Service & Supply | Oilfield Services | Job Cuts / Downsize / Layoff | Capital Markets | Capital Expenditure | Capex Decrease | Capital Expenditure - 2020

Newpark Cuts Workforce, Reduces Salaries; Plans Minimal 2020 Spending

Share Print Bookmark    |    Wednesday,April 08,2020

Newpark Resources, Inc. has reported an update on actions taken in response to the ongoing market volatility.

Actions include:

• The implementation of workforce reductions, the suspension of the Company's matching contributions to its U.S. defined contribution plan, and temporary salary reductions effective April 1, 2020 for a significant portion of U.S. employees, including a 15% cut to the salaries paid to executive officers and the annual cash retainers paid to all non-employee members of the Board of Directors

• The initiation of additional actions to further reduce the operational footprint of the Fluids Systems business in U.S. land, to better align the Company's cost structure with expected declines in market activity levels

• The elimination of all non-essential capital investments, which reduces our expected full year 2020 capital expenditures to approximately $15- $20 million.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "Our immediate focus remains on the health and safety of our employees, their families, and the communities where we live and work, while diligently supporting our customers' global operations.  However, the significant pullback in U.S. customer drilling plans requires us to take swift actions to right size our business for the new market reality, including reducing operating expenses and capital expenditures to help ensure continued free cash flow generation.

"With the 17% decline in U.S. land market rig count over the past three weeks, along with the market uncertainty and logistical limitations associated with COVID-19 impacting the timing of product sales in our Mats & Integrated Services business, our first quarter 2020 consolidated revenues are expected to be approximately $165 million.  Looking forward, we expect revenues from U.S. land E&P markets will decline in the near term, driven by the anticipated reductions in E&P drilling and completion activity. 

"Looking beyond the COVID-19 disruptions, consistent with our historical experience, we expect our Fluids Systems business units in the Gulf of Mexico and international markets will demonstrate greater stability than U.S. land, benefitting from our IOC and NOC customer base. With roughly half of our Fluids Systems segment revenue generated outside of U.S. land, our global footprint provides us with improved revenue stability to help navigate the volatile U.S. land market environment. 

"Within the Mats & Integrated Services segment, our diversified market presence provides the opportunity for revenue growth outside of the deteriorating E&P markets, as we seek to build upon the $110 million of segment revenues derived from the Energy Infrastructure and other non-E&P markets in 2019.  We have been extremely pleased with our progress in penetrating the Energy Infrastructure market, and as we look beyond the immediate COVID-19 impact on industrial power demand, we expect activity will remain robust, particularly in the utility transmission and distribution sector," added Howes.     

"We entered 2020 with a strong balance sheet, available liquidity under our credit facility, and meaningful opportunities to reduce our working capital, positioning us well to settle our convertible notes that mature in December 2021.  As part of our balance sheet management plans, we repurchased $14.5 million of convertible notes during the first quarter of 2020, reducing the December 2021 obligation to $85.5 million as of March 31, 2020," concluded Howes.

The Company ended the first quarter of 2020 with a cash balance of approximately $49 million and a total debt balance of approximately $163 million, which includes the remaining $85.5 million of convertible notes maturing in December 2021.