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 16, 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 February 16, 2023, Newpark Resources, Inc. (the “Company”) issued a press release announcing financial information for the three months and twelve months ended December 31, 2022. 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. onFebruary 16, 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: | February 16, 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 FOURTH QUARTER 2022 RESULTS
Company reports revenues of $225 million, net income of $0.10 per diluted share
and Adjusted Net Income of $0.07 per diluted share
THE WOODLANDS, TX – February 16, 2023 – Newpark Resources, Inc. (NYSE: NR) (“Newpark” or the “Company”) today announced results for its fourth quarter ended December 31, 2022. Total revenues for the fourth quarter of 2022 were $225.2 million compared to $219.9 million for the third quarter of 2022 and $179.6 million for the fourth quarter of 2021. Net income for the fourth quarter of 2022 was $9.0 million, or $0.10 per diluted share, which includes $2.4 million of net income ($0.03 per diluted share) associated with previously disclosed divestiture transactions completed in the quarter. Adjusted Net Income for the fourth quarter of 2022 grew 27% sequentially to $0.07 per diluted share and Adjusted EBITDA improved 9% sequentially to $21.5 million. Net loss for the third quarter of 2022 was $24.6 million, or ($0.26) per share, which included $29.9 million of pre-tax charges ($29.8 million after-tax, $0.32 per diluted share). Net loss for the fourth quarter of 2021 was $3.7 million, or ($0.04) per share.
Matthew Lanigan, Newpark’s President and Chief Executive Officer, stated, “The fourth quarter provided a strong finish to 2022 with the successful closure of our key strategic divestitures and solid operating performances across our ongoing business segments. We also returned significant value to shareholders through the repurchase of nearly 5% of our outstanding shares.
“Our strong operational execution was led by Industrial Solutions, where robust demand from the utilities sector contributed to a 12% sequential growth in revenues. Rental and service revenues improved to $40 million for the fourth quarter of 2022, a 22% sequential increase and a 39% year-over-year increase, reflecting strength in utility infrastructure project activity combined with the benefit of favorable weather conditions, which extended rental projects and elevated rental fleet utilization to very strong levels. Product sales contributed $17 million of revenues for the fourth quarter of 2022, reflecting a decline from prior quarter and prior year, as utility customers elected to focus their remaining 2022 capital budgets on items that had been delayed by supply chain disruptions earlier in the year. Revenues from the utilities and other industrial end-markets reached a new quarterly record, coming in at $43 million for the fourth quarter. Benefitting from the extremely robust market environment, including a favorable revenue mix and improved pricing dynamics, the Industrial Solutions segment delivered operating income of $17.8 million and Adjusted EBITDA of $23.3 million for the quarter.”
Lanigan continued, “In Fluids Systems, while the fourth quarter was impacted by the partial-quarter results and some operational inefficiency associated with the divestitures, the U.S. land business delivered solid improvement. Segment revenues declined modestly to $168 million for the fourth quarter, as a $6 million decline from the divested operations was substantially offset by net improvements in other regions. Excluding the divested Excalibar business, U.S. land revenues improved $8 million sequentially, benefitting from growth across most regions. The divested Excalibar and Gulf of Mexico operations contributed $20 million of revenue and a $2.9 million operating loss in the fourth quarter of 2022, while
the ongoing Fluids Systems segment operations delivered $148 million of revenues, a 4% sequential increase, and operating income of $7.7 million, which reflects a 5.2% operating margin.
“Regarding cash flows, we generated roughly $80 million of cash in the fourth quarter from the divested business units, including $71 million of cash proceeds from the divestiture transactions, reduced total debt by $47 million and used $18 million to fund share repurchases. Additionally, we expect roughly $30 million of cash flow in the first half of 2023 from the wind-down of remaining receivables and other working capital retained within the divested business units,” added Lanigan. “In terms of our continuing business operations, elevated receivable DSO’s in the U.S. Fluids business provided roughly a $10 million headwind to fourth quarter cash flows, though we expect this to reverse in the first quarter, providing an additional tailwind to 2023 Free Cash Flow generation.
“As we look to the year ahead, we expect to deliver solid Free Cash Flow, as we focus on executing our disciplined growth strategy, including the acceleration of our growth in the utilities sector, while also continuing to return excess cash generation to shareholders through additional share repurchases,” concluded Lanigan.
Segment Results
The Industrial Solutions segment generated revenues of $57.5 million for the fourth quarter of 2022 compared to $51.2 million for the third quarter of 2022 and $51.1 million for the fourth quarter of 2021. Segment operating income was $17.8 million for the fourth quarter of 2022 compared to $10.0 million for the third quarter of 2022 and $9.5 million for the fourth quarter of 2021.
The Fluids Systems segment generated revenues of $167.7 million for the fourth quarter of 2022 compared to $168.6 million for the third quarter of 2022 and $127.9 million for the fourth quarter of 2021. Segment operating income was $4.8 million for the fourth quarter of 2022 compared to an operating loss of $24.2 million for the third quarter of 2022 and operating income of $0.9 million for the fourth quarter of 2021. The Fluids Systems operating income for the fourth quarter of 2022 includes 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. The Fluids Systems operating loss for the third quarter of 2022 included $29.4 million of non-cash impairment charges related to the long-lived assets and inventory associated with the exit of Gulf of Mexico operations. The Fluids Systems operating income for the fourth quarter of 2021 included $0.9 million of charges primarily related to facility exit and severance costs.
Conference Call
Newpark has scheduled a conference call to discuss fourth quarter of 2022 results and its near-term operational outlook, which will be broadcast live over the Internet, on Friday, February 17, 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 March 3, 2023 and may be accessed by dialing 201-612-7415 and using pass code 13735641#. 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 | Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands, except per share data) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | |||||
| Revenues | $ | 225,159 | $ | 219,853 | $ | 179,563 | $ | 815,594 | $ | 614,781 |
| Cost of revenues | 186,980 | 187,884 | 153,182 | 694,058 | 529,552 | |||||
| Selling, general and administrative expenses | 24,648 | 24,207 | 26,690 | 97,618 | 94,445 | |||||
| Other operating (income) loss, net | (3,995) | (345) | (250) | (4,370) | (391) | |||||
| Impairments and other charges | — | 29,417 | — | 37,322 | — | |||||
| Operating income (loss) | 17,526 | (21,310) | (59) | (9,034) | (8,825) | |||||
| Foreign currency exchange (gain) loss | 2,332 | (1,424) | (314) | 389 | (397) | |||||
| Interest expense, net | 2,321 | 1,875 | 2,057 | 7,040 | 8,805 | |||||
| Loss on extinguishment of debt | — | — | — | — | 1,000 | |||||
| Income (loss) before income taxes | 12,873 | (21,761) | (1,802) | (16,463) | (18,233) | |||||
| Provision for income taxes | 3,881 | 2,834 | 1,879 | 4,371 | 7,293 | |||||
| Net income (loss) | $ | 8,992 | $ | (24,595) | $ | (3,681) | $ | (20,834) | $ | (25,526) |
| Calculation of EPS: | ||||||||||
| Net income (loss) - basic and diluted | $ | 8,992 | $ | (24,595) | $ | (3,681) | $ | (20,834) | $ | (25,526) |
| Weighted average common shares outstanding - basic | 92,324 | 93,737 | 92,043 | 92,712 | 91,460 | |||||
| Dilutive effect of stock options and restricted stock awards | 1,156 | — | — | — | — | |||||
| Weighted average common shares outstanding - diluted | 93,480 | 93,737 | 92,043 | 92,712 | 91,460 | |||||
| Net income (loss) per common share - basic: | $ | 0.10 | $ | (0.26) | $ | (0.04) | $ | (0.22) | $ | (0.28) |
| Net income (loss) per common share - diluted: | $ | 0.10 | $ | (0.26) | $ | (0.04) | $ | (0.22) | $ | (0.28) |
Newpark Resources, Inc.
Operating Segment Results
(Unaudited)
| Three Months Ended | Twelve Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | ||||||||||
| Revenues | |||||||||||||||
| Fluids Systems | $ | 167,705 | $ | 168,621 | $ | 127,892 | $ | 622,601 | $ | 420,789 | |||||
| Industrial Solutions | 57,454 | 51,232 | 51,138 | 192,993 | 185,171 | ||||||||||
| Industrial Blending | — | — | 533 | — | 8,821 | ||||||||||
| Total revenues | $ | 225,159 | $ | 219,853 | $ | 179,563 | $ | 815,594 | $ | 614,781 | |||||
| Operating income (loss) | |||||||||||||||
| Fluids Systems (1) | $ | 4,828 | $ | (24,193) | $ | 932 | $ | (15,566) | $ | (19,012) | |||||
| Industrial Solutions | 17,751 | 10,036 | 9,472 | 43,899 | 42,117 | ||||||||||
| Industrial Blending (2) | 2,322 | (526) | (1,115) | (8,002) | (2,384) | ||||||||||
| Corporate office | (7,375) | (6,627) | (9,348) | (29,365) | (29,546) | ||||||||||
| Total operating income (loss) | $ | 17,526 | $ | (21,310) | $ | (59) | $ | (9,034) | $ | (8,825) | |||||
| Segment operating margin | |||||||||||||||
| Fluids Systems | 2.9 | % | (14.3) | % | 0.7 | % | (2.5) | % | (4.5) | % | |||||
| Industrial Solutions | 30.9 | % | 19.6 | % | 18.5 | % | 22.7 | % | 22.7 | % | |||||
| Industrial Blending | NM | NM | NM | NM | (27.0) | % |
(1)Fluids Systems operating loss for the three months ended September 30, 2022 and twelve months ended December 31, 2022 includes $29.4 million of non-cash impairment charges related to the long-lived assets and inventory associated with the exit of our Gulf of Mexico operations. Fluids Systems operating loss for the twelve months ended December 31, 2021 included $5.5 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.
(2)Industrial Blending operating income for the three months ended December 31, 2022 includes a $2.6 million gain related to the sale of the blending facility and related assets, partially offset by exit and other costs. Industrial Blending operating loss for the twelve months ended December 31, 2022 includes a $7.9 million non-cash charge for the impairment of the long-lived assets as well as exit and other costs, partially offset by the $2.6 million gain upon the eventual sale of these assets.
Summarized operating results (including impairments and other charges described above) 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 | Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | |||||
| Revenues | ||||||||||
| Excalibar | $ | 11,922 | $ | 17,623 | $ | 10,816 | $ | 55,990 | $ | 36,396 |
| Gulf of Mexico | 8,011 | 8,591 | 4,049 | 26,708 | 25,366 | |||||
| Total revenues | $ | 19,933 | $ | 26,214 | $ | 14,865 | $ | 82,698 | $ | 61,762 |
| Operating income (loss) | ||||||||||
| Excalibar | $ | 1,127 | $ | 888 | $ | 385 | $ | 3,665 | $ | (277) |
| Gulf of Mexico | (4,023) | (32,931) | (2,257) | (43,215) | (6,753) | |||||
| Total operating income (loss) | $ | (2,896) | $ | (32,043) | $ | (1,872) | $ | (39,550) | $ | (7,030) |
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (In thousands, except share data) | December 31,<br>2022 | December 31, 2021 | ||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 23,182 | $ | 24,088 |
| Receivables, net | 242,247 | 194,296 | ||
| Inventories | 149,571 | 155,341 | ||
| Prepaid expenses and other current assets | 10,966 | 14,787 | ||
| Total current assets | 425,966 | 388,512 | ||
| Property, plant and equipment, net | 193,099 | 260,256 | ||
| Operating lease assets | 23,769 | 27,569 | ||
| Goodwill | 47,110 | 47,283 | ||
| Other intangible assets, net | 20,215 | 24,959 | ||
| Deferred tax assets | 2,275 | 2,316 | ||
| Other assets | 2,441 | 1,991 | ||
| Total assets | $ | 714,875 | $ | 752,886 |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
| Current debt | $ | 22,438 | $ | 19,210 |
| Accounts payable | 93,633 | 84,585 | ||
| Accrued liabilities | 46,871 | 46,597 | ||
| Total current liabilities | 162,942 | 150,392 | ||
| Long-term debt, less current portion | 91,677 | 95,593 | ||
| Noncurrent operating lease liabilities | 19,816 | 22,352 | ||
| Deferred tax liabilities | 8,121 | 11,819 | ||
| Other noncurrent liabilities | 9,291 | 10,344 | ||
| Total liabilities | 291,847 | 290,500 | ||
| Common stock, $0.01 par value (200,000,000 shares authorized and 111,451,999 and 109,330,733 shares issued, respectively) | 1,115 | 1,093 | ||
| Paid-in capital | 641,266 | 634,929 | ||
| Accumulated other comprehensive loss | (67,186) | (61,480) | ||
| Retained earnings | 2,489 | 24,345 | ||
| Treasury stock, at cost (21,751,232 and 16,981,147 shares, respectively) | (154,656) | (136,501) | ||
| Total stockholders’ equity | 423,028 | 462,386 | ||
| Total liabilities and stockholders' equity | $ | 714,875 | $ | 752,886 |
Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Twelve Months Ended December 31, | ||||
|---|---|---|---|---|
| (In thousands) | 2022 | 2021 | ||
| Cash flows from operating activities: | ||||
| Net loss | $ | (20,834) | $ | (25,526) |
| Adjustments to reconcile net loss to net cash used in operations: | ||||
| Impairments and other non-cash charges | 37,322 | — | ||
| Depreciation and amortization | 38,610 | 42,225 | ||
| Stock-based compensation expense | 6,861 | 7,926 | ||
| Provision for deferred income taxes | (3,384) | (1,209) | ||
| Credit loss expense | 1,039 | 664 | ||
| Gain on divestitures | (3,596) | — | ||
| Gain on sale of assets | (2,809) | (7,182) | ||
| Gain on insurance recovery | — | (849) | ||
| Loss on extinguishment of debt | — | 1,000 | ||
| Amortization of original issue discount and debt issuance costs | 871 | 3,707 | ||
| Change in assets and liabilities: | ||||
| Increase in receivables | (42,452) | (61,283) | ||
| Increase in inventories | (46,909) | (10,336) | ||
| Increase in other assets | (855) | (726) | ||
| Increase in accounts payable | 10,781 | 36,341 | ||
| Increase in accrued liabilities and other | 334 | 12,235 | ||
| Net cash used in operating activities | (25,021) | (3,013) | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (28,273) | (21,793) | ||
| Proceeds from divestitures | 71,286 | — | ||
| Business acquisitions, net of cash acquired | — | (13,434) | ||
| Proceeds from sale of property, plant and equipment | 3,217 | 15,999 | ||
| Proceeds from insurance property claim | — | 1,753 | ||
| Net cash provided by (used in) investing activities | 46,230 | (17,475) | ||
| Cash flows from financing activities: | ||||
| Borrowings on lines of credit | 287,276 | 286,154 | ||
| Payments on lines of credit | (290,886) | (208,575) | ||
| Purchases of Convertible Notes | — | (28,137) | ||
| Payment on Convertible Notes | — | (38,567) | ||
| Proceeds from term loan | 3,754 | 8,258 | ||
| Proceeds from financing obligation | — | 8,004 | ||
| Debt issuance costs | (1,499) | (295) | ||
| Purchases of treasury stock | (20,248) | (1,448) | ||
| Other financing activities | (3,327) | (3,986) | ||
| Net cash provided by (used in) financing activities | (24,930) | 21,408 | ||
| Effect of exchange rate changes on cash | (707) | (1,779) | ||
| Net decrease in cash, cash equivalents, and restricted cash | (4,428) | (859) | ||
| Cash, cash equivalents, and restricted cash at beginning of period | 29,489 | 30,348 | ||
| Cash, cash equivalents, and restricted cash at end of period | $ | 25,061 | $ | 29,489 |
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, 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 | Twelve Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | |||||||||||||||||
| Net income (loss) (GAAP) | $ | 8,992 | $ | (24,595) | $ | (3,681) | $ | (20,834) | $ | (25,526) | ||||||||||||
| Impairments and other charges | — | 29,417 | — | 37,322 | — | |||||||||||||||||
| Gain on divestitures | (3,596) | — | — | (3,596) | — | |||||||||||||||||
| Fourchon, Louisiana hurricane-related costs | — | — | — | — | 2,596 | |||||||||||||||||
| Facility exit costs and other | 1,303 | 526 | 708 | 2,860 | 2,399 | |||||||||||||||||
| Severance costs | 216 | — | 201 | 736 | 1,898 | |||||||||||||||||
| Gain on legal settlement | — | — | — | — | (1,000) | |||||||||||||||||
| Loss on extinguishment of debt | — | — | — | — | 1,000 | |||||||||||||||||
| Gain on insurance recovery | — | — | — | — | (849) | |||||||||||||||||
| Tax expense (benefit) on adjustments | (318) | (110) | — | (755) | — | |||||||||||||||||
| Tax benefit on restructuring of certain subsidiary legal entities | — | — | — | (3,111) | — | |||||||||||||||||
| Adjusted net income (loss) (non-GAAP) | $ | 6,597 | $ | 5,238 | $ | (2,772) | $ | 12,622 | $ | (19,482) | Adjusted net income (loss) (non-GAAP) | $ | 6,597 | $ | 5,238 | $ | (2,772) | $ | 12,622 | $ | (19,482) | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||
| Weighted average common shares outstanding - basic | 92,324 | 93,737 | 92,043 | 92,712 | 91,460 | |||||||||||||||||
| Dilutive effect of stock options and restricted stock awards | 1,156 | 446 | — | 1,300 | — | |||||||||||||||||
| Weighted average common shares outstanding - diluted | 93,480 | 94,183 | 92,043 | 94,012 | 91,460 | |||||||||||||||||
| Adjusted net income (loss) per common share - diluted (non-GAAP): | $ | 0.07 | $ | 0.06 | $ | (0.03) | $ | 0.13 | $ | (0.21) |
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
EBITDA and Adjusted EBITDA
The following table reconciles the Company’s net income (loss) calculated in accordance with GAAP to the non-GAAP financial measures of EBITDA and Adjusted EBITDA:
| Consolidated | Three Months Ended | Twelve Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | |||||
| Net income (loss) (GAAP) | $ | 8,992 | $ | (24,595) | $ | (3,681) | $ | (20,834) | $ | (25,526) |
| Interest expense, net | 2,321 | 1,875 | 2,057 | 7,040 | 8,805 | |||||
| Provision (benefit) for income taxes | 3,881 | 2,834 | 1,879 | 4,371 | 7,293 | |||||
| Depreciation and amortization | 8,351 | 9,696 | 10,216 | 38,610 | 42,225 | |||||
| EBITDA (non-GAAP) | 23,545 | (10,190) | 10,471 | 29,187 | 32,797 | |||||
| Impairments and other charges | — | 29,417 | — | 37,322 | — | |||||
| Gain on divestitures | (3,596) | — | — | (3,596) | — | |||||
| Fourchon, Louisiana hurricane-related costs | — | — | — | — | 2,596 | |||||
| Facility exit costs and other | 1,303 | 388 | 708 | 2,452 | 2,399 | |||||
| Severance costs | 216 | — | 201 | 736 | 1,898 | |||||
| Gain on legal settlement | — | — | — | — | (1,000) | |||||
| Loss on extinguishment of debt | — | — | — | — | 1,000 | |||||
| Gain on insurance recovery | — | — | — | — | (849) | |||||
| Adjusted EBITDA (non-GAAP) | $ | 21,468 | $ | 19,615 | $ | 11,380 | $ | 66,101 | $ | 38,841 |
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>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | |||||
| Net cash provided by (used in) operating activities (GAAP) | $ | 3,072 | $ | (5,082) | $ | (16,683) | $ | (25,021) | $ | (3,013) |
| Capital expenditures | (10,553) | (8,205) | (2,690) | (28,273) | (21,793) | |||||
| Proceeds from sale of property, plant and equipment | 720 | 554 | 4,269 | 3,217 | 15,999 | |||||
| Free Cash Flow (non-GAAP) | $ | (6,761) | $ | (12,733) | $ | (15,104) | $ | (50,077) | $ | (8,807) |
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
EBITDA Margin
The following tables reconcile the Company’s segment operating income (loss) calculated in accordance with GAAP to the non-GAAP financial measures of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin:
| Fluids Systems | Three Months Ended | Twelve Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | ||||||||||
| Revenues | $ | 167,705 | $ | 168,621 | $ | 127,892 | $ | 622,601 | $ | 420,789 | |||||
| Operating income (loss) (GAAP) | $ | 4,828 | $ | (24,193) | $ | 932 | $ | (15,566) | $ | (19,012) | |||||
| Depreciation and amortization | 2,358 | 3,598 | 4,292 | 13,875 | 17,877 | ||||||||||
| EBITDA (non-GAAP) | 7,186 | (20,595) | 5,224 | (1,691) | (1,135) | ||||||||||
| Impairments and other charges | — | 29,417 | — | 29,417 | — | ||||||||||
| Gain on divestiture | (971) | — | — | (971) | — | ||||||||||
| Fourchon, Louisiana hurricane-related costs | — | — | — | — | 2,596 | ||||||||||
| Facility exit costs and other | 1,000 | — | 708 | 1,000 | 2,399 | ||||||||||
| Severance costs | 163 | — | 152 | 398 | 1,329 | ||||||||||
| Gain on insurance recovery | — | — | — | — | (849) | ||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 7,378 | $ | 8,822 | $ | 6,084 | $ | 28,153 | $ | 4,340 | |||||
| Operating Margin (GAAP) | 2.9 | % | (14.3) | % | 0.7 | % | (2.5) | % | (4.5) | % | |||||
| Adjusted EBITDA Margin (non-GAAP) | 4.4 | % | 5.2 | % | 4.8 | % | 4.5 | % | 1.0 | % | |||||
| Industrial Solutions | Three Months Ended | Twelve Months Ended | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | ||||||||||
| Revenues | $ | 57,454 | $ | 51,232 | $ | 51,138 | $ | 192,993 | $ | 185,171 | |||||
| Operating income (GAAP) | $ | 17,751 | $ | 10,036 | $ | 9,472 | $ | 43,899 | $ | 42,117 | |||||
| Depreciation and amortization | 5,482 | 5,367 | 4,960 | 21,653 | 19,304 | ||||||||||
| EBITDA (non-GAAP) | 23,233 | 15,403 | 14,432 | 65,552 | 61,421 | ||||||||||
| Severance costs | 53 | — | 49 | 214 | 302 | ||||||||||
| Gain on legal settlement | — | — | — | — | (1,000) | ||||||||||
| Adjusted EBITDA (non-GAAP) | $ | 23,286 | $ | 15,403 | $ | 14,481 | $ | 65,766 | $ | 60,723 | |||||
| Operating Margin (GAAP) | 30.9 | % | 19.6 | % | 18.5 | % | 22.7 | % | 22.7 | % | |||||
| Adjusted EBITDA Margin (non-GAAP) | 40.5 | % | 30.1 | % | 28.3 | % | 34.1 | % | 32.8 | % |
Newpark Resources, Inc.
Non-GAAP Reconciliations (Continued)
(Unaudited)
| Industrial Blending | Three Months Ended | Twelve Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (In thousands) | December 31,<br>2022 | September 30,<br>2022 | December 31,<br>2021 | December 31,<br>2022 | December 31,<br>2021 | |||||
| Revenues | $ | — | $ | — | $ | 533 | $ | — | $ | 8,821 |
| Operating income (loss) (GAAP) | $ | 2,322 | $ | (526) | $ | (1,115) | $ | (8,002) | $ | (2,384) |
| Depreciation and amortization | — | 138 | 270 | 678 | 1,095 | |||||
| EBITDA (non-GAAP) | 2,322 | (388) | (845) | (7,324) | (1,289) | |||||
| Impairment | — | — | — | 7,905 | — | |||||
| Gain on divestiture | (2,625) | — | — | (2,625) | — | |||||
| Facility exit costs and other | 303 | 388 | — | 1,453 | — | |||||
| Severance costs | — | — | — | 123 | 61 | |||||
| Adjusted EBITDA (non-GAAP) | $ | — | $ | — | $ | (845) | $ | (468) | $ | (1,228) |
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>2022 | December 31,<br>2021 | ||||
|---|---|---|---|---|---|---|
| Current debt | $ | 22,438 | $ | 19,210 | ||
| Long-term debt, less current portion | 91,677 | 95,593 | ||||
| Total Debt | 114,115 | 114,803 | ||||
| Total stockholders’ equity | 423,028 | 462,386 | ||||
| Total Capital | $ | 537,143 | $ | 577,189 | ||
| Ratio of Total Debt to Capital | 21.2 | % | 19.9 | % | ||
| Total Debt | $ | 114,115 | $ | 114,803 | ||
| Less: cash and cash equivalents | (23,182) | (24,088) | ||||
| Net Debt | 90,933 | 90,715 | ||||
| Total stockholders’ equity | 423,028 | 462,386 | ||||
| Total Capital, Net of Cash | $ | 513,961 | $ | 553,101 | ||
| Ratio of Net Debt to Capital | 17.7 | % | 16.4 | % |
11