(Newpark, 25.Apr.2019) — Newpark Resources, Inc. today announced results for its first quarter ended March 31, 2019. Total revenues for the first quarter of 2019 were $211.5 million compared to $247.7 million for the fourth quarter of 2018 and $227.3 million for the first quarter of 2018. Net income for the first quarter of 2019 was $1.3 million, or $0.01 per diluted share, compared to $10.6 million, or $0.11 per diluted share, for the fourth quarter of 2018, and $7.2 million, or $0.08 per diluted share, in the first quarter of 2018. First quarter 2019 results include the impact of the following:
— $4.0 million of pre-tax charges ($2.7 million after-tax) associated with the modification of the Company’s retirement policy applicable to cash and equity awards, to include the Company’s executive officers (who were previously excluded from the eligible population under the Company’s retirement policy). These charges primarily reflect the acceleration of expense, as well as the incremental value associated with modifications to extend the exercise period of outstanding options for previously-granted awards for retirement eligible executive officers; and
— $0.5 million of pre-tax charges for severance and related costs in the Fluids Systems segment ($0.4 million after-tax).
Combined, the impact of the above items resulted in a $4.5 million reduction in operating income and a $3.1 million reduction in net income ($0.03 per diluted share) in the first quarter of 2019.
Paul Howes, Newpark’s President and Chief Executive Officer, stated, “Although the market softness and international contract transitions in our Fluids Systems segment had a greater than anticipated impact on first quarter results, we continue to be encouraged by our operational execution. Fluids revenues pulled back across all regions, resulting in a 10% sequential decline. In North America, Fluids revenues declined 4% sequentially to $116 million, reflecting the impact of the softer activity levels in the U.S. onshore market and lack of the typical seasonal improvements in Canada. A decline in our U.S. land business was partially offset by the start of two deepwater projects in the Gulf of Mexico, as our offshore market penetration efforts continue to gain momentum.
“Meanwhile, international Fluids revenues declined 21% sequentially, primarily reflecting the contract transitions in Algeria and Brazil, as well as the impact of project delays in Eastern Europe, as discussed on our previous quarter’s call,” added Howes. “Despite sequential margin improvements in our U.S. business, Fluids segment operating income was negatively impacted by the softer revenues, as well as the inherent cost inefficiencies that result from the contract transitions and project delays. In addition, the first quarter included the impact of $1.1 million of the charges described above, resulting in a 2.4% segment operating margin.
“In our Mats and Integrated Services segment, first quarter revenues were $51 million, reflecting the anticipated sequential decline from the record result in the fourth quarter, which benefitted from elevated year-end demand for direct sales, as well as strong weather-driven rental and service demand across industries,” added Howes. “Notwithstanding the sequential decline in revenues, the segment delivered a 27% operating margin, which benefitted from a favorable revenue mix, disciplined cost controls and our ongoing efforts to focus on opportunities that provide stronger returns, particularly given the tight U.S. labor market.
“Following the softer first quarter performance, we anticipate improvements in both segments as we progress through 2019, benefitting from improving market conditions, the execution of our current strategic growth initiatives, as well as the completion of our international contract transitions in Fluids,” added Howes. “In addition to the Gulf of Mexico projects now underway, we were also awarded the fluids work for an additional deepwater drillship with Shell Oil. This work is expected to begin in the second quarter and continue into early 2020.”
Segment Results
The Fluids Systems segment generated revenues of $160.7 million for the first quarter of 2019 compared to $177.7 million for the fourth quarter of 2018 and $177.4 million for the first quarter of 2018. Segment operating income was $3.9 million for the first quarter of 2019 compared to $8.2 million for the fourth quarter of 2018 and $10.5 million for the first quarter of 2018. The Fluids Systems segment operating income in the first quarter of 2019 includes $1.1 million of pre-tax charges related to the modification of the Company’s retirement policy and severance costs.
The Mats and Integrated Services segment generated revenues of $50.8 million for the first quarter of 2019 compared to $69.9 million for the fourth quarter of 2018 and $49.9 million for the first quarter of 2018. Segment operating income was $13.5 million for the first quarter of 2019 compared to $20.7 million for the fourth quarter of 2018 and $12.1 million for the first quarter of 2018.
Conference Call
Newpark has scheduled a conference call to discuss first quarter 2019 results and its near-term operational outlook, which will be broadcast live over the Internet, on Friday, April 26, 2019 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 May 9, 2019 and may be accessed by dialing 201-612-7415 and using pass code 13688608#. Also, an archive of the webcast will be available shortly after the call at www.newpark.com for 90 days.
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