Company Quick10K Filing
Newpark Resources
Price7.73 EPS0
Shares92 P/E48
MCap708 P/FCF13
Net Debt114 EBIT30
TEV822 TEV/EBIT28
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-02-21
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-04-26
10-K 2018-12-31 Filed 2019-02-22
10-Q 2018-09-30 Filed 2018-10-26
10-Q 2018-06-30 Filed 2018-07-27
10-Q 2018-03-31 Filed 2018-04-27
10-K 2017-12-31 Filed 2018-02-23
10-Q 2017-09-30 Filed 2017-10-31
10-Q 2017-06-30 Filed 2017-07-28
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-24
10-Q 2016-09-30 Filed 2016-10-31
10-Q 2016-06-30 Filed 2016-07-29
10-Q 2016-03-31 Filed 2016-05-13
10-K 2015-12-31 Filed 2016-02-26
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-10-31
10-Q 2014-06-30 Filed 2014-07-25
10-Q 2014-03-31 Filed 2014-04-25
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-10-25
10-Q 2013-06-30 Filed 2013-07-26
10-Q 2013-03-31 Filed 2013-04-26
10-K 2012-12-31 Filed 2013-02-28
10-Q 2012-09-30 Filed 2012-10-26
10-Q 2012-06-30 Filed 2012-07-27
10-Q 2012-03-31 Filed 2012-05-02
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-09-30 Filed 2011-10-28
10-Q 2011-06-30 Filed 2011-07-29
10-Q 2011-03-31 Filed 2011-04-29
10-K 2010-12-31 Filed 2011-03-08
10-Q 2010-09-30 Filed 2010-10-29
10-Q 2010-06-30 Filed 2010-07-30
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-03
8-K 2020-05-05 Earnings, Other Events, Exhibits
8-K 2020-04-08 Earnings, Officers, Regulation FD, Exhibits
8-K 2020-02-27 Regulation FD, Exhibits
8-K 2020-02-06 Earnings, Exhibits
8-K 2019-12-06 Regulation FD, Exhibits
8-K 2019-10-30 Earnings, Exhibits
8-K 2019-09-17 Regulation FD, Exhibits
8-K 2019-07-30 Earnings, Exhibits
8-K 2019-07-02 Officers, Regulation FD, Exhibits
8-K 2019-06-14 Regulation FD, Exhibits
8-K 2019-05-23 Officers, Shareholder Vote, Exhibits
8-K 2019-05-14 Regulation FD, Exhibits
8-K 2019-04-25 Earnings, Exhibits
8-K 2019-03-20 Enter Agreement, Off-BS Arrangement, Regulation FD, Exhibits
8-K 2019-02-19 Officers, Exhibits
8-K 2019-02-11 Regulation FD, Exhibits
8-K 2019-02-07 Earnings, Exhibits
8-K 2019-01-16 Other Events
8-K 2018-12-04 Regulation FD, Exhibits
8-K 2018-12-03 Officers, Exhibits
8-K 2018-11-29 Regulation FD, Exhibits
8-K 2018-11-14 Leave Agreement, Officers, Exhibits
8-K 2018-11-14 Other Events, Exhibits
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-10-02 Officers, Exhibits
8-K 2018-09-25 Regulation FD, Exhibits
8-K 2018-08-20 Regulation FD, Exhibits
8-K 2018-08-15 Officers, Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-05-17 Shareholder Vote, Regulation FD, Exhibits
8-K 2018-05-15 Regulation FD, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-04-02 Officers, Exhibits
8-K 2018-02-27 Officers, Exhibits
8-K 2018-02-12 Regulation FD, Exhibits
8-K 2018-02-08 Earnings, Other Events, Exhibits

NR 10Q Quarterly Report

Part I Financial Information
Item 1. Financial Statements
Note 1 - Basis of Presentation and Significant Accounting Policies
Note 2 - Earnings per Share
Note 3 - Repurchase Program
Note 4 - Receivables
Note 5 - Inventories
Note 6 - Financing Arrangements and Fair Value of Financial Instruments
Note 7 - Income Taxes
Note 8 - Commitments and Contingencies
Note 9 - Supplemental Disclosures To The Statements of Cash Flows
Note 10 - Segment Data
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 a2020q110qexhibit311.htm
EX-31.2 a2020q110qexhibit312.htm
EX-32.1 a2020q110qexhibit321.htm
EX-32.2 a2020q110qexhibit322.htm
EX-95.1 a2020q110qexhibit951.htm

Newpark Resources Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.10.90.70.40.20.02012201420172020
Assets, Equity
0.40.30.20.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12012201420172020
Ops, Inv, Fin

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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 March 31, 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-20200331_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
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 May 4, 2020, a total of 89,899,053 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 MONTHS ENDED
MARCH 31, 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 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)March 31, 2020December 31, 2019
ASSETS  
Cash and cash equivalents$49,064  $48,672  
Receivables, net197,440  216,714  
Inventories187,979  196,897  
Prepaid expenses and other current assets16,241  16,526  
Total current assets450,724  478,809  
Property, plant and equipment, net305,732  310,409  
Operating lease assets32,049  32,009  
Goodwill42,108  42,332  
Other intangible assets, net28,032  29,677  
Deferred tax assets5,077  3,600  
Other assets3,110  3,243  
Total assets$866,832  $900,079  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current debt$6,981  $6,335  
Accounts payable69,940  79,777  
Accrued liabilities36,335  42,750  
Total current liabilities113,256  128,862  
Long-term debt, less current portion155,965  153,538  
Noncurrent operating lease liabilities26,546  26,946  
Deferred tax liabilities32,614  34,247  
Other noncurrent liabilities8,092  7,841  
Total liabilities336,473  351,434  
Commitments and contingencies (Note 8)
Common stock, $0.01 par value (200,000,000 shares authorized and 106,696,719 and 106,696,719 shares issued, respectively)
1,067  1,067  
Paid-in capital622,115  620,626  
Accumulated other comprehensive loss(75,440) (67,947) 
Retained earnings120,501  134,119  
Treasury stock, at cost (16,797,666 and 16,958,418 shares, respectively)
(137,884) (139,220) 
Total stockholders’ equity530,359  548,645  
Total liabilities and stockholders’ equity$866,832  $900,079  
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

2


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

 Three Months Ended
March 31,
(In thousands, except per share data)20202019
Revenues$164,550  $211,473  
Cost of revenues146,084  174,976  
Selling, general and administrative expenses24,696  30,742  
Other operating (income) loss, net(344) 76  
Operating income (loss)(5,886) 5,679  
Foreign currency exchange (gain) loss1,982  (1,062) 
Interest expense, net3,201  3,656  
Loss on extinguishment of debt915    
Income (loss) before income taxes(11,984) 3,085  
Provision for income taxes164  1,803  
Net income (loss)$(12,148) $1,282  
Net income (loss) per common share - basic:$(0.14) $0.01  
Net income (loss) per common share - diluted:$(0.14) $0.01  
 
See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements
3


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

 Three Months Ended
March 31,
(In thousands)20202019
Net income (loss)$(12,148) $1,282  
Foreign currency translation adjustments (net of tax benefit of $272 and $70)
(7,493) (1,921) 
Comprehensive loss$(19,641) $(639) 

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 December 31, 2018$1,064  $617,276  $(67,673) $148,802  $(129,788) $569,681  
Net income—  —  —  1,282  —  1,282  
Employee stock options, restricted stock and employee stock purchase plan—  309  —  —  481  790  
Stock-based compensation expense—  4,969  —  —  —  4,969  
Treasury shares purchased at cost—  —  —  —  (5,013) (5,013) 
Foreign currency translation, net of tax—  —  (1,921) —  —  (1,921) 
Balance at March 31, 2019$1,064  $622,554  $(69,594) $150,084  $(134,320) $569,788  
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—  —  —  (12,148) —  (12,148) 
Employee stock options, restricted stock and employee stock purchase plan—  (103) —  (735) 1,336  498  
Stock-based compensation expense—  1,592  —  —  —  1,592  
Foreign currency translation, net of tax—  —  (7,493) —  —  (7,493) 
Balance at March 31, 2020$1,067  $622,115  $(75,440) $120,501  $(137,884) $530,359  

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

5


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

 Three Months Ended March 31,
(In thousands)20202019
Cash flows from operating activities:  
Net income (loss)$(12,148) $1,282  
Adjustments to reconcile net income (loss) to net cash provided by operations:      
Depreciation and amortization11,453  11,438  
Stock-based compensation expense1,592  4,969  
Provision for deferred income taxes(2,801) (438) 
Credit loss expense20  386  
Gain on sale of assets(1,033) (2,339) 
Loss on extinguishment of debt915    
Amortization of original issue discount and debt issuance costs1,573  1,481  
Change in assets and liabilities:   
Decrease in receivables10,652  5,300  
Decrease in inventories5,466  10,139  
Increase in other assets(644) (273) 
Decrease in accounts payable(9,842) (15,149) 
Decrease in accrued liabilities and other(815) (14,527) 
Net cash provided by operating activities4,388  2,269  
Cash flows from investing activities:      
Capital expenditures(6,649) (17,467) 
Proceeds from sale of property, plant and equipment3,673  1,771  
Net cash used in investing activities(2,976) (15,696) 
Cash flows from financing activities:      
Borrowings on lines of credit74,909  80,656  
Payments on lines of credit(58,948) (61,524) 
Purchases of Convertible Notes(13,775)   
Debt issuance costs  (927) 
Proceeds from employee stock plans  330  
Purchases of treasury stock(32) (5,013) 
Other financing activities(1,218) (1,169) 
Net cash provided by financing activities936  12,353  
Effect of exchange rate changes on cash(2,576) (581) 
Net decrease in cash, cash equivalents, and restricted cash(228) (1,655) 
Cash, cash equivalents, and restricted cash at beginning of period56,863  64,266  
Cash, cash equivalents, and restricted cash at end of period$56,635  $62,611  

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 and our first quarter represents the three-month period ended March 31. The results of operations for the first quarter 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 March 31, 2020 and our results of operations and cash flows for the first quarter 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 4 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  
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.
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Note 2 – Earnings Per Share
The following table presents the reconciliation of the numerator and denominator for calculating net income (loss) per share:
 First Quarter
(In thousands, except per share data)20202019
Numerator 
Net income (loss) - basic and diluted $(12,148) $1,282  
Denominator
Weighted average common shares outstanding - basic89,645  90,111  
Dilutive effect of stock options and restricted stock awards  2,267  
Dilutive effect of Convertible Notes     
Weighted average common shares outstanding - diluted89,645  92,378  
Net income (loss) per common share
Basic$(0.14) $0.01  
Diluted$(0.14) $0.01  
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:
 First Quarter
(In thousands)20202019
Stock options and restricted stock awards4,835  1,712  
For the first quarter 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 this period. The Convertible Notes (as defined in Note 6) 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 6. 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.
Note 3 – 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 6). 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 March 31, 2020, we had $67.2 million remaining under the program.
During the first quarter of 2020, we repurchased $14.5 million of our Convertible Notes in the open market under the repurchase program for a total cost of $13.8 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 quarter of 2020. During the first quarter of 2019, we repurchased an aggregate of 655,666 shares of our common stock under the program for a total cost of $5.0 million.

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Note 4 – Receivables
Receivables consisted of the following:
(In thousands)March 31, 2020December 31, 2019
Trade receivables:
Gross trade receivables$188,576  $207,554  
Allowance for credit losses(6,141) (6,007) 
Net trade receivables182,435  201,547  
Income tax receivables6,263  7,393  
Other receivables8,742  7,774  
Total receivables, net$197,440  $216,714  
Other receivables included $7.0 million and $6.2 million for value added, goods and service taxes related to foreign jurisdictions as of March 31, 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 Quarter
(In thousands)20202019
Balance at beginning of period$6,007  $10,034  
Cumulative effect of accounting change959  —  
Credit loss expense20  386  
Write-offs, net of recoveries(845) (861) 
Balance at end of period$6,141  $9,559  

Note 5 – Inventories
Inventories consisted of the following:
(In thousands)March 31, 2020December 31, 2019
Raw materials:  
Fluids systems$124,623  $141,314  
Mats and integrated services4,451  5,049  
Total raw materials129,074  146,363  
Blended fluids systems components40,892  39,542  
Finished goods - mats18,013  10,992  
Total inventories$187,979  $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.

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Note 6 – Financing Arrangements and Fair Value of Financial Instruments
Financing arrangements consisted of the following:
March 31, 2020December 31, 2019
(In thousands)Principal AmountUnamortized Discount and Debt Issuance CostsTotal DebtPrincipal AmountUnamortized Discount and Debt Issuance CostsTotal Debt
Convertible Notes$85,500  $(9,261) $76,239  $100,000  $(12,291) $87,709  
ABL Facility79,000  —  79,000  65,000  —  65,000  
Other debt7,707  —  7,707  7,164  —  7,164  
Total debt172,207  (9,261) 162,946  172,164  (12,291) 159,873  
Less: Current portion(6,981)   (6,981) (6,335)   (6,335) 
Long-term debt$165,226  $(9,261) $155,965  $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 $85.5 million principal amount was outstanding at March 31, 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 May 4, 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 March 31, 2020, the carrying amount of the debt component was $76.2 million, which is net of the unamortized debt discount and debt issuance costs of $9.3 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 quarter of 2020, we repurchased $14.5 million of our Convertible Notes in the open market for a total cost of $13.8 million, and recognized a net loss of $0.9 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 March 31, 2020, our total availability under the ABL Facility was $151.0 million, of which $79.0 million was drawn, resulting in remaining availability of $72.0 million.
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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 March 31, 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 2.4% at March 31, 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 March 31, 2020, the applicable commitment fee was 37.5 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. 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 $6.7 million and $4.8 million outstanding under these arrangements at March 31, 2020 and December 31, 2019, respectively.
In addition, at March 31, 2020, we had $49.8 million in outstanding letters of credit, performance bonds, and other guarantees for which certain of the letters of credit are collateralized by $7.6 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 March 31, 2020 and December 31, 2019. The estimated fair value of our Convertible Notes was $63.8 million at March 31, 2020 and $101.4 million at December 31, 2019, based on quoted market prices at these respective dates.

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Note 7 – Income Taxes
The provision for income taxes was $0.2 million for the first quarter of 2020 despite reporting a pretax loss. 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 more than offset by the tax expense related to earnings from our international operations. The provision for income taxes was $1.8 million for the first quarter of 2019, reflecting an effective tax rate of 58%. The 2019 effective tax rate was negatively impacted by $0.7 million of discrete tax adjustments relative to the amount of pre-tax income.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States. The CARES Act contains several tax provisions, including but not limited to 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 quarter of 2020, we are continuing to evaluate the provisions of the CARES Act and currently anticipate filing an amendment to our 2018 U.S. federal income tax return in the second quarter of 2020 to accelerate the refund of $0.7 million of AMT carryforwards.
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. While we anticipate deferrals of applicable payroll taxes through December 31, 2020, there were no deferrals at March 31, 2020.

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Note 8 – 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 March 31, 2020, there are open claims remaining with four plaintiffs. We have been advised by our insurer that these claims are insured under our insurance programs. As of March 31, 2020, the claims related to the fire under our property, business interruption, and general liability insurance programs have not been finalized.
Note 9 – Supplemental Disclosures to the Statements of Cash Flows
Supplemental disclosures to the statements of cash flows are presented below:
First Quarter
(In thousands)20202019
Cash paid for:  
Income taxes (net of refunds)$1,888  $3,868  
Interest$991  $1,514  
Cash, cash equivalents, and restricted cash in the consolidated statements of cash flows consisted of the following:
(In thousands)March 31, 2020December 31, 2019
Cash and cash equivalents$49,064  $48,672  
Restricted cash (included in prepaid expenses and other current assets)7,571  8,191  
Cash, cash equivalents, and restricted cash$56,635  $56,863  


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Note 10 – Segment Data
Summarized operating results for our reportable segments are shown in the following table (net of inter-segment transfers):
 First Quarter
(In thousands)20202019
Revenues
Fluids systems$132,805  $160,653  
Mats and integrated services31,745  50,820  
Total revenues$164,550  $211,473  
Operating income (loss)
Fluids systems$(2,268) $3,874  
Mats and integrated services3,062  13,538  
Corporate office(6,680) (11,733) 
Total operating income (loss)$(5,886) $5,679  
        The following table presents further disaggregated revenues for the Fluids Systems segment:
First Quarter
(In thousands)20202019
United States$73,660  $103,059  
Canada13,260  13,266  
Total North America86,920  116,325  
EMEA42,137  37,765  
Other3,748  6,563  
Total International45,885  44,328  
Total Fluids Systems revenues$132,805  $160,653  
The following table presents further disaggregated revenues for the Mats and Integrated Services segment:
First Quarter
(In thousands)20202019
Service revenues$14,101  $21,150  
Rental revenues13,502  21,580  
Product sales revenues4,142  8,090  
Total Mats and Integrated Services revenues$31,745  $50,820  

We recognized $1.4 million of charges for inventory write-downs and severance costs in the first quarter of 2020, with $1.2 million in the Fluids Systems segment and $0.2 million in the Corporate office. During March 2020, oil prices collapsed due to geopolitical events along with the worldwide effects of the COVID-19 pandemic. As of May 1, 2020, the U.S. active rig count was 408, reflecting a 48% decline from the first quarter 2020 average level, and is expected to continue to significantly decline in the coming months. In response to the deteriorating U.S. land oil and natural gas market, we initiated certain headcount reductions and other cost reduction programs late in the first quarter of 2020, and these actions have continued into the second quarter of 2020. As a result, we expect to recognize additional severance charges and certain facility exit costs in the second quarter of 2020; however, such amounts are not currently estimable.
We also made the decision in late 2019 to wind down our Brazil operations. At March 31, 2020, we had $11.6 million of accumulated translation losses related to our subsidiary in Brazil. As such, we will reclassify these losses and recognize a charge to income at such time when we have substantially liquidated our subsidiary in Brazil.
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As of March 31, 2020, our consolidated balance sheet includes $42.1 million of goodwill, all of which relates to the Mats and Integrated Services segment. Goodwill and other indefinite-lived intangible assets are tested for impairment annually as of November 1, or more frequently, if indicators of impairment exists. In March 2020, primarily as a result of the collapse in oil prices and the expected declines in the U.S. land E&P markets, along with a significant decline in the quoted market prices of our common stock, we considered these developments to be a potential indicator of impairment that required us to complete an interim goodwill impairment evaluation. As such, in March 2020, we estimated the fair value of our Mats and Integrated Services reporting unit based on our current forecasts and expectations for market conditions and determined that even though the estimated fair value had decreased, the fair value remained substantially in excess of its net carrying value, and therefore, no impairment was required.
As of March 31, 2020, our consolidated balance sheet also includes $305.7 million of property, plant and equipment, net, and $27.5 million of finite-lived intangible assets, net, which combined includes $170.8 million in the Fluids Systems segment and $150.8 million in the Mats and Integrated Services segment. We review property, plant and equipment, finite-lived intangible assets and certain other assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We assess recoverability based on expected undiscounted future net cash flows. With the market uncertainty as discussed above, we completed an impairment review of such assets in March 2020, which indicated that the estimated undiscounted cash flows exceeded the carrying value, and therefore, no impairment was required.
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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition, results of operations, liquidity, and capital resources should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report as well as our Annual Report on Form 10-K for the year ended December 31, 2019. Our first quarter represents the three-month period ended March 31. Unless otherwise noted, all currency amounts are stated in U.S. dollars. The reference to a “Note” herein refers to the accompanying Notes to Unaudited Condensed Consolidated Financial Statements contained in Item 1 “Financial Statements.”
Overview
We are a geographically diversified supplier providing products, as well as rentals and services. We operate our business through two reportable segments: Fluids Systems, which primarily serves the oil and natural gas exploration and production (“E&P”) industry, and Mats and Integrated Services, which serves a variety of industries, including E&P, electrical transmission & distribution, pipeline, solar, petrochemical, and construction industries.
Our operating results, particularly for the Fluids Systems segment, depend on oil and natural gas drilling activity levels in the markets we serve and the nature of the drilling operations (including the depth and whether the wells are drilled vertically or horizontally), which governs the revenue potential of each well. Drilling activity levels, in turn, depend on a variety of factors, including oil and natural gas commodity pricing, inventory levels, product demand, and regulatory restrictions. Oil and natural gas prices and activity are cyclical and volatile, and this market volatility has a significant impact on our operating results.
While our revenue potential is driven by a number of factors including those described above, rig count data remains the most widely accepted indicator of drilling activity. Average North American rig count data for the first quarter of 2020 as compared to the first quarter of 2019 is as follows:
 First Quarter2020 vs 2019
 20202019Count%
U.S. Rig Count785  1,043  (258) (25)%
Canada Rig Count196  183  13  %
North America Rig Count981  1,226