Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 06, 2016 | |
Entity Registrant Name | NEWPARK RESOURCES INC | |
Entity Central Index Key | 71,829 | |
Trading Symbol | nr | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Entity Common Stock, Shares Outstanding (in shares) | 84,111,567 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 82,534 | $ 107,138 |
Receivables, net | 188,451 | 206,364 |
Inventories | 154,638 | 163,657 |
Prepaid expenses and other current assets | 27,807 | 29,219 |
Total current assets | 453,430 | 506,378 |
Property, plant and equipment, net | 312,466 | 307,632 |
Goodwill | 18,890 | 19,009 |
Other intangible assets, net | 10,089 | 11,051 |
Deferred tax assets | 2,095 | 1,821 |
Other assets | 2,919 | 3,002 |
Total assets | 799,889 | 848,893 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Short-term debt | 5,521 | 7,382 |
Accounts payable | 52,034 | 72,211 |
Accrued liabilities | 35,639 | 45,835 |
Total current liabilities | 93,194 | 125,428 |
Long-term debt, less current portion | 160,289 | 171,211 |
Deferred tax liabilities | 26,272 | 26,368 |
Other noncurrent liabilities | 5,291 | 5,627 |
Total liabilities | $ 285,046 | $ 328,634 |
Commitments and contingencies (Note 7) | ||
Common stock, $0.01 par value, 200,000,000 shares authorized and 99,342,156 and 99,377,391 shares issued, respectively | $ 993 | $ 994 |
Paid-in capital | 536,459 | 533,746 |
Accumulated other comprehensive loss | (53,642) | (58,276) |
Retained earnings | 158,488 | 171,788 |
Treasury stock, at cost; 15,238,028 and 15,302,345 shares, respectively | (127,455) | (127,993) |
Total stockholders’ equity | 514,843 | 520,259 |
Total liabilities and stockholders' equity | $ 799,889 | $ 848,893 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 99,342,156 | 99,377,391 |
Treasury stock, shares (in shares) | 15,238,028 | 15,302,345 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues | $ 114,544 | $ 208,464 |
Cost of revenues | 111,573 | 176,634 |
Selling, general and administrative expenses | 23,492 | 25,978 |
Other operating income, net | (1,696) | (276) |
Operating income (loss) | (18,825) | 6,128 |
Foreign currency exchange (gain) loss | (455) | 1,564 |
Interest expense, net | 2,081 | $ 2,255 |
Gain on extinguishment of debt | (1,894) | |
Income (loss) from operations before income taxes | (18,557) | $ 2,309 |
Provision (benefit) for income taxes | (5,257) | 1,316 |
Net income (loss) | $ (13,300) | $ 993 |
Income (loss) per common share - basic: (in dollars per share) | $ (0.16) | $ 0.01 |
Income (loss) per common share - diluted: (in dollars per share) | $ (0.16) | $ 0.01 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Net income (loss) | $ (13,300) | $ 993 |
Foreign currency translation adjustments | 4,634 | (17,209) |
Comprehensive loss | $ (8,666) | $ (16,216) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (13,300) | $ 993 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation and amortization | 9,573 | 10,527 |
Stock-based compensation expense | 2,974 | 2,964 |
Provision for deferred income taxes | (36) | 1,775 |
Net provision for doubtful accounts | 528 | 721 |
(Gain) loss on sale of assets | (1,271) | $ 11 |
Gain on extinguishment of debt | $ (1,894) | |
Excess tax benefit from stock-based compensation | $ (16) | |
Change in assets and liabilities: | ||
Decrease in receivables | $ 27,606 | 45,869 |
Decrease in inventories | 10,630 | 7,620 |
(Increase) decrease in other assets | 1,667 | (265) |
Decrease in accounts payable | (20,028) | (29,353) |
Decrease in accrued liabilities and other | (19,349) | (9,250) |
Net cash provided by (used in) operating activities | (2,900) | 31,596 |
Cash flows from investing activities: | ||
Capital expenditures | (13,418) | (18,505) |
Proceeds from sale of property, plant and equipment | 1,450 | 298 |
Net cash used in investing activities | (11,968) | (18,207) |
Cash flows from financing activities: | ||
Borrowings on lines of credit | 2,479 | 1,906 |
Payments on lines of credit | (4,851) | $ (2,394) |
Purchase of senior notes | $ (9,206) | |
Debt issuance costs | $ (1,456) | |
Other financing activities | $ (3) | (12) |
Proceeds from employee stock plans | 305 | |
Excess tax benefit from stock-based compensation | 16 | |
Net cash used in financing activities | $ (11,581) | (1,635) |
Effect of exchange rate changes on cash | 1,845 | (5,114) |
Net increase (decrease) in cash and cash equivalents | (24,604) | 6,640 |
Cash and cash equivalents at beginning of year | 107,138 | 85,052 |
Cash and cash equivalents at end of period | 82,534 | 91,692 |
Cash paid for: | ||
Income taxes (net of refunds) | 1,555 | 4,846 |
Interest | $ 494 | $ 661 |
Note 1 - Basis of Presentation
Note 1 - Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Basis of Presentation and Significant Accounting Policies [Text Block] | Note 1 – Basis of Presentation and Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements of Newpark Resources, Inc. and our wholly-owned subsidiaries, which we refer to as “we,” “our” or “us,” have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”), and do not include all information and footnotes required by the accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. Our fiscal year end is December 31 and our first quarter represents the three month period ended March 31. The results of operations for the first quarter of 2016 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise stated, all currency amounts are stated in U.S. dollars. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary to present fairly our financial position as of March 31, 2016 and our results of operations and cash flows for the first quarters of 2016 and 2015. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 2015 is derived from the audited consolidated financial statements at that date. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 1 in our Annual Report on Form 10-K for the year ended December 31, 2015. Change in Accounting Estimates During the first quarter of 2016, we reviewed our estimates of the useful lives and residual values of our composite mats rental fleet included in fixed assets for the Mats and Integrated Services segment. We revised our original estimates based on the observed historical service lives and end of life residual values for composite mats. We now estimate that certain composite mats which were originally estimated to have a useful life of 7 years with zero residual value will have estimated useful lives ranging from 10 to 12 years with an estimated residual value of 20%. These changes in estimates were recognized prospectively beginning from January 1, 2016 resulting in a reduction in depreciation expense of approximately $1.6 million for the Mats and Integrated Services segment and additional quarterly net income after taxes of approximately $1.0 million, or $0.01 per share, in the first quarter of 2016. We expect these changes to have a similar effect on future quarterly results in 2016 and going forward. New Accounting Pronouncements Standard adopted in 2016 In September 2015, the Financial Accounting Standards Board (“FASB”) issued updated guidance that eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The new guidance was effective for us prospectively in the first quarter of 2016; however, the adoption did not have any effect on our consolidated financial statements. Standards not yet adopted In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of the new guidance by one year and provided entities the option to early adopt the new guidance. The new guidance is effective for us in the first quarter of 2018 with early adoption permitted in the first quarter of 2017. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We are currently evaluating the impact of these amendments, including the adoption and transition alternatives, on our consolidated financial statements. In July 2015, the FASB issued updated guidance that simplifies the subsequent measurement of inventory. It replaces the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance is effective prospectively for us in the first quarter of 2017 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. In February 2016, the FASB issued updated guidance regarding accounting for leases. The new accounting standard provides principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognize both assets and liabilities arising from financing and operating leases. The classification as either a financing or operating lease will determine whether lease expense is recognized based on an effective interest method basis or on a straight-line basis over the term of the lease, respectively. The new guidance is effective for us in the first quarter of 2019 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. In March 2016, the FASB issued updated guidance that simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification of excess tax benefits on the statement of cash flows. The new guidance is effective for us in the first quarter of 2017 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. |
Note 2 - Earnings Per Share
Note 2 - Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Earnings Per Share [Text Block] | Note 2 – Earnings per Share The following table presents the reconciliation of the numerator and denominator for calculating earnings per share from continuing operations: First Quarter (In thousands, except per share data) 2016 2015 Basic EPS: Net income (loss) $ (13,300 ) $ 993 Weighted average number of common shares outstanding 83,258 82,299 Basic income (loss) per common share $ (0.16 ) $ 0.01 Diluted EPS: Net income (loss) $ (13,300 ) $ 993 Assumed conversions of Senior Notes - - Adjusted net income (loss) $ (13,300 ) $ 993 Weighted average number of common shares outstanding-basic 83,258 82,299 Add: Dilutive effect of stock options and restricted stock awards - 1,505 Dilutive effect of Senior Notes - - Diluted weighted average number of common shares outstanding 83,258 83,804 Diluted income (loss) per common share $ (0.16 ) $ 0.01 Stock options and restricted stock excluded from calculation of diluted earnings per share because anti-dilutive for the period 6,265 954 For the first quarter of 2016, we excluded 0.6 million shares for the dilutive effect of stock options and restricted stock awards in calculating diluted earnings per share as the effect was anti-dilutive due to the net loss incurred for this period. For the first quarters of 2016 and 2015, we excluded the assumed conversion of the Senior Notes in calculating diluted earnings per share as the effect was anti-dilutive for each period. |
Note 3 - Repurchase Program
Note 3 - Repurchase Program | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Stockholders' Equity Note Disclosure [Text Block] | Note 3 – Repurchase Program In April 2013, our Board of Directors approved a share repurchase program that authorizes the Company to purchase up to $50.0 million of its outstanding shares of common stock. This authorization was subsequently increased to $100.0 million in February 2014. In September 2015, our Board of Directors expanded the repurchase program to include the repurchase of our convertible Senior Notes (as defined in Note 6 below), in addition to outstanding shares of common stock. The repurchase program has no specific term. The Company may repurchase shares or convertible Senior Notes in the open market or as otherwise determined by management, subject to market conditions, business opportunities, limitations under the ABL Facility (as defined in Note 6 below) and other factors. Repurchases are expected to be funded from operating cash flows and available cash on-hand. As part of the share repurchase program, the Company’s management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. There were no shares repurchased during the first quarter of 2016 or 2015. In February 2016, we repurchased $11.2 million of our convertible Senior Notes in the open market for $9.2 million. This repurchase was made under our existing Board authorized repurchase program discussed above. As of March 31, 2016, we had $33.5 million of authorization remaining under the program. |
Note 4 - Receivables
Note 4 - Receivables | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] | Note 4 – Receivables Receivables consisted of the following: (In thousands) March 31, 2016 December 31, 2015 Gross trade receivables $ 135,998 $ 159,119 Allowance for doubtful accounts (7,355 ) (7,189 ) Net trade receivables 128,643 151,930 Income tax receivables 39,813 32,600 Other receivables 19,995 21,834 Total receivables, net $ 188,451 $ 206,364 At March 31, 2016 and December 31, 2015, income tax receivables includes approximately $36 million and $29 million, respectively, related to our decision to request refunds for the carryback of U.S. federal tax losses incurred in 2016 and 2015. Other receivables include $10.3 million and $10.4 million for value added, goods and service taxes related to foreign jurisdictions and other tax related receivables as of March 31, 2016 and December 31, 2015, respectively. In addition, other receivables includes $8.0 million at March 31, 2016 and December 31, 2015 in connection with the March 2014 sale of the Environmental Services business that is held in escrow associated with transaction representations, warranties and indemnities. In December 2014, the buyer made certain claims for indemnification under the terms of the sale agreement, which defers the release of the escrow funds until such claims are resolved. Further discussion of the buyer’s claims and related litigation is contained in Note 7 below. |
Note 5 - Inventories
Note 5 - Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Inventory Disclosure [Text Block] | Note 5 – Inventories Inventories consisted of the following: (In thousands) March 31, 2016 December 31, 2015 Raw materials: Drilling fluids $ 127,181 $ 133,934 Mats 1,035 657 Total raw materials 128,216 134,591 Blended drilling fluids components 22,847 25,343 Finished goods- mats 3,575 3,723 Total $ 154,638 $ 163,657 Raw materials consist primarily of barite, chemicals, and other additives that are consumed in the production of our drilling fluid systems. Our blended drilling fluids components consist of base drilling fluid systems that have been either mixed internally at our mixing plants or purchased from third party vendors. These base systems require raw materials to be added, as required to meet specified customer requirements. |
Note 6 - Financing Arrangements
Note 6 - Financing Arrangements and Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Debt Disclosure [Text Block] | Note 6 – Financing Arrangements and Fair Value of Financial Instruments Financing arrangements consisted of the following: (In thousands) March 31, 2016 December 31, 2015 Senior Notes $ 161,321 $ 172,497 Debt issuance costs - Senior Notes (1,039 ) (1,296 ) Revolving credit facility - - Other 5,528 7,392 Total debt 165,810 178,593 Less: current portion (5,521 ) (7,382 ) Long-term portion $ 160,289 $ 171,211 Senior Notes. Revolving Credit Facility. At March 31, 2016, we had no outstanding borrowings under the revolving credit facility. Following the significant decline in customer activity during the first quarter of 2016, we were not in compliance with the consolidated leverage ratio and interest coverage ratio covenants included in the Amendment. We terminated the Credit Agreement effective May 12, 2016 and replaced it with an asset-based revolving loan facility as discussed further below. As of the date of termination, we had no outstanding borrowings under the Credit Agreement. Asset-Based Loan Facility. Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate plus an applicable margin based on either, (1) LIBOR subject to a floor of zero or (2) a base rate equal to the highest of: (a) the federal funds rate plus 50 basis points, (b) the prime rate of Bank of America, N.A. or (c) LIBOR, subject to a floor of zero, plus 100 basis points. The applicable margin ranges from 225 to 350 basis points for LIBOR borrowings, and 125 to 250 basis points with respect to base rate borrowings, based on our consolidated EBITDA, consolidated leverage ratio, and consolidated fixed charge coverage ratio. The initial applicable margin for borrowings under our ABL Facility is 350 basis points with respect to LIBOR borrowings and 250 basis points with respect to base rate borrowings. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 37.5 to 62.5 basis points, based on our consolidated leverage ratio. The initial applicable commitment fee is 62.5 basis points. The ABL Facility is a senior secured obligation, secured by first liens on all of our U.S. tangible and intangible assets and a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral. The ABL Facility contains customary operating covenants and certain restrictions including, among other things, the incurrence of additional debt, liens, dividends, asset sales, investments, mergers, acquisitions, affiliate transactions, stock repurchases and other restricted payments such as the redemption, defeasance or refinancing of the Senior Notes. In addition, the ABL Facility contains customary events of default, including, without limitation, a failure to make payments under the facility, acceleration of more than $25.0 million of other indebtedness, certain bankruptcy events and certain change of control events. Other Debt. At March 31, 2016, we had letters of credit issued and outstanding which totaled $14.2 million that are collateralized by $15.5 million in restricted cash. Additionally, our foreign operations had $11.5 million outstanding in letters of credit and other guarantees, with certain letters of credit that are collateralized by $2.0 million in restricted cash. At March 31, 2016, this restricted cash totaling $17.5 million was included in other current assets in the accompanying balance sheet. Our financial instruments include cash and cash equivalents, receivables, payables and debt. We believe the carrying values of these instruments, with the exception of our Senior Notes, approximated their fair values at March 31, 2016 and December 31, 2015. The estimated fair value of our Senior Notes was $141.5 million at March 31, 2016 and $154.4 million at December 31, 2015, based on quoted market prices at these respective dates. |
Note 7 - Commitments and Contin
Note 7 - Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Commitments and Contingencies Disclosure [Text Block] | Note 7 – Commitments and Contingencies In the ordinary course of conducting our business, we become involved in litigation and other claims from private party actions, as well as judicial and administrative proceedings involving governmental authorities at the federal, state and local levels. Wage and Hour Litigation During the second quarter of 2014, a lawsuit was filed by Jesse Davida, a former employee, in Federal Court in Texas against Newpark Drilling Fluids LLC, alleging violations of the Fair Labor Standards Act (“FLSA”). The plaintiff seeks damages and penalties for the Company’s alleged failure to properly classify its field service employees as “non-exempt” under the FLSA and pay them on an hourly basis (including overtime). The plaintiff seeks recovery on his own behalf, and seeks certification of a class of similarly situated employees. The Court conditionally certified a class of plaintiffs as those working as fluid service technicians for Newpark Drilling Fluids for the prior three years. Notification was given to 658 current and former fluid service technician employees of Newpark regarding this litigation and those individuals were given the opportunity to “opt-in” to the Davida Davida A second case was filed by Josh Christensen in the fourth quarter of 2014 in Federal Court in Texas alleging that individuals treated as independent contractors should have been classified as employees and, as such, are entitled to assert claims for alleged violations of the FLSA (similar to the claims asserted in the Davida In the fourth quarter of 2015, the same counsel representing the plaintiffs in the Davida Christiansen Davida Beginning in November 2015, we engaged in settlement discussions with counsel for the plaintiffs in the pending wage and hour litigation cases described above. Following mediation in January of 2016, the parties executed a settlement agreement in April 2016 to settle all of the pending matters, subject to a number of conditions, including approval by the Court in the Davida Christiansen Escrow Claims Related to the Sale of the Environmental Services Business Under the terms of the March 2014 sale of our previous Environmental Services business to Ecoserv, LLC (“Ecoserv”), $8 million of the sales price was withheld and placed in an escrow account to satisfy claims for possible breaches of representations and warranties contained in the sale agreement. For the amount withheld in escrow, $4 million was scheduled for release to Newpark at each of the nine-month and 18-month anniversary of the closing. In December 2014, we received a letter from counsel for Ecoserv asserting that we had breached certain representations and warranties contained in the sale agreement; including failing to disclose service work performed on injection wells and increased barge rental costs. The letter indicated that Ecoserv expected the costs associated with these claims to exceed the escrow amount. Following a further exchange of letters, in July of 2015, we filed a declaratory judgment action against Ecoserv in state court in Harris County, Texas, seeking release of the escrow funds. Thereafter, Ecoserv filed a counterclaim seeking recovery of the escrow funds based on the alleged breach of representations and warranties. Ecoserv also alleges that we committed fraud in connection with the sale transaction. We believe there is no basis in the agreement or on the facts to support the claims asserted by Ecoserv and intend to vigorously defend our position, while pursuing release of the entire $8 million in escrow. The litigation remains in the discovery process. |
Note 8 - Segment Data
Note 8 - Segment Data | 3 Months Ended |
Mar. 31, 2016 | |
Notes to Financial Statements | |
Segment Reporting Disclosure [Text Block] | Note 8 – Segment Data Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers): First Quarter (In thousands) 2016 2015 Revenues Fluids systems $ 98,651 $ 171,902 Mats & integrated services 15,893 36,562 Total Revenues $ 114,544 $ 208,464 Operating Income (loss) Fluids systems $ (15,207 ) $ (1,702 ) Mats & integrated services 3,736 15,647 Corporate office (7,354 ) (7,817 ) Operating Income (loss) $ (18,825 ) $ 6,128 In response to the significant declines in industry activity in North America, we initiated cost reduction programs in the first quarter of 2015 including workforce reductions, reduced discretionary spending, and temporary salary freezes for substantially all employees, including executive officers, and have continued these efforts through the first quarter of 2016. In September 2015, we also initiated a voluntary early retirement program with certain eligible employees in the United States for retirement dates ranging from the fourth quarter of 2015 through the third quarter of 2016. As a result of the continuing declines in activity in the first quarter of 2016, we initiated further cost reduction actions including additional workforce reductions and beginning in March 2016, a temporary salary reduction for a significant number of North American employees, including executive officers, suspension of the Company’s matching contribution to the U.S. defined contribution plan as well as a reduction in cash compensation paid to our Board of Directors, in order to further align our cost structure to the current activity levels. As part of these cost reduction programs, we have eliminated substantially all contract positions and reduced our North American employee base by 591 (approximately 46%) since December 31, 2014, including a 155 employee reduction in the first quarter of 2016. As a result of these termination programs, we recognized charges for employee termination costs of $3.4 million and $2.9 million in the first quarters of 2016 and 2015, respectively, of which $2.7 million and $2.2 million, respectively, are reported in cost of revenues, and $0.7 million and $0.7 million, respectively, are reported in selling, general and administrative expenses. The employee termination costs in the first quarters of 2016 and 2015 include $3.2 million and $2.6 million in Fluids Systems, $0.1 million and $0.2 million in Mats and Integrated Services and $0.1 million and $0.1 million in our corporate office, respectively. Accrued employee termination costs at March 31, 2016 and December 31, 2015 were $1.0 million and $3.3 million, respectively, and are expected to be substantially paid in the first half of 2016. As discussed above, we revised our estimated useful lives and end of life residual values for composite mats included in our rental fleet resulting in a decrease in depreciation expense of approximately $1.6 million in the first quarter of 2016. For the first quarter of 2016, revenue from our primary customer in Algeria, Sonatrach, was approximately 15% of consolidated revenues. |
Significant Accounting Policies
Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Use of Estimates, Policy [Policy Text Block] | Change in Accounting Estimates During the first quarter of 2016, we reviewed our estimates of the useful lives and residual values of our composite mats rental fleet included in fixed assets for the Mats and Integrated Services segment. We revised our original estimates based on the observed historical service lives and end of life residual values for composite mats. We now estimate that certain composite mats which were originally estimated to have a useful life of 7 years with zero residual value will have estimated useful lives ranging from 10 to 12 years with an estimated residual value of 20%. These changes in estimates were recognized prospectively beginning from January 1, 2016 resulting in a reduction in depreciation expense of approximately $1.6 million for the Mats and Integrated Services segment and additional quarterly net income after taxes of approximately $1.0 million, or $0.01 per share, in the first quarter of 2016. We expect these changes to have a similar effect on future quarterly results in 2016 and going forward. |
New Accounting Pronouncements, Policy [Policy Text Block] | New Accounting Pronouncements Standard adopted in 2016 In September 2015, the Financial Accounting Standards Board (“FASB”) issued updated guidance that eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. The new guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The new guidance was effective for us prospectively in the first quarter of 2016; however, the adoption did not have any effect on our consolidated financial statements. Standards not yet adopted In May 2014, the FASB amended the existing accounting standards for revenue recognition. The amendments are based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB deferred the effective date of the new guidance by one year and provided entities the option to early adopt the new guidance. The new guidance is effective for us in the first quarter of 2018 with early adoption permitted in the first quarter of 2017. The amendments may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We are currently evaluating the impact of these amendments, including the adoption and transition alternatives, on our consolidated financial statements. In July 2015, the FASB issued updated guidance that simplifies the subsequent measurement of inventory. It replaces the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The new guidance is effective prospectively for us in the first quarter of 2017 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. In February 2016, the FASB issued updated guidance regarding accounting for leases. The new accounting standard provides principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognize both assets and liabilities arising from financing and operating leases. The classification as either a financing or operating lease will determine whether lease expense is recognized based on an effective interest method basis or on a straight-line basis over the term of the lease, respectively. The new guidance is effective for us in the first quarter of 2019 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. In March 2016, the FASB issued updated guidance that simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification of excess tax benefits on the statement of cash flows. The new guidance is effective for us in the first quarter of 2017 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements. |
Note 2 - Earnings Per Share (Ta
Note 2 - Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | First Quarter (In thousands, except per share data) 2016 2015 Basic EPS: Net income (loss) $ (13,300 ) $ 993 Weighted average number of common shares outstanding 83,258 82,299 Basic income (loss) per common share $ (0.16 ) $ 0.01 Diluted EPS: Net income (loss) $ (13,300 ) $ 993 Assumed conversions of Senior Notes - - Adjusted net income (loss) $ (13,300 ) $ 993 Weighted average number of common shares outstanding-basic 83,258 82,299 Add: Dilutive effect of stock options and restricted stock awards - 1,505 Dilutive effect of Senior Notes - - Diluted weighted average number of common shares outstanding 83,258 83,804 Diluted income (loss) per common share $ (0.16 ) $ 0.01 Stock options and restricted stock excluded from calculation of diluted earnings per share because anti-dilutive for the period 6,265 954 |
Note 4 - Receivables (Tables)
Note 4 - Receivables (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] | (In thousands) March 31, 2016 December 31, 2015 Gross trade receivables $ 135,998 $ 159,119 Allowance for doubtful accounts (7,355 ) (7,189 ) Net trade receivables 128,643 151,930 Income tax receivables 39,813 32,600 Other receivables 19,995 21,834 Total receivables, net $ 188,451 $ 206,364 |
Note 5 - Inventories (Tables)
Note 5 - Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Inventory, Current [Table Text Block] | (In thousands) March 31, 2016 December 31, 2015 Raw materials: Drilling fluids $ 127,181 $ 133,934 Mats 1,035 657 Total raw materials 128,216 134,591 Blended drilling fluids components 22,847 25,343 Finished goods- mats 3,575 3,723 Total $ 154,638 $ 163,657 |
Note 6 - Financing Arrangemen19
Note 6 - Financing Arrangements and Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Debt [Table Text Block] | (In thousands) March 31, 2016 December 31, 2015 Senior Notes $ 161,321 $ 172,497 Debt issuance costs - Senior Notes (1,039 ) (1,296 ) Revolving credit facility - - Other 5,528 7,392 Total debt 165,810 178,593 Less: current portion (5,521 ) (7,382 ) Long-term portion $ 160,289 $ 171,211 |
Note 8 - Segment Data (Tables)
Note 8 - Segment Data (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Notes Tables | |
Schedule of Segment Reporting Information, by Segment [Table Text Block] | First Quarter (In thousands) 2016 2015 Revenues Fluids systems $ 98,651 $ 171,902 Mats & integrated services 15,893 36,562 Total Revenues $ 114,544 $ 208,464 Operating Income (loss) Fluids systems $ (15,207 ) $ (1,702 ) Mats & integrated services 3,736 15,647 Corporate office (7,354 ) (7,817 ) Operating Income (loss) $ (18,825 ) $ 6,128 |
Note 1 - Basis of Presentatio21
Note 1 - Basis of Presentation and Significant Accounting Policies (Details Textual) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Composite Mats [Member] | Mats and Integrated Services [Member] | Minimum [Member] | ||
Property, Plant and Equipment, Useful Life | 10 years | |
Composite Mats [Member] | Mats and Integrated Services [Member] | Maximum [Member] | ||
Property, Plant and Equipment, Useful Life | 12 years | |
Composite Mats [Member] | Mats and Integrated Services [Member] | ||
Property, Plant and Equipment, Useful Life | 7 years | |
Property, Plant, and Equipment, Salvage Value | $ 0 | |
Property, Plant and Equipment, Salvage Value, Percentage | 20.00% | |
Reduction in Depreciation Expense | $ 1,600,000 | |
Additional Net Income from Reduction in Depreciation Expense | $ 1,000,000 | |
Additional Earnings Per Share from Reduction in Depreciation Expense | 0.01 |
Note 2 - Earnings Per Share (De
Note 2 - Earnings Per Share (Details Textual) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Compensation Plan [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 600 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,265 | 954 |
Note 2 - Earnings Per Share (23
Note 2 - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Basic EPS: | |||
Net income (loss) | $ (13,300) | $ 993 | $ 993 |
Weighted average number of common shares outstanding (in shares) | 83,258 | 82,299 | |
Basic income (loss) per common share (in dollars per share) | $ (0.16) | $ 0.01 | |
Diluted EPS: | |||
Net income (loss) | $ (13,300) | $ 993 | $ 993 |
Assumed conversions of Senior Notes | |||
Adjusted net income (loss) | $ (13,300) | $ 993 | |
Weighted average number of common shares outstanding (in shares) | 83,258 | 82,299 | |
Add: Dilutive effect of stock options and restricted stock awards (in shares) | 1,505 | ||
Dilutive effect of Senior Notes (in shares) | |||
Diluted weighted average number of common shares outstanding (in shares) | 83,258 | 83,804 | |
Diluted income (loss) per common share (in dollars per share) | $ (0.16) | $ 0.01 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 6,265 | 954 |
Note 3 - Repurchase Program (De
Note 3 - Repurchase Program (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | |||
Feb. 29, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Feb. 28, 2014 | Apr. 30, 2013 | |
Share Repurchase Program [Member] | Senior Notes [Member] | |||||
Debt Instrument, Repurchased Face Amount | $ 11,200,000 | $ 11,200,000 | |||
Purchase of Senior Notes | $ 9,200,000 | ||||
Share Repurchase Program [Member] | |||||
Stock Repurchase Program, Authorized Amount | $ 100,000,000 | $ 50,000,000 | |||
Treasury Stock, Shares, Acquired | 0 | 0 | |||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 33,500,000 | ||||
Purchase of Senior Notes | $ 9,206,000 |
Note 4 - Receivables (Details T
Note 4 - Receivables (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Receivables, Net [Member] | Environmental Services [Member] | Escrow [Member] | ||
Other Receivables, Net, Current | $ 8,000 | $ 8,000 |
Receivables, Net [Member] | ||
Income Taxes Receivable | 36,000 | 29,000 |
Nontrade Receivables | 10,300 | 10,400 |
Other Receivables, Net, Current | $ 19,995 | $ 21,834 |
Note 4 - Receivables (Details)
Note 4 - Receivables (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Gross trade receivables | $ 135,998 | $ 159,119 |
Allowance for doubtful accounts | (7,355) | (7,189) |
Net trade receivables | 128,643 | 151,930 |
Income tax receivables | 39,813 | 32,600 |
Other Receivables, Net, Current | 19,995 | 21,834 |
Total receivables, net | $ 188,451 | $ 206,364 |
Note 5 - Inventories (Details)
Note 5 - Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Drilling Fluids [Member] | ||
Raw materials: | ||
Raw materials | $ 127,181 | $ 133,934 |
Mats [Member] | ||
Raw materials: | ||
Raw materials | 1,035 | 657 |
Finished goods- mats | 3,575 | 3,723 |
Blended Drilling Fluids Components [Member] | ||
Raw materials: | ||
Blended drilling fluids components | 22,847 | 25,343 |
Raw materials | 128,216 | 134,591 |
Total | $ 154,638 | $ 163,657 |
Note 6 - Financing Arrangemen28
Note 6 - Financing Arrangements and Fair Value of Financial Instruments (Details Textual) - USD ($) | May. 12, 2016 | Feb. 29, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | Sep. 30, 2010 |
Senior Notes [Member] | Share Repurchase Program [Member] | ||||||
Debt Instrument, Repurchased Face Amount | $ 11,200,000 | $ 11,200,000 | ||||
Purchase of Senior Notes | $ 9,200,000 | |||||
Gain (Loss) on Extinguishment of Debt | 1,900,000 | |||||
Senior Notes [Member] | ||||||
Debt Instrument, Face Amount | $ 172,500,000 | |||||
Unsecured Debt | $ 161,300,000 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | |||||
Debt Conversion Converted Instrument Shares Issued for Basis Principal | 90.8893 | |||||
Debt Conversion Principal Amount of Senior Notes as Basis for Conversion Rate | $ 1,000 | |||||
Debt Instrument, Convertible, Conversion Price | $ 11 | |||||
Debt Instrument, Fair Value Disclosure | $ 141,500,000 | $ 154,400,000 | ||||
Credit Agreement [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||
Long-term Line of Credit | $ 0 | |||||
Credit Agreement [Member] | Revolving Credit Facility [Member] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 200,000,000 | 150,000,000 | ||||
Long-term Line of Credit | 0 | |||||
ABL Facility [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | Scenario, Option [Member] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 150,000,000 | |||||
ABL Facility [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | Minimum [Member] | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.375% | |||||
ABL Facility [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | Maximum [Member] | ||||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.625% | |||||
ABL Facility [Member] | Revolving Credit Facility [Member] | Subsequent Event [Member] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 90,000,000 | |||||
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage | 0.625% | |||||
Line of Credit Facility, Covenant Terms, Acceleration of Other Indebtedness | $ 25,000,000 | |||||
ABL Facility [Member] | Subsequent Event [Member] | Federal Funds Rate [Member] | ||||||
Debt Instrument, Base Rate, Basis Spread on Variable Rate | 0.50% | |||||
ABL Facility [Member] | Subsequent Event [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 2.25% | |||||
ABL Facility [Member] | Subsequent Event [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | |||||
ABL Facility [Member] | Subsequent Event [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument, Base Rate, Basis Spread on Variable Rate | 1.00% | |||||
Debt Instrument, Basis Spread on Variable Rate | 3.50% | |||||
ABL Facility [Member] | Subsequent Event [Member] | Base Rate [Member] | Minimum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | |||||
ABL Facility [Member] | Subsequent Event [Member] | Base Rate [Member] | Maximum [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||||
ABL Facility [Member] | Subsequent Event [Member] | Base Rate [Member] | ||||||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||||
Foreign Operations [Member] | ||||||
Short-term Debt | 5,500,000 | 7,400,000 | ||||
Letters of Credit Outstanding, Amount | 11,500,000 | |||||
Restricted Cash and Cash Equivalents, Current | 2,000,000 | |||||
Other Current Assets [Member] | ||||||
Restricted Cash and Cash Equivalents, Current | 17,500,000 | |||||
Unsecured Debt | 161,321,000 | $ 172,497,000 | ||||
Purchase of Senior Notes | 9,206,000 | |||||
Gain (Loss) on Extinguishment of Debt | $ 1,894,000 | |||||
Long-term Line of Credit | ||||||
Short-term Debt | $ 5,521,000 | $ 7,382,000 | ||||
Letters of Credit Outstanding, Amount | 14,200,000 | |||||
Restricted Cash and Cash Equivalents, Current | $ 15,500,000 |
Note 6 - Financing Arrangemen29
Note 6 - Financing Arrangements (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Unsecured Debt | $ 161,321 | $ 172,497 |
Debt issuance costs - Senior Notes | $ (1,039) | $ (1,296) |
Long-term Line of Credit | ||
Other | $ 5,528 | $ 7,392 |
Total debt | 165,810 | 178,593 |
Less: current portion | (5,521) | (7,382) |
Long-term portion | $ 160,289 | $ 171,211 |
Note 7 - Commitments and Cont30
Note 7 - Commitments and Contingencies (Details Textual) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
May. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2015USD ($) | Dec. 31, 2014 | Jun. 30, 2014 | Mar. 31, 2016USD ($) | Mar. 31, 2014USD ($) | |
Ecoserv [Member] | Environmental Services [Member] | Released 18 Months from Closing Date [Member] | |||||||
Escrow Deposit | $ 4 | ||||||
Ecoserv [Member] | Environmental Services [Member] | Released 9 Months from Closing Date Member | |||||||
Escrow Deposit | 4 | ||||||
Ecoserv [Member] | Environmental Services [Member] | |||||||
Escrow Deposit | $ 8 | $ 8 | |||||
Davida [Member] | |||||||
Number of Employees Provided Class Action Notification | 658 | ||||||
Loss Contingency, Number of Plaintiffs | 91 | ||||||
Christensen [Member] | |||||||
Loss Contingency, Number of Plaintiffs | 5 | ||||||
Loss Contingency, New Claims Filed, Number | 2 | ||||||
Loss Contingency, Pending Claims, Number | 8 | ||||||
Individual FLSA Cases [Member] | |||||||
Loss Contingency, New Claims Filed, Number | 2 | ||||||
Litigation Settlement, Amount | $ 5 |
Note 8 - Segment Data (Details
Note 8 - Segment Data (Details Textual) | 3 Months Ended | 15 Months Ended | ||
Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
North America [Member] | ||||
Workforce Reduction, Number of Employees | 155 | 591 | ||
Percentage of Workforce Reduction | 46.00% | |||
Cost of Sales [Member] | ||||
Severance Costs | $ 2,700,000 | $ 2,200,000 | ||
Selling, General and Administrative Expenses [Member] | ||||
Severance Costs | 700,000 | 700,000 | ||
Fluids Systems [Member] | ||||
Severance Costs | 3,200,000 | 2,600,000 | ||
Mats and Integrated Services [Member] | Composite Mats [Member] | ||||
Reduction in Depreciation Expense | 1,600,000 | |||
Mats and Integrated Services [Member] | ||||
Severance Costs | 100,000 | 200,000 | ||
Corporate Segment [Member] | ||||
Severance Costs | $ 100,000 | 100,000 | ||
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Sonatrach [Member] | ||||
Concentration Risk, Percentage | 15.00% | |||
Severance Costs | $ 3,400,000 | $ 2,900,000 | ||
Supplemental Unemployment Benefits, Severance Benefits | $ 1,000,000 | $ 1,000,000 | $ 3,300,000 |
Note 8 - Financial Information
Note 8 - Financial Information by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fluids Systems [Member] | ||
Revenues | ||
Revenues | $ 98,651 | $ 171,902 |
Operating Income (loss) | ||
Operating Income (loss) | (15,207) | (1,702) |
Mats and Integrated Services [Member] | ||
Revenues | ||
Revenues | 15,893 | 36,562 |
Operating Income (loss) | ||
Operating Income (loss) | 3,736 | 15,647 |
Corporate Segment [Member] | ||
Operating Income (loss) | ||
Operating Income (loss) | (7,354) | (7,817) |
Revenues | 114,544 | 208,464 |
Operating Income (loss) | $ (18,825) | $ 6,128 |