0000071829December 312020Q2falseP3YP5DP5D0.107138100000718292020-01-012020-06-300000071829us-gaap:CommonStockMember2020-01-012020-06-300000071829nr:RightsToPurchaseSeriesDJuniorParticipatingPreferredStockMember2020-01-012020-06-30xbrli:shares00000718292020-07-31iso4217:USD00000718292020-06-3000000718292019-12-31iso4217:USDxbrli:shares00000718292020-04-012020-06-3000000718292019-04-012019-06-3000000718292019-01-012019-06-300000071829us-gaap:CommonStockMember2020-03-310000071829us-gaap:AdditionalPaidInCapitalMember2020-03-310000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000071829us-gaap:RetainedEarningsMember2020-03-310000071829us-gaap:TreasuryStockMember2020-03-3100000718292020-03-310000071829us-gaap:RetainedEarningsMember2020-04-012020-06-300000071829us-gaap:CommonStockMember2020-04-012020-06-300000071829us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000071829us-gaap:TreasuryStockMember2020-04-012020-06-300000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000071829us-gaap:CommonStockMember2020-06-300000071829us-gaap:AdditionalPaidInCapitalMember2020-06-300000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000071829us-gaap:RetainedEarningsMember2020-06-300000071829us-gaap:TreasuryStockMember2020-06-300000071829us-gaap:CommonStockMember2019-03-310000071829us-gaap:AdditionalPaidInCapitalMember2019-03-310000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-03-310000071829us-gaap:RetainedEarningsMember2019-03-310000071829us-gaap:TreasuryStockMember2019-03-3100000718292019-03-310000071829us-gaap:RetainedEarningsMember2019-04-012019-06-300000071829us-gaap:CommonStockMember2019-04-012019-06-300000071829us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300000071829us-gaap:TreasuryStockMember2019-04-012019-06-300000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-04-012019-06-300000071829us-gaap:CommonStockMember2019-06-300000071829us-gaap:AdditionalPaidInCapitalMember2019-06-300000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300000071829us-gaap:RetainedEarningsMember2019-06-300000071829us-gaap:TreasuryStockMember2019-06-3000000718292019-06-300000071829us-gaap:CommonStockMember2019-12-310000071829us-gaap:AdditionalPaidInCapitalMember2019-12-310000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000071829us-gaap:RetainedEarningsMember2019-12-310000071829us-gaap:TreasuryStockMember2019-12-310000071829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2019-12-310000071829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-06-300000071829us-gaap:RetainedEarningsMember2020-01-012020-06-300000071829us-gaap:CommonStockMember2020-01-012020-06-300000071829us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300000071829us-gaap:TreasuryStockMember2020-01-012020-06-300000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-06-300000071829us-gaap:CommonStockMember2018-12-310000071829us-gaap:AdditionalPaidInCapitalMember2018-12-310000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000071829us-gaap:RetainedEarningsMember2018-12-310000071829us-gaap:TreasuryStockMember2018-12-3100000718292018-12-310000071829us-gaap:RetainedEarningsMember2019-01-012019-06-300000071829us-gaap:CommonStockMember2019-01-012019-06-300000071829us-gaap:AdditionalPaidInCapitalMember2019-01-012019-06-300000071829us-gaap:TreasuryStockMember2019-01-012019-06-300000071829us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-06-300000071829us-gaap:AccountingStandardsUpdate201613Member2020-01-0100000718292020-01-010000071829nr:ConvertibleNotesdue2021Memberus-gaap:SeniorNotesMember2020-06-300000071829nr:ConvertibleNotesdue2021Member2020-06-300000071829nr:ConvertibleNotesdue2021Member2019-12-3100000718292020-05-270000071829us-gaap:SeriesDPreferredStockMember2020-05-27xbrli:pure0000071829us-gaap:RestrictedStockUnitsRSUMembernr:The2015PlanMember2020-06-300000071829nr:ExecutiveOfficerAndKeyEmployeesMemberus-gaap:RestrictedStockUnitsRSUMembernr:The2015PlanMember2020-04-012020-06-300000071829nr:ExecutiveOfficerAndKeyEmployeesMemberus-gaap:RestrictedStockUnitsRSUMembernr:The2015PlanMember2020-06-300000071829nr:PerformancebasedRestrictedStockUnitsMember2020-04-012020-06-300000071829nr:TimebasedRestrictedStockUnitsMember2020-04-012020-06-300000071829us-gaap:GeographicDistributionForeignMember2020-06-300000071829us-gaap:GeographicDistributionForeignMember2019-12-310000071829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2019-12-310000071829srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000071829nr:DrillingFluidsMember2020-06-300000071829nr:DrillingFluidsMember2019-12-310000071829nr:MatsMember2020-06-300000071829nr:MatsMember2019-12-310000071829nr:BlendedDrillingFluidsComponentsMember2020-06-300000071829nr:BlendedDrillingFluidsComponentsMember2019-12-310000071829nr:FluidsSystemsMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300000071829nr:ConvertibleNotesdue2021Memberus-gaap:SeniorNotesMember2019-12-310000071829us-gaap:RevolvingCreditFacilityMembernr:ABLFacilityMember2020-06-300000071829us-gaap:RevolvingCreditFacilityMembernr:ABLFacilityMember2019-12-310000071829nr:OtherDebtMember2020-06-300000071829nr:OtherDebtMember2019-12-310000071829nr:ConvertibleNotesdue2021Memberus-gaap:SeniorNotesMember2016-12-31nr:trading_day0000071829us-gaap:SeniorNotesMember2020-01-012020-06-300000071829nr:ConvertibleDebtDebtComponentMember2020-06-300000071829us-gaap:SeniorNotesMember2020-06-300000071829nr:ConvertibleNotesdue2021Member2020-01-012020-06-300000071829us-gaap:RevolvingCreditFacilityMembernr:ABLFacilityMember2019-03-310000071829nr:ConvertibleNotesdue2021Memberus-gaap:RevolvingCreditFacilityMember2019-03-310000071829nr:FederalFundsRateMembernr:ABLFacilityMember2019-03-012019-03-310000071829us-gaap:LondonInterbankOfferedRateLIBORMembernr:ABLFacilityMember2019-03-012019-03-310000071829srt:MinimumMemberus-gaap:LondonInterbankOfferedRateLIBORMembernr:ABLFacilityMember2020-06-012020-06-300000071829us-gaap:LondonInterbankOfferedRateLIBORMembersrt:MaximumMembernr:ABLFacilityMember2020-06-012020-06-300000071829srt:MinimumMemberus-gaap:BaseRateMembernr:ABLFacilityMember2020-06-012020-06-300000071829srt:MaximumMemberus-gaap:BaseRateMembernr:ABLFacilityMember2020-06-012020-06-300000071829us-gaap:LondonInterbankOfferedRateLIBORMembernr:ABLFacilityMember2020-01-012020-06-300000071829us-gaap:BaseRateMembernr:ABLFacilityMember2020-01-012020-06-300000071829srt:MinimumMemberus-gaap:RevolvingCreditFacilityMembernr:ABLFacilityMember2020-01-012020-06-300000071829us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembernr:ABLFacilityMember2020-01-012020-06-300000071829us-gaap:RevolvingCreditFacilityMembernr:ABLFacilityMember2020-01-012020-06-300000071829us-gaap:ForeignLineOfCreditMember2020-06-300000071829us-gaap:ForeignLineOfCreditMember2019-12-310000071829us-gaap:DomesticLineOfCreditMembernr:CreditAgreementMember2020-06-30nr:plaintiff0000071829us-gaap:NaturalDisastersAndOtherCasualtyEventsMemberus-gaap:DamageFromFireExplosionOrOtherHazardMember2020-01-012020-06-300000071829nr:FluidsSystemsMember2020-04-012020-06-300000071829nr:FluidsSystemsMember2019-04-012019-06-300000071829nr:FluidsSystemsMember2020-01-012020-06-300000071829nr:FluidsSystemsMember2019-01-012019-06-300000071829nr:MatsAndIntegratedServicesMember2020-04-012020-06-300000071829nr:MatsAndIntegratedServicesMember2019-04-012019-06-300000071829nr:MatsAndIntegratedServicesMember2020-01-012020-06-300000071829nr:MatsAndIntegratedServicesMember2019-01-012019-06-300000071829nr:FluidsSystemsMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300000071829nr:FluidsSystemsMemberus-gaap:OperatingSegmentsMember2019-04-012019-06-300000071829nr:FluidsSystemsMemberus-gaap:OperatingSegmentsMember2019-01-012019-06-300000071829us-gaap:OperatingSegmentsMembernr:MatsAndIntegratedServicesMember2020-04-012020-06-300000071829us-gaap:OperatingSegmentsMembernr:MatsAndIntegratedServicesMember2019-04-012019-06-300000071829us-gaap:OperatingSegmentsMembernr:MatsAndIntegratedServicesMember2020-01-012020-06-300000071829us-gaap:OperatingSegmentsMembernr:MatsAndIntegratedServicesMember2019-01-012019-06-300000071829us-gaap:CorporateNonSegmentMember2020-04-012020-06-300000071829us-gaap:CorporateNonSegmentMember2019-04-012019-06-300000071829us-gaap:CorporateNonSegmentMember2020-01-012020-06-300000071829us-gaap:CorporateNonSegmentMember2019-01-012019-06-300000071829nr:FluidsSystemsMembercountry:US2020-04-012020-06-300000071829nr:FluidsSystemsMembercountry:US2019-04-012019-06-300000071829nr:FluidsSystemsMembercountry:US2020-01-012020-06-300000071829nr:FluidsSystemsMembercountry:US2019-01-012019-06-300000071829nr:FluidsSystemsMembercountry:CA2020-04-012020-06-300000071829nr:FluidsSystemsMembercountry:CA2019-04-012019-06-300000071829nr:FluidsSystemsMembercountry:CA2020-01-012020-06-300000071829nr:FluidsSystemsMembercountry:CA2019-01-012019-06-300000071829srt:NorthAmericaMembernr:FluidsSystemsMember2020-04-012020-06-300000071829srt:NorthAmericaMembernr:FluidsSystemsMember2019-04-012019-06-300000071829srt:NorthAmericaMembernr:FluidsSystemsMember2020-01-012020-06-300000071829srt:NorthAmericaMembernr:FluidsSystemsMember2019-01-012019-06-300000071829nr:FluidsSystemsMemberus-gaap:EMEAMember2020-04-012020-06-300000071829nr:FluidsSystemsMemberus-gaap:EMEAMember2019-04-012019-06-300000071829nr:FluidsSystemsMemberus-gaap:EMEAMember2020-01-012020-06-300000071829nr:FluidsSystemsMemberus-gaap:EMEAMember2019-01-012019-06-300000071829nr:FluidsSystemsMembernr:OtherCountriesMember2020-04-012020-06-300000071829nr:FluidsSystemsMembernr:OtherCountriesMember2019-04-012019-06-300000071829nr:FluidsSystemsMembernr:OtherCountriesMember2020-01-012020-06-300000071829nr:FluidsSystemsMembernr:OtherCountriesMember2019-01-012019-06-300000071829nr:InternationalMembernr:FluidsSystemsMember2020-04-012020-06-300000071829nr:InternationalMembernr:FluidsSystemsMember2019-04-012019-06-300000071829nr:InternationalMembernr:FluidsSystemsMember2020-01-012020-06-300000071829nr:InternationalMembernr:FluidsSystemsMember2019-01-012019-06-300000071829nr:MatsAndIntegratedServicesMemberus-gaap:ServiceMember2020-04-012020-06-300000071829nr:MatsAndIntegratedServicesMemberus-gaap:ServiceMember2019-04-012019-06-300000071829nr:MatsAndIntegratedServicesMemberus-gaap:ServiceMember2020-01-012020-06-300000071829nr:MatsAndIntegratedServicesMemberus-gaap:ServiceMember2019-01-012019-06-300000071829nr:RentalMembernr:MatsAndIntegratedServicesMember2020-04-012020-06-300000071829nr:RentalMembernr:MatsAndIntegratedServicesMember2019-04-012019-06-300000071829nr:RentalMembernr:MatsAndIntegratedServicesMember2020-01-012020-06-300000071829nr:RentalMembernr:MatsAndIntegratedServicesMember2019-01-012019-06-300000071829nr:MatSalesMembernr:MatsAndIntegratedServicesMember2020-04-012020-06-300000071829nr:MatSalesMembernr:MatsAndIntegratedServicesMember2019-04-012019-06-300000071829nr:MatSalesMembernr:MatsAndIntegratedServicesMember2020-01-012020-06-300000071829nr:MatSalesMembernr:MatsAndIntegratedServicesMember2019-01-012019-06-30nr:numberOfRigsnr:employees0000071829us-gaap:CostOfSalesMember2020-04-012020-06-300000071829us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-04-012020-06-300000071829us-gaap:CostOfSalesMember2020-01-012020-06-300000071829us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-06-300000071829country:BR2020-06-300000071829nr:FluidsSystemsMemberus-gaap:OperatingSegmentsMember2020-06-300000071829us-gaap:OperatingSegmentsMembernr:MatsAndIntegratedServicesMember2020-06-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-02960
nr-20200630_g1.jpg 
Newpark Resources, Inc.
(Exact name of registrant as specified in its charter)
Delaware72-1123385
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
9320 Lakeside Boulevard,Suite 100 
The Woodlands,Texas77381
(Address of principal executive offices)(Zip Code)
 
(281) 362-6800
(Registrant’s telephone number, including area code)
 Not Applicable    
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueNRNew York Stock Exchange
Rights to Purchase Series D Junior Participating Preferred Stock
N/ANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes       No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
        Yes       No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company




If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
        Yes      No       
As of July 31, 2020, a total of 90,650,353 shares of common stock, $0.01 par value per share, were outstanding.



NEWPARK RESOURCES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 2020


 
 
 
 
 
 
 

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. We also may provide oral or written forward-looking statements in other materials we release to the public. Words such as “will,” “may,” “could,” “would,” “should,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar expressions are intended to identify these forward-looking statements but are not the exclusive means of identifying them. These forward-looking statements reflect the current views of our management as of the filing date of this Quarterly Report on Form 10-Q and include statements regarding the impact of the COVID-19 pandemic; however, various risks, uncertainties, contingencies, and other factors, some of which are beyond our control, are difficult to predict and could cause our actual results, performance, or achievements to differ materially from those expressed in, or implied by, these statements.
We assume no obligation to update, amend, or clarify publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by securities laws. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed in this Quarterly Report on Form 10-Q might not occur.
For further information regarding these and other factors, risks, and uncertainties that could cause actual results to differ, we refer you to the risk factors set forth in Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and in Part II Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020 and this Quarterly Report on Form 10-Q.
1


PART I  FINANCIAL INFORMATION
ITEM 1. Financial Statements
Newpark Resources, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

(In thousands, except share data)June 30, 2020December 31, 2019
ASSETS  
Cash and cash equivalents$42,942  $48,672  
Receivables, net139,627  216,714  
Inventories177,973  196,897  
Prepaid expenses and other current assets20,657  16,526  
Total current assets381,199  478,809  
Property, plant and equipment, net297,234  310,409  
Operating lease assets33,524  32,009  
Goodwill42,094  42,332  
Other intangible assets, net26,907  29,677  
Deferred tax assets3,047  3,600  
Other assets3,040  3,243  
Total assets$787,045  $900,079  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current debt$10,519  $6,335  
Accounts payable52,364  79,777  
Accrued liabilities33,261  42,750  
Total current liabilities96,144  128,862  
Long-term debt, less current portion125,291  153,538  
Noncurrent operating lease liabilities27,392  26,946  
Deferred tax liabilities21,875  34,247  
Other noncurrent liabilities8,906  7,841  
Total liabilities279,608  351,434  
Commitments and contingencies (Note 9)
Common stock, $0.01 par value (200,000,000 shares authorized and 107,429,802 and 106,696,719 shares issued, respectively)
1,074  1,067  
Paid-in capital623,269  620,626  
Accumulated other comprehensive loss(73,308) (67,947) 
Retained earnings93,292  134,119  
Treasury stock, at cost (16,784,471 and 16,958,418 shares, respectively)
(136,890) (139,220) 
Total stockholders’ equity507,437  548,645  
Total liabilities and stockholders’ equity$787,045  $900,079  
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

2


Newpark Resources, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

 Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands, except per share data)2020201920202019
Revenues$101,946  $216,412  $266,496  $427,885  
Cost of revenues112,290  177,933  258,374  352,909  
Selling, general and administrative expenses20,937  28,037  45,633  58,779  
Other operating income, net(742) (472) (1,086) (396) 
Operating income (loss)(30,539) 10,914  (36,425) 16,593  
Foreign currency exchange (gain) loss781  990  2,763  (72) 
Interest expense, net2,912  3,523  6,113  7,179  
Gain on extinguishment of debt(1,334)   (419)   
Income (loss) before income taxes(32,898) 6,401  (44,882) 9,486  
Provision (benefit) for income taxes(6,654) 2,095  (6,490) 3,898  
Net income (loss)$(26,244) $4,306  $(38,392) $5,588  
Net income (loss) per common share - basic:$(0.29) $0.05  $(0.43) $0.06  
Net income (loss) per common share - diluted:$(0.29) $0.05  $(0.43) $0.06  
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
3


Newpark Resources, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)

 Three Months Ended
June 30,
Six Months Ended
June 30,
(In thousands)2020201920202019
Net income (loss)$(26,244) $4,306  $(38,392) $5,588  
Foreign currency translation adjustments (net of tax benefit (expense) of $326, $(179), $598, $(109))
2,132  1,721  (5,361) (200) 
Comprehensive income (loss)$(24,112) $6,027  $(43,753) $5,388  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

4


Newpark Resources, Inc.
Condensed Consolidated Statements of Stockholders Equity
(Unaudited)

(In thousands)Common StockPaid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTreasury StockTotal
Balance at March 31, 2020$1,067  $622,115  $(75,440) $120,501  $(137,884) $530,359  
Net loss—  —  —  (26,244) —  (26,244) 
Employee stock options, restricted stock and employee stock purchase plan7  (331) —  (965) 994  (295) 
Stock-based compensation expense—  1,485  —  —  —  1,485  
Foreign currency translation, net of tax—  —  2,132  —  —  2,132  
Balance at June 30, 2020$1,074  $623,269  $(73,308) $93,292  $(136,890) $507,437  
Balance at March 31, 2019$1,064  $622,554  $(69,594) $150,084  $(134,320) $569,788  
Net income—  —  —  4,306  —  4,306  
Employee stock options, restricted stock and employee stock purchase plan3  (5,833) —  (995) 5,758  (1,067) 
Stock-based compensation expense—  1,905  —  —  —  1,905  
Treasury shares purchased at cost—  —  —  —  (10,524) (10,524) 
Foreign currency translation, net of tax—  —  1,721  —  —  1,721  
Balance at June 30, 2019$1,067  $618,626  $(67,873) $153,395  $(139,086) $566,129  
Balance at December 31, 2019$1,067  $620,626  $(67,947) $134,119  $(139,220) $548,645  
Cumulative effect of accounting change—  —  —  (735) —  (735) 
Net loss—  —  —  (38,392) —  (38,392) 
Employee stock options, restricted stock and employee stock purchase plan7  (434) —  (1,700) 2,330  203  
Stock-based compensation expense—  3,077  —  —  —  3,077  
Foreign currency translation, net of tax—  —  (5,361) —  —  (5,361) 
Balance at June 30, 2020$1,074  $623,269  $(73,308) $93,292  $(136,890) $507,437  
Balance at December 31, 2018$1,064  $617,276  $(67,673) $148,802  $(129,788) $569,681  
Net income—  —  —  5,588  —  5,588  
Employee stock options, restricted stock and employee stock purchase plan3  (5,524) —  (995) 6,239  (277) 
Stock-based compensation expense—  6,874  —  —  —  6,874  
Treasury shares purchased at cost—  —  —  —  (15,537) (15,537) 
Foreign currency translation, net of tax—  —  (200) —  —  (200) 
Balance at June 30, 2019$1,067  $618,626  $(67,873) $153,395  $(139,086) $566,129  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

5


Newpark Resources, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 Six Months Ended June 30,
(In thousands)20202019
Cash flows from operating activities:  
Net income (loss)$(38,392) $5,588  
Adjustments to reconcile net income (loss) to net cash provided by operations:  
Inventory impairments8,996    
Depreciation and amortization22,915  23,070  
Stock-based compensation expense3,077  6,874  
Provision for deferred income taxes(11,418) (1,514) 
Credit loss expense726  789  
Gain on sale of assets(2,163) (5,128) 
Gain on extinguishment of debt(419)   
Amortization of original issue discount and debt issuance costs2,801  2,973  
Change in assets and liabilities: 
Decrease in receivables66,510  6,583  
Decrease in inventories7,512  3,868  
Increase in other assets(5,294) (5,058) 
Increase (decrease) in accounts payable(26,577) 6,207  
Decrease in accrued liabilities and other(3,261) (10,012) 
Net cash provided by operating activities25,013  34,240  
Cash flows from investing activities:  
Capital expenditures(10,655) (23,866) 
Proceeds from sale of property, plant and equipment7,963  5,708  
Net cash used in investing activities(2,692) (18,158) 
Cash flows from financing activities:  
Borrowings on lines of credit117,068  135,952  
Payments on lines of credit(116,207) (141,317) 
Purchases of Convertible Notes(29,124)   
Debt issuance costs  (917) 
Proceeds from employee stock plans  1,090  
Purchases of treasury stock(326) (17,365) 
Other financing activities2,480  2,758  
Net cash used in financing activities(26,109) (19,799) 
Effect of exchange rate changes on cash(2,713) (125) 
Net decrease in cash, cash equivalents, and restricted cash(6,501) (3,842) 
Cash, cash equivalents, and restricted cash at beginning of period56,863  64,266  
Cash, cash equivalents, and restricted cash at end of period$50,362  $60,424  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
6


NEWPARK RESOURCES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 collectively 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, 2019. Our fiscal year end is December 31, our second quarter represents the three month period ended June 30, and our first half represents the six month period ended June 30. The results of operations for the second quarter and first half of 2020 are not necessarily indicative of the results to be expected for the entire year. Unless otherwise noted, 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 June 30, 2020, our results of operations for the second quarter and first half of 2020 and 2019, and our cash flows for the first half of 2020 and 2019. All adjustments are of a normal recurring nature. Our balance sheet at December 31, 2019 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, 2019.
New Accounting Pronouncements
Standards Adopted in 2020
Credit Losses. In 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance which requires financial assets measured at amortized cost basis, including trade receivables, to be presented at the net amount expected to be collected. The new guidance requires an entity to estimate its lifetime “expected credit loss” for such assets at inception, which will generally result in the earlier recognition of allowances for losses. Under previous guidance, reserves for uncollectible accounts receivable were determined on a specific identification basis when we believed that the required payment of specific amounts owed to us was not probable. Under the new guidance, our allowance for credit losses reflects losses that are expected over the contractual life of the asset, and takes into account historical loss experience, current and future economic conditions, and reasonable and supportable forecasts.
We adopted this new guidance as of January 1, 2020 using the modified retrospective transition method, and recorded a net reduction of $0.7 million to opening retained earnings to reflect the cumulative effect of adoption. Results for reporting periods beginning after December 31, 2019 are presented under the new guidance, while prior period amounts were not adjusted and continue to be reported in accordance with previous guidance. See Note 5 for additional required disclosures.
The cumulative effect of the changes made to our consolidated balance sheet for the adoption of the new accounting guidance for credit losses were as follows:

(In thousands)Balance at December 31, 2019Impact of Adoption of New Credit Losses GuidanceBalance at January 1, 2020
Receivables, net$216,714  $(959) $215,755  
Deferred tax assets3,600  59  3,659  
Deferred tax liabilities34,247  (165) 34,082  
Retained earnings134,119  (735) 133,384  
7


Standards Not Yet Adopted
Income Taxes: Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued new guidance which is intended to simplify various aspects related to accounting for income taxes. This guidance is effective for us in the first quarter of 2021 with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.
Note 2 – Earnings Per Share
The following table presents the reconciliation of the numerator and denominator for calculating net income (loss) per share:
 Second QuarterFirst Half
(In thousands, except per share data)2020201920202019
Numerator 
Net income (loss) - basic and diluted$(26,244) $4,306  $(38,392) $5,588  
Denominator
Weighted average common shares outstanding - basic89,981  89,806  89,813  89,958  
Dilutive effect of stock options and restricted stock awards  1,900    2,082  
Dilutive effect of Convertible Notes         
Weighted average common shares outstanding - diluted89,981  91,706  89,813  92,040  
Net income (loss) per common share
Basic$(0.29) $0.05  $(0.43) $0.06  
Diluted$(0.29) $0.05  $(0.43) $0.06  
We excluded the following weighted-average potential shares from the calculations of diluted net income (loss) per share during the applicable periods because their inclusion would have been anti-dilutive:
 Second QuarterFirst Half
(In thousands)2020201920202019
Stock options and restricted stock awards5,067  1,707  4,951  1,710  
For the second quarter and first half of 2020, we excluded all potentially dilutive 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 these periods. The Convertible Notes (as defined in Note 7) only impact the calculation of diluted net income per share in periods that the average price of our common stock, as calculated in accordance with the terms of the indenture governing the Convertible Notes, exceeds the conversion price of $9.33 per share. We have the option to pay cash, issue shares of common stock, or any combination thereof for the aggregate amount due upon conversion of the Convertible Notes as further described in Note 7. If converted, we currently intend to settle the principal amount of the notes in cash and as a result, only the amounts payable in excess of the principal amount of the notes, if any, would be assumed to be settled with shares of common stock for purposes of computing diluted net income per share.

8


Note 3 – Capital Stock and Repurchase Program
Our securities repurchase program remains available for repurchases of any combination of our common stock and our Convertible Notes. The repurchase program has no specific term. Repurchases are expected to be funded from operating cash flows, available cash on hand, and borrowings under our ABL Facility (as defined in Note 7). As part of the share repurchase program, our management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934. As of June 30, 2020, we had $51.9 million remaining under the program.
During the first half of 2020, we repurchased $33.1 million of our Convertible Notes in the open market under the repurchase program for a total cost of $29.1 million. There were no Convertible Notes repurchased under the program during 2019.
There were no shares of common stock repurchased under the repurchase program during the first half of 2020. During the first half of 2019, we repurchased an aggregate of 2,047,014 shares of our common stock under the program for a total cost of $15.5 million.
On May 27, 2020, our Board of Directors adopted a limited duration stockholder rights agreement which expires on May 1, 2021, whereby a dividend distribution of one right (each, a “Right”) for each outstanding share of our common stock was paid to holders of record as of the close of business on June 12, 2020. Each Right entitles the registered holder to purchase from us one one-thousandth of a share of Series D Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $12.00, subject to adjustment. Subject to certain exceptions, if a person or group acquires more than 10% of our outstanding common stock, the Rights will become exercisable for common stock having a value equal to two times the purchase price.

Note 4 – Stock-Based and Other Long-Term Incentive Compensation
During the second quarter of 2020, the Compensation Committee of our Board of Directors (“Compensation Committee”) approved equity-based compensation to executive officers and other key employees consisting of 2,474,377 restricted stock units which will primarily vest in equal installments over a three-year period. At June 30, 2020, 1,375,975 shares remained available for award under the 2015 Employee Equity Incentive Plan (“2015 Plan”). In addition, non-employee directors received a grant of 156,886 restricted stock awards which will vest in full on the earlier of the day prior to the next annual meeting of stockholders following the grant date or the first anniversary of the grant date. The weighted average grant-date fair value was $2.06 per share for both the restricted stock units and restricted stock awards.
Also during the second quarter of 2020, the Compensation Committee approved the issuance of performance-based cash awards to certain executive officers with a target amount of $2.6 million. The performance-based cash awards will be settled based on the relative ranking of our total shareholder return (“TSR”) as compared to the TSR of our designated peer group over a three-year performance period. The performance period began May 2, 2020 and ends May 31, 2023, with the ending TSR price being equal to the average closing price of our shares over the 30-calendar days ending May 31, 2023 and the cash payout for each executive ranging from 0% to 200% of target. The performance-based cash awards are accrued as a liability award over the performance period based on the estimated fair value. The fair value of the performance-based cash awards is remeasured each period using a Monte-Carlo valuation model with changes in fair value recognized in the consolidated statements of operations.

9


Note 5 – Receivables
Receivables consisted of the following:
(In thousands)June 30, 2020December 31, 2019
Trade receivables:
Gross trade receivables$130,914  $207,554  
Allowance for credit losses(6,755) (6,007) 
Net trade receivables124,159  201,547  
Income tax receivables6,170  7,393  
Other receivables9,298  7,774  
Total receivables, net$139,627  $216,714  
Other receivables included $7.8 million and $6.2 million for value added, goods and service taxes related to foreign jurisdictions as of June 30, 2020 and December 31, 2019, respectively.
We adopted the new accounting guidance for credit losses as of January 1, 2020 (see Note 1 for additional information). To measure expected credit losses, we evaluate our receivables on a collective basis for assets that share similar risk characteristics. Our allowance for credit losses reflects losses that are expected over the contractual life of the asset, and takes into account historical loss experience, current and future economic conditions, and reasonable and supportable forecasts.
Changes in our allowance for credit losses were as follows:
First Half
(In thousands)20202019
Balance at beginning of period$6,007  $10,034  
Cumulative effect of accounting change959    
Credit loss expense726  789  
Write-offs, net of recoveries(937) (1,350) 
Balance at end of period$6,755  $9,473  


Note 6 – Inventories
Inventories consisted of the following:
(In thousands)June 30, 2020December 31, 2019
Raw materials:  
Fluids systems$118,684  $141,314  
Mats and integrated services3,982  5,049  
Total raw materials122,666  146,363  
Blended fluids systems components35,042  39,542  
Finished goods - mats20,265  10,992  
Total inventories$177,973  $196,897  
Raw materials for the Fluids Systems segment consists primarily of barite, chemicals, and other additives that are consumed in the production of our fluids systems. Raw materials for the Mats and Integrated Services segment consists primarily of resins, chemicals, and other materials used to manufacture composite mats, as well as materials that are consumed in providing spill containment and other services to our customers. Our blended fluids systems components consist of base fluid systems that have been either mixed internally at our blending facilities or purchased from third-party vendors. These base fluid systems require raw materials to be added, as needed to meet specified customer requirements.
Fluids Systems segment cost of revenues includes a total of $9.0 million of charges for the first half of 2020 for inventory write-downs, primarily attributable to the reduction in carrying values of certain inventory to their net realizable value.
10



Note 7 – Financing Arrangements and Fair Value of Financial Instruments
Financing arrangements consisted of the following:
June 30, 2020December 31, 2019
(In thousands)Principal AmountUnamortized Discount and Debt Issuance CostsTotal DebtPrincipal AmountUnamortized Discount and Debt Issuance CostsTotal Debt
Convertible Notes$66,912  $(6,275) $60,637  $100,000  $(12,291) $87,709  
ABL Facility64,000  —  64,000  65,000  —  65,000  
Other debt11,173  —  11,173  7,164  —  7,164  
Total debt142,085  (6,275) 135,810  172,164  (12,291) 159,873  
Less: Current portion(10,519)   (10,519) (6,335)   (6,335) 
Long-term debt$131,566  $(6,275) $125,291  $165,829  $(12,291) $153,538  
Convertible Notes. In December 2016, we issued $100.0 million of unsecured convertible senior notes (“Convertible Notes”) that mature on December 1, 2021, of which $66.9 million principal amount was outstanding at June 30, 2020. The notes bear interest at a rate of 4.0% per year, payable semiannually in arrears on June 1 and December 1 of each year.
Holders may convert the notes at their option at any time prior to the close of business on the business day immediately preceding June 1, 2021, only under the following circumstances:
during any calendar quarter (and only during such calendar quarter) if the last reported sale price of our common stock for at least 20 trading days (regardless of whether consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price of the notes in effect on each applicable trading day;
during the five business day period after any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each trading day was less than 98% of the last reported sale price of our common stock on such date multiplied by the conversion rate on each such trading day; or
upon the occurrence of specified corporate events, as described in the indenture governing the notes, such as a consolidation, merger, or share exchange.
On or after June 1, 2021 until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time, regardless of whether any of the foregoing conditions have been satisfied. As of July 31, 2020, the notes were not convertible.
The notes are convertible into, at our election, cash, shares of common stock, or a combination of both, subject to satisfaction of specified conditions and during specified periods, as described above. If converted, we currently intend to pay cash for the principal amount of the notes converted. The conversion rate is 107.1381 shares of our common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of $9.33 per share of common stock), subject to adjustment in certain circumstances. We may not redeem the notes prior to their maturity date.
In accordance with accounting guidance for convertible debt with a cash conversion option, we separately accounted for the debt and equity components of the notes in a manner that reflected our estimated nonconvertible debt borrowing rate. As of June 30, 2020, the carrying amount of the debt component was $60.6 million, which is net of the unamortized debt discount and debt issuance costs of $6.3 million. Including the impact of the unamortized debt discount and debt issuance costs, the effective interest rate on the notes is approximately 11.3%.
During the first half of 2020, we repurchased $33.1 million of our Convertible Notes in the open market for a total cost of $29.1 million, and recognized a net gain of $0.4 million reflecting the difference in the amount paid and the net carrying value of the extinguished debt, including original issue discount and debt issuance costs.
Asset-Based Loan Facility. In May 2016, we entered into an asset-based revolving credit agreement which replaced our previous credit agreement. In October 2017, we entered into an Amended and Restated Credit Agreement and in March 2019, we entered into a First Amendment to Amended and Restated Credit Agreement (as amended, the “ABL Facility”). The ABL Facility provides financing of up to $200.0 million available for borrowings (inclusive of letters of credit) and can be increased up to a maximum capacity of $275.0 million, subject to certain conditions. As of June 30, 2020, our total availability under the ABL Facility was $132.9 million, of which $64.0 million was drawn, resulting in remaining availability of $68.9 million.
11


The ABL Facility terminates in March 2024; however, the ABL Facility has a springing maturity date that will accelerate the maturity of the ABL Facility to September 1, 2021 if, prior to such date, the Convertible Notes have not been repurchased, redeemed, refinanced, exchanged or otherwise satisfied in full or we have not escrowed an amount of funds, that together with the amount that we establish as a reserve against our borrowing capacity, is sufficient for the future settlement of the Convertible Notes at their maturity. The ABL Facility requires compliance with a minimum fixed charge coverage ratio and minimum unused availability of $25.0 million to utilize borrowings or assignment of availability under the ABL Facility towards funding the repayment of the Convertible Notes.
Borrowing availability under the ABL Facility is calculated based on eligible accounts receivable, inventory, and, subject to satisfaction of certain financial covenants as described below, composite mats included in the rental fleet, net of reserves and limits on such assets included in the borrowing base calculation. To the extent pledged by us, the borrowing base calculation also includes the amount of eligible pledged cash. The lender may establish such reserves, in part based on appraisals of the asset base, and other limits at its discretion which could reduce the amounts otherwise available under the ABL Facility. Availability associated with eligible rental mats will also be subject to maintaining a minimum consolidated fixed charge coverage ratio and a minimum level of operating income for the Mats and Integrated Services segment.
Under the terms of the ABL Facility, we may elect to borrow at a variable interest rate 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. and (c) LIBOR, subject to a floor of zero, plus 100 basis points, plus, in each case, an applicable margin per annum. The applicable margin ranges from 150 to 200 basis points for LIBOR borrowings, and 50 to 100 basis points for base rate borrowings, based on the consolidated fixed charge coverage ratio as defined in the ABL Facility. As of June 30, 2020, the applicable margin for borrowings under our ABL Facility was 150 basis points with respect to LIBOR borrowings and 50 basis points with respect to base rate borrowings. The weighted average interest rate for the ABL Facility was 1.7% at June 30, 2020. In addition, we are required to pay a commitment fee on the unused portion of the ABL Facility ranging from 25 to 37.5 basis points, based on the level of outstanding borrowings, as defined in the ABL Facility. As of June 30, 2020, the applicable commitment fee was 37.5 basis points.
The ABL Facility is a senior secured obligation, secured by first liens on substantially 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. The ABL Facility also requires compliance with a fixed charge coverage ratio if availability under the ABL Facility falls below $22.5 million. 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. Certain of our foreign subsidiaries maintain local credit arrangements consisting primarily of lines of credit or overdraft facilities which are generally renewed on an annual basis. We utilize local financing arrangements in our foreign operations in order to provide short-term local liquidity needs. We had $6.9 million and $4.8 million outstanding under these arrangements at June 30, 2020 and December 31, 2019, respectively.
In addition, at June 30, 2020, we had $52.1 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $7.4 million in restricted cash.
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 Convertible Notes, approximated their fair values at June 30, 2020 and December 31, 2019. The estimated fair value of our Convertible Notes was $59.2 million at June 30, 2020 and $101.4 million at December 31, 2019, based on quoted market prices at these respective dates.

12


Note 8 – Income Taxes
The benefit for income taxes was $6.5 million for the first half of 2020, reflecting an effective tax benefit rate of 14%. This result primarily reflects the impact of the geographic composition of our pretax loss, where the tax benefit from losses in the U.S was partially offset by the tax expense related to earnings from our international operations. The provision for income taxes was $3.9 million for the first half of 2019, reflecting an effective tax rate of 41%.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted in March 2020 in the United States. The CARES Act contains several tax provisions, including additional carryback opportunities for net operating losses, temporary increases in the interest deductibility threshold, and the acceleration of refunds for any remaining alternative minimum tax (“AMT”) carryforwards. While there was no material impact from the CARES Act in our provision for income taxes for the first half of 2020, we are continuing to evaluate the provisions of the CARES Act. In addition, we filed an amendment to our 2018 U.S. federal income tax return in the second quarter of 2020 and received a refund of $0.7 million for AMT carryforwards in July 2020.
The CARES Act also permits most companies to defer paying their portion of certain applicable payroll taxes from the date the CARES Act was signed into law through December 31, 2020. The deferred amount will be due in two equal installments on December 31, 2021 and December 31, 2022. The deferred amount of applicable payroll taxes was $1.3 million at June 30, 2020.
Note 9 – 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. While the outcome of litigation or other proceedings against us cannot be predicted with certainty, management does not expect that any loss resulting from such litigation or other proceedings, in excess of any amounts accrued or covered by insurance, will have a material adverse impact on our consolidated financial statements.
Kenedy, Texas Drilling Fluids Facility Fire
In July 2018, a fire occurred at our Kenedy, Texas drilling fluids facility, destroying the distribution warehouse, including inventory and surrounding equipment. In addition, nearby residences and businesses were evacuated as part of the response to the fire. In order to avoid any customer service disruptions, we implemented contingency plans to supply products from alternate facilities in the area and region. Subsequently, we received petitions seeking payment for alleged bodily injuries, property damage, and punitive damages claimed to have been incurred as a result of the fire and the subsequent efforts we undertook to remediate any potential smoke damage. As of June 30, 2020, there are open claims remaining with two plaintiffs. We have been advised by our insurer that these claims are insured under our insurance programs. As of June 30, 2020, the claims related to the fire under our property, business interruption, and general liability insurance programs have not been finalized.
Note 10 – Supplemental Disclosures to the Statements of Cash Flows
Supplemental disclosures to the statements of cash flows are presented below:
First Half
(In thousands)20202019
Cash paid for:  
Income taxes (net of refunds)$4,081  $5,927  
Interest$3,572  $