutions operating income for the twelve months ended December 31, 2021 includes $0.9 million of incremental pre-tax expenses related to a multi-year sales tax audit and insurance reserves, as well as a $1.0 million gain related to a legal settlement.
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands, except share data) | December 31,<br>2021 | December 31,<br>2020 | ||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 24,088 | $ | 24,197 |
| Receivables, net | 194,296 | 141,045 | ||
| Inventories | 155,341 | 147,857 | ||
| Prepaid expenses and other current assets | 14,787 | 15,081 | ||
| Total current assets | 388,512 | 328,180 | ||
| Property, plant and equipment, net | 260,256 | 277,696 | ||
| Operating lease assets | 27,569 | 30,969 | ||
| Goodwill | 47,283 | 42,444 | ||
| Other intangible assets, net | 24,959 | 25,428 | ||
| Deferred tax assets | 2,316 | 1,706 | ||
| Other assets | 1,991 | 2,769 | ||
| Total assets | $ | 752,886 | $ | 709,192 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current debt | $ | 19,210 | $ | 67,472 |
| Accounts payable | 84,585 | 49,252 | ||
| Accrued liabilities | 46,597 | 36,934 | ||
| Total current liabilities | 150,392 | 153,658 | ||
| Long-term debt, less current portion | 95,593 | 19,690 | ||
| Noncurrent operating lease liabilities | 22,352 | 25,068 | ||
| Deferred tax liabilities | 11,819 | 13,368 | ||
| Other noncurrent liabilities | 10,344 | 9,376 | ||
| Total liabilities | 290,500 | 221,160 | ||
| Common stock, $0.01 par value (200,000,000 shares authorized and 109,330,733 and 107,587,786 shares issued, respectively) | 1,093 | 1,076 | ||
| Paid-in capital | 634,929 | 627,031 | ||
| Accumulated other comprehensive loss | (61,480) | (54,172) | ||
| Retained earnings | 24,345 | 50,937 | ||
| Treasury stock, at cost (16,981,147 and 16,781,150 shares, respectively) | (136,501) | (136,840) | ||
| Total stockholders’ equity | 462,386 | 488,032 | ||
| Total liabilities and stockholders' equity | $ | 752,886 | $ | 709,192 |
Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Twelve Months Ended December 31, | ||||
|---|---|---|---|---|
| (In thousands) | 2021 | 2020 | ||
| Cash flows from operating activities: | ||||
| Net loss | $ | (25,526) | $ | (80,696) |
| Adjustments to reconcile net loss to net cash provided by (used in) operations: | ||||
| Impairments and other non-cash charges | — | 25,072 | ||
| Depreciation and amortization | 42,225 | 45,314 | ||
| Stock-based compensation expense | 7,926 | 6,578 | ||
| Provision for deferred income taxes | (1,209) | (18,850) | ||
| Credit loss expense | 664 | 1,427 | ||
| Gain on sale of assets | (7,182) | (6,531) | ||
| Gain on insurance recovery | (849) | — | ||
| (Gain) loss on extinguishment of debt | 1,000 | (419) | ||
| Amortization of original issue discount and debt issuance costs | 3,707 | 5,152 | ||
| Change in assets and liabilities: | ||||
| (Increase) decrease in receivables | (61,283) | 70,994 | ||
| (Increase) decrease in inventories | (10,336) | 39,889 | ||
| Increase in other assets | (726) | (686) | ||
| Increase (decrease) in accounts payable | 36,341 | (29,457) | ||
| Increase (decrease) in accrued liabilities and other | 12,235 | (1,996) | ||
| Net cash provided by (used in) operating activities | (3,013) | 55,791 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (21,793) | (15,794) | ||
| Business acquisitions, net of cash acquired | (13,434) | — | ||
| Proceeds from sale of property, plant and equipment | 15,999 | 12,399 | ||
| Proceeds from insurance property claim | 1,753 | — | ||
| Net cash used in investing activities | (17,475) | (3,395) | ||
| Cash flows from financing activities: | ||||
| Borrowings on lines of credit | 286,154 | 173,794 | ||
| Payments on lines of credit | (208,575) | (221,781) | ||
| Purchases of Convertible Notes | (28,137) | (29,124) | ||
| Payment on Convertible Notes | (38,567) | — | ||
| Proceeds from term loan | 8,258 | — | ||
| Proceeds from financing obligation | 8,004 | — | ||
| Debt issuance costs | (295) | — | ||
| Purchases of treasury stock | (1,448) | (333) | ||
| Other financing activities | (3,986) | (497) | ||
| Net cash provided by (used in) financing activities | 21,408 | (77,941) | ||
| Effect of exchange rate changes on cash | (1,779) | (970) | ||
| Net decrease in cash, cash equivalents, and restricted cash | (859) | (26,515) | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 30,348 | 56,863 | ||
| Cash, cash equivalents, and restricted cash at end of period | $ | 29,489 | $ | 30,348 |
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, Free Cash Flow, 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.
EBITDA and EBITDA Margin
The following tables reconcile the Company’s net income (loss) or segment operating income (loss) calculated in accordance with GAAP to the non-GAAP financial measure of EBITDA:
| Consolidated | Three Months Ended | Twelve Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||
| Net income (loss) (GAAP) (1) | $ | (3,681) | $ | (10,485) | $ | (18,434) | $ | (25,526) | $ | (80,696) |
| Interest expense, net | 2,057 | 2,176 | 2,462 | 8,805 | 10,986 | |||||
| Provision (benefit) for income taxes | 1,879 | 2,011 | (580) | 7,293 | (11,883) | |||||
| Depreciation and amortization | 10,216 | 10,516 | 11,128 | 42,225 | 45,314 | |||||
| EBITDA (non-GAAP) (1) | $ | 10,471 | $ | 4,218 | $ | (5,424) | $ | 32,797 | $ | (36,279) |
(1)See above for charges included.
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
| Fluids Systems | Three Months Ended | Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Operating income (loss) (GAAP) (1) | $ | 932 | $ | (6,646) | $ | (20,119) | $ | (19,012) | $ | (66,403) | |||||
| Depreciation and amortization | 4,292 | 4,421 | 4,869 | 17,877 | 20,555 | ||||||||||
| EBITDA (non-GAAP) (1) | 5,224 | (2,225) | (15,250) | (1,135) | (45,848) | ||||||||||
| Revenues | 127,892 | 107,955 | 79,430 | 420,789 | 354,608 | ||||||||||
| Operating Margin (GAAP) | 0.7 | % | (6.2) | % | (25.3) | % | (4.5) | % | (18.7) | % | |||||
| EBITDA Margin (non-GAAP) | 4.1 | % | (2.1) | % | (19.2) | % | (0.3) | % | (12.9) | % |
(1)See above for charges included.
| Industrial Solutions | Three Months Ended | Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | ||||||||||
| Operating income (GAAP) | $ | 8,357 | $ | 8,103 | $ | 9,531 | $ | 39,733 | $ | 13,459 | |||||
| Depreciation and amortization | 5,230 | 4,993 | 5,186 | 20,399 | 20,427 | ||||||||||
| EBITDA (non-GAAP) | 13,587 | 13,096 | 14,717 | 60,132 | 33,886 | ||||||||||
| Revenues | 51,671 | 43,842 | 50,275 | 193,992 | 138,017 | ||||||||||
| Operating Margin (GAAP) | 16.2 | % | 18.5 | % | 19.0 | % | 20.5 | % | 9.8 | % | |||||
| EBITDA Margin (non-GAAP) | 26.3 | % | 29.9 | % | 29.3 | % | 31.0 | % | 24.6 | % |
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
Free Cash Flow
The following table reconciles the Company’s net cash provided by (used in) operating activities calculated in accordance with GAAP to the non-GAAP financial measure of the Company's free cash flow:
| Consolidated | Three Months Ended | Twelve Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2021 | September 30,<br>2021 | December 31,<br>2020 | December 31,<br>2021 | December 31,<br>2020 | |||||
| Net cash provided by (used in) operating activities (GAAP) | $ | (16,683) | $ | (12,167) | $ | 15,498 | $ | (3,013) | $ | 55,791 |
| Capital expenditures | (2,690) | (8,626) | (1,185) | (21,793) | (15,794) | |||||
| Proceeds from sale of property, plant and equipment | 4,269 | 2,522 | 1,902 | 15,999 | 12,399 | |||||
| Free Cash Flow (non-GAAP) | $ | (15,104) | $ | (18,271) | $ | 16,215 | $ | (8,807) | $ | 52,396 |
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) | December 31,<br>2021 | December 31,<br>2020 | ||||
|---|---|---|---|---|---|---|
| Current debt | $ | 19,210 | $ | 67,472 | ||
| Long-term debt, less current portion | 95,593 | 19,690 | ||||
| Total Debt | 114,803 | 87,162 | ||||
| Total stockholders’ equity | 462,386 | 488,032 | ||||
| Total Capital | $ | 577,189 | $ | 575,194 | ||
| Ratio of Total Debt to Capital | 19.9 | % | 15.2 | % | ||
| Total Debt | $ | 114,803 | $ | 87,162 | ||
| Less: cash and cash equivalents | (24,088) | (24,197) | ||||
| Net Debt | 90,715 | 62,965 | ||||
| Total stockholders’ equity | 462,386 | 488,032 | ||||
| Total Capital, Net of Cash | $ | 553,101 | $ | 550,997 | ||
| Ratio of Net Debt to Capital | 16.4 | % | 11.4 | % |
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