Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NEWPARK RESOURCES INC | a20161110-8kxq3investorpre.htm |
Newpark Resources
Presentation
November 2016
NYSE: NR
2
Forward Looking Statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act that are based on management's current expectations, estimates and projections. All statements
that address expectations or projections about the future, including Newpark's strategy for growth, product
development, market position, expected expenditures and financial results are forward-looking statements.
Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans,"
"intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future
performance 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, 2015,
and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, as well as others, could
cause 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 customer
concentration and reliance on the U.S. exploration and production market, the cost and continued availability
of borrowed funds, including non-compliance with debt covenants, our international operations, operating
hazards present in the oil and natural gas industry, our ability to execute our business strategy and make
successful business acquisitions and capital investments, the availability of raw materials and skilled
personnel, our market competition, legal and regulatory matters, including environmental regulations,
inherent limitations in insurance coverage, potential impairments of long-lived intangible assets,
technological developments in our industry, our exposure to cybersecurity breaches or business system
disruptions, and the impact of severe weather, particularly in the U.S. Gulf Coast. 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.
3
$909
$984
$1,042
$1,118
$677
$334
$526
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2011 2012 2013 2014 2015 2016
85%
15%
First Nine Months 2016 - Revenue by Segment
Company Overview
Operating Segments:
Fluids Systems
Mats and Integrated
Services
Customer markets:
Oil and Gas exploration
Mats expanding into utilities
and other non-exploration
markets
Key geographic markets:
North America
EMEA
Latin America
Asia Pacific
R
e
ve
n
u
e
s
($
m
ill
io
n
s)
Consolidated Revenues
Fluids Systems Mats and Integrated Services
Full Year
First Nine Months
4
Global Presence
First Nine Months 2016 Revenue by Region
43%
39%
10%
1%
7%
U.S. EMEA Latin America APAC Canada
5
36%
8%
43%
12%
1%
U.S. Canada EMEA Latin America APAC
Fluids Systems - Overview
Largest independent drilling
fluids provider
3rd largest drilling fluids
company worldwide*
Seek to capitalize on
competitive diversions to drive
market share gains
Geographic reach continuing to
expand, leveraging IOC/NOC
relationships
$799
$862
$926
$965
$581
$284
$451
$0
$200
$400
$600
$800
$1,000
$1,200
2011 2012 2013 2014 2015 2016
Re
ve
n
u
e
s
($
m
il
lio
n
s)
Total Segment Revenues
First Nine Months 2016 - Revenue by Region
*Based on company data
Full Year
First Nine Months
6
2,283
2,114
2,241
1,170
594
10%
11%
12%
13%
14%
15%
16%
-
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 First Nine Months
2016
NAM Rig Count Market Share
$585 $615
$654
$687
$352
$123
$279
$0
$100
$200
$300
$400
$500
$600
$700
$800
2011 2012 2013 2014 2015 2016
Fluids Systems – North America
Revenues impacted by sharp
decline in drilling activity and
operators reducing well
expenditures
Service quality and focus driving
share gains in a difficult market
environment
Hold #2 market share position in
U.S. land*; expanding presence in
GOM
(1) Source: BHI and company data
Re
ve
n
u
e
(
$
m
il
lio
n
s)
North American Revenues
NAM U.S Rig Count & Market Share(1)
Full Year
First Nine Months
*Based on company data
7
$214
$246
$272 $278
$229
$172
$160
$0
$50
$100
$150
$200
$250
$300
$350
2011 2012 2013 2014 2015 2016
$113 $117 $137
$166 $164
$123
$76 $87
$99
$84
$47
$25
$42
$36 $28
$18
$4
2011 2012 2013 2014 2015 First Nine
Months
2016
EMEA LATAM APAC
Fluids Systems - International
International expansion is key to our strategy
More stable than NAM, through the current
cycle
Longer term contracts
Largely IOC’s/NOC’s
Few competitors
Key contract awards have driven growth
Black Sea Deepwater
Kuwait (KOC)
Algeria (Sonatrach)
Republic of Congo (ENI)
Uruguay ultra-deepwater (Total)
Albania (Shell)
2015 revenues include negative y/y impact
from currency rates (strong U.S. dollar)
International Revenues
Revenues by Region
Full Year
First Nine Months
$33
IMPACT OF
CURRENCY
8
Fluids Strategic Investments
Newpark Technology Center
Manufacturing Facility & Distribution Center
Gulf of Mexico Deepwater Shorebase
Elevated capital campaign largely
completed
Infrastructure investments significantly
enhance our capabilities
Reflects our commitment to be the global
leader in fluids technology
9
$110
$122
$116
$153
$96
$51
$75
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2011 2012 2013 2014 2015 2016
Mats & Integrated Services - Overview
Leading provider of engineered worksite
solutions
Patented technology and size of
composite mat rental fleet provide
competitive advantage
Revenues include rentals and sale of
DURA-BASE composite mats
Mat sales targeted to international E&P
and non-oil and gas customers
Established core rental business in NAM
exploration market, where mats reduce
operator’s costs and improve
environmental protection during drilling
and completion phase
Seeking to accelerate growth by
expanding into new geographic markets
and industries
Total Segment Revenues
R
e
ve
n
u
e
s
($
m
ill
io
n
s)
15%
29%
40%
16% Mat Sales - Non-Exploration
Rental - Exploration
Rental - NAM Utilities & Pipeline
Rental - U.K. Utilities & Other
First Nine Months - 2016 Revenues by Market
Full Year
First Nine Months
10
Mats & Integrated Services - Strategy
Key investments made to support
future growth
Manufacturing capacity expanded
R&D center completed
Transform wellsite offering to system
solution, driving lowest cost to
operators
Defender Spill Containment System
Other enhancements (lighting, safety
barriers, etc.)
Diversify beyond the wellsite
Accelerate penetration of non-
exploration markets, both domestically
and internationally
Commercialize differentiated system
enhancements, including EPZ Grounding
System® for the utility industry
11
Maintaining Financial Discipline
Short-Term Actions
Focused on managing cost
structure as NAM activity levels
improve
Generating cash flow through
continued working capital
reductions
Minimize capital investments
beyond deepwater project
Long-term Focus
Continue investing in strategic
capital projects
IOC/deepwater focus in fluids
Aggressively pursue non-E&P
market expansion in mats
Selectively seek to strengthen core
competencies during cycle,
including expanding technology
portfolio
$256
$183 $182 $179 $170
$209
$117
$97
$71 $78
20%
23%
26%
29%
32%
35%
$0
$50
$100
$150
$200
$250
$300
2012 2013 2014 2015 Sep
2016
Total Debt Net Debt Debt to Book Capital Ratio
Capital Structure
Protecting the Balance Sheet
Seeking to maximize near-term liquidity while
preparing for Q4 2017 debt maturity
Revolving credit facility remains unused, providing
additional liquidity
12
APPENDIX
13
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
(In thousands, except per share data)
September 30,
2016
June 30,
2016
September 30,
2015
September 30,
2016
September 30,
2015
Revenues $ 104,554 $ 115,315 $ 154,170 $ 334,413 $ 526,278
Cost of revenues 99,293 102,803 138,283 313,669 457,072
Selling, general and administrative expenses 21,736 21,435 25,859 66,663 75,800
Other operating income, net (1,420 ) (713 ) (709 ) (3,829 ) (1,777 )
Impairments and other charges — 6,925 — 6,925 —
Operating loss (15,055 ) (15,135 ) (9,263 ) (49,015 ) (4,817 )
Foreign currency exchange (gain) loss 761 (746 ) 3,236 (440 ) 4,390
Interest expense, net 2,127 3,022 2,129 7,230 6,608
Gain on extinguishment of debt — — — (1,894 ) —
Loss from operations before income taxes (17,943 ) (17,411 ) (14,628 ) (53,911 ) (15,815 )
Benefit for income taxes (4,492 ) (3,507 ) (10,157 ) (13,256 ) (8,083 )
Net loss $ (13,451 ) $ (13,904 ) $ (4,471 ) $ (40,655 ) $ (7,732 )
Loss per common share - basic $ (0.16 ) $ (0.17 ) $ (0.05 ) $ (0.49 ) $ (0.09 )
Loss per common share - diluted $ (0.16 ) $ (0.17 ) $ (0.05 ) $ (0.49 ) $ (0.09 )
14
Operating Segment Results
Three Months Ended
(In thousands)
September 30,
2016
June 30,
2016
September 30,
2015
Revenues
Fluids systems $ 89,097 $ 96,153 $ 138,765
Mats and integrated services 15,457 19,162 15,405
Total revenues $ 104,554 $ 115,315 $ 154,170
Operating income (loss)
Fluids systems $ (8,995 ) $ (11,924 ) $ (1,246 )
Mats and integrated services 882 3,989 (128 )
Corporate office (6,942 ) (7,200 ) (7,889 )
Operating loss $ (15,055 ) $ (15,135 ) $ (9,263 )
Segment operating margin
Fluids systems (10.1 )% (12.4 )% (0.9 )%
Mats and integrated services 5.7 % 20.8 % (0.8 )%
15
Consolidated Balance Sheets
(In thousands, except share data) September 30, 2016 December 31, 2015
ASSETS
Cash and cash equivalents $ 91,864 $ 107,138
Receivables, net 169,839 206,364
Inventories 138,747 163,657
Prepaid expenses and other current assets 30,358 29,219
Total current assets 430,808 506,378
Property, plant and equipment, net 308,820 307,632
Goodwill 20,216 19,009
Other intangible assets, net 6,938 11,051
Deferred tax assets 5,661 1,821
Other assets 4,000 3,002
Total assets $ 776,443 $ 848,893
LIABILITIES AND STOCKHOLDERS’ EQUITY
Short-term debt $ 8,900 $ 7,382
Accounts payable 46,098 72,211
Accrued liabilities 37,231 45,835
Total current liabilities 92,229 125,428
Long-term debt, less current portion 160,631 171,211
Deferred tax liabilities 27,290 26,368
Other noncurrent liabilities 6,827 5,627
Total liabilities 286,977 328,634
Common stock, $0.01 par value, 200,000,000 shares authorized and
99,809,902 and 99,377,391 shares issued, respectively 998
994
Paid-in capital 540,415 533,746
Accumulated other comprehensive loss (55,782 ) (58,276 )
Retained earnings 129,931 171,788
Treasury stock, at cost; 15,161,747 and 15,302,345 shares, respectively (126,096 ) (127,993 )
Total stockholders’ equity 489,466 520,259
Total liabilities and stockholders' equity $ 776,443 $ 848,893
16
Consolidated Statements of Cash Flow
Nine Months Ended September 30,
(In thousands) 2016 2015
Cash flows from operating activities:
Net loss $ (40,655 ) $ (7,732 )
Adjustments to reconcile net loss to net cash provided by operations:
Impairments and other non-cash charges 9,493 —
Depreciation and amortization 28,421 32,668
Stock-based compensation expense 8,865 10,514
Provision for deferred income taxes (3,205 ) (12,240 )
Net provision for doubtful accounts 2,032 1,176
Gain on sale of assets (2,331 ) (940 )
Gain on extinguishment of debt (1,894 ) —
Change in assets and liabilities:
Decrease in receivables 31,360 120,848
Decrease in inventories 25,368 11,190
Decrease (increase) in other assets 582 (2,384 )
Decrease in accounts payable (24,241 ) (38,772 )
Decrease in accrued liabilities and other (3,860 ) (7,161 )
Net cash provided by operating activities 29,935 107,167
Cash flows from investing activities:
Capital expenditures (33,390 ) (51,375 )
Business acquisitions, net of cash acquired (3,761 ) —
Increase in restricted cash (578 ) (15,500 )
Proceeds from sale of property, plant and equipment 3,317 1,864
Net cash used in investing activities (34,412 ) (65,011 )
Cash flows from financing activities:
Borrowings on lines of credit 6,056 7,178
Payments on lines of credit (7,210 ) (9,928 )
Purchase of senior notes (9,206 ) —
Debt issuance costs (2,143 ) (1,763 )
Other financing activities 1,452 (1,695 )
Proceeds from employee stock plans 508 469
Purchases of treasury stock (1,236 ) (1,771 )
Net cash used in financing activities (11,779 ) (7,510 )
Effect of exchange rate changes on cash 982 (5,848 )
Net increase (decrease) in cash and cash equivalents (15,274 ) 28,798
Cash and cash equivalents at beginning of year 107,138 85,052
Cash and cash equivalents at end of period $ 91,864 $ 113,850
17
Experienced Leadership
• Paul Howes President & CEO
• Gregg Piontek VP & CFO
• Mark Airola SVP, GC & Admin Officer
• Bruce Smith President
Fluids Systems
• Matthew Lanigan President
Mats & Integrated Services
18
Management Biographies
Paul L. Howes, President & CEO: Paul joined Newpark’s Board of Directors and was appointed its Chief Executive
Officer in March 2006. In June 2006, Mr. Howes also was appointed as Newpark’s President. Mr. Howes’ career has
included experience in the defense industry, chemicals and plastics manufacturing, and the packaging industry. From
2002 until October 2005, he served as President and Chief Executive Officer of Astaris LLC, a primary chemicals
company headquartered in St. Louis, Missouri, with operations in North America, Europe and South America. Prior to
this, from 1997 until 2002, he served as Vice President and General Manager, Packaging Division,
for Flint Ink Corporation, a global ink company headquartered in Ann Arbor, Michigan with operations in North
America, Europe, Asia Pacific and Latin America.
Gregg S. Piontek, VP & CFO: Joined Newpark in April 2007 and served as Vice President, Controller and Chief
Accounting Officer from April 2007 to October 2011. Prior to joining Newpark, Mr. Piontek was Vice President and
Chief Accounting Officer of Stewart & Stevenson LLC from 2006 to 2007, where he served as the lead executive
financial officer for the asset acquisition from Stewart & Stevenson Services, Inc. and $150 million public debt offering.
From 2001 to 2006, Mr. Piontek held the positions of Assistant Corporate Controller and Division Controller for Stewart
& Stevenson Services, Inc. Prior to that, Mr. Piontek served in various financials roles at General Electric and CNH Global
N.V., after beginning his career as an auditor for Deloitte & Touche LLP. Mr. Piontek is a Certified Public Accountant and
holds a bachelor degree in Accountancy from Arizona State University and a Master of Business Administration degree
from Marquette University.
Mark J. Airola, Sr. VP, GC & Admin Officer: Mark joined Newpark in October 2006 as its Vice President, General
Counsel and Chief Administrative Officer. Mr. Airola was named Senior Vice President in February of 2011. Prior to
joining Newpark, Mr. Airola was Assistant General Counsel and Chief Compliance Officer for BJ Services Company, a
leading provider of pressure pumping and other oilfield services to the petroleum industry, serving as an executive
officer since 2003. From 1988 to 1995, he held the position of Senior Litigation Counsel at Cooper Industries, Inc., a
global manufacturer of electrical products and tools, with initial responsibility for managing environmental regulatory
matters and litigation and subsequently managing the company’s commercial litigation.
19
Bruce C. Smith, Executive VP and President Fluids Systems: Bruce joined Newpark in April 1998 as Vice President,
International. Since October 2000, he has served as President of its subsidiary Newpark Drilling Fluids, L.P. Prior to
joining Newpark, Mr. Smith was the Managing Director of the U.K. operations of M-I Swaco, a competitor of Newpark
Drilling Fluids, where he was responsible for two business units, including their drilling fluids unit.
Matthew Lanigan, President Mats and Integrated Services: Matthew joined Newpark in April 2016, as President of
Newpark Mats & Integrated Services. Matthew began his professional career at ExxonMobil in Australia working
on rigs as a Drilling & Completions Engineer, progressing from there to Offshore Production Engineer and as a
Marketer for Crude & LPG. While pursuing his MBA, he accepted a position with GE in the Plastics division
where he rose to the role of Chief Marketing Officer before transferring to the Capital division of GE, based in
the UK. His first opportunity to work in the United States came with the Enterprise Client Group of GE's Capital
division, where he worked in leadership roles in Sales & Marketing. In 2011, he was appointed as the Director
of Commercial Excellence for Asia Pacific, based in Australia. In addition to growing revenue and market share,
key responsibilities for this role included developing cross-organizational synergies and market entry strategies.
Management Biographies