Newpark Resources Reports 4Q:22 Results

(Newpark Resources, 16.Feb.2023) — Newpark Resources, Inc. (NYSE: NR) announced results for its fourth quarter ended 31 December 2022. Total revenues for the fourth quarter of 2022 were $225.2mn compared to $219.9mn for the third quarter of 2022 and $179.6mn for the fourth quarter of 2021. Net income for the fourth quarter of 2022 was $9.0mn, or $0.10 per diluted share, which includes $2.4mn 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 $21.5mn. Net loss for the third quarter of 2022 was $24.6mn, or ($0.26) per share, which included $29.9mn of pre-tax charges ($29.8mn after-tax, $0.32 per diluted share). Net loss for the fourth quarter of 2021 was $3.7mn, 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 $40mn 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 $17mn 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 $43mn 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 $17.8mn and Adjusted EBITDA of $23.3mn 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 $168mn for the fourth quarter, as a $6mn decline from the divested operations was substantially offset by net improvements in other regions. Excluding the divested Excalibar business, U.S. land revenues improved $8mn sequentially, benefitting from growth across most regions. The divested Excalibar and Gulf of Mexico operations contributed $20mn of revenue and a $2.9mn operating loss in the fourth quarter of 2022, while the ongoing Fluids Systems segment operations delivered $148mn of revenues, a 4% sequential increase, and operating income of $7.7mn, which reflects a 5.2% operating margin.

“Regarding cash flows, we generated roughly $80mn of cash in the fourth quarter from the divested business units, including $71mn of cash proceeds from the divestiture transactions, reduced total debt by $47mn and used $18mn to fund share repurchases. Additionally, we expect roughly $30mn 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 $10mn 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 $57.5mn for the fourth quarter of 2022 compared to $51.2mn for the third quarter of 2022 and $51.1mn for the fourth quarter of 2021. Segment operating income was $17.8mn for the fourth quarter of 2022 compared to $10mn for the third quarter of 2022 and $9.5mn for the fourth quarter of 2021.

The Fluids Systems segment generated revenues of $167.7mn for the fourth quarter of 2022 compared to $168.6mn for the third quarter of 2022 and $127.9mn for the fourth quarter of 2021. Segment operating income was $4.8mn for the fourth quarter of 2022 compared to an operating loss of $24.2mn for the third quarter of 2022 and operating income of $0.9mn for the fourth quarter of 2021. The Fluids Systems operating income for the fourth quarter of 2022 includes a $1mn pre-tax gain related to the Excalibar sale, as well as $1.2mn in charges primarily related to facility exit and severance costs. The Fluids Systems operating loss for the third quarter of 2022 included $29.4mn 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 $0.9mn 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, 17 February 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 3March 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.

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