Npk International Inc. · NYSE:NPKI
Npk International — Newpark Resources — Q1 2023 Earnings Presentation
32 slides from Npk International's earnings presentation, May 3, 2023
Slide 1: Investor Presentation: Positioned for Sustainable Growth Through the Energy Transition
May 2023 Investor Presentation Positioned for Sustainable Growth Through the Energy Transition
Slide 2: Notice to Investors
Notice to Investors Disclaimers Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements other than statements of historical facts are forward-looking statements. Words s
Slide 3: Agenda
Agenda Introduction End-Market Overview Summary of Key Financial Data 3
Slide 4: Introduction
1) Introduction
Slide 5: Aligning Portfolio to Maximize Value Creation Through Accelerated Growth in Power Infrastructure Markets
Aligning Portfolio to Maximize Value Creation Through Accelerated Growth in Power Infrastructure Markets Disciplined Strategy Aligned with Long-Term Global Megatrends
Slide 6: Company Overview
Company Overview Specialty Rental & Services Company Supporting Energy Transition Newpark Resources, Inc. is a global company supporting energy and infrastructure markets. NEWPARK RESOURCES GLOBAL FOOTPRINT We built a reputation for innovating and adapting to the changing needs of our customers, de
Slide 7: Leader in Energy and Power Infrastructure Solutions
Leader in Energy and Power Infrastructure Solutions Providing Innovative Product & Service Solutions for Power T&D Infrastructure and O&G Markets 70% INDUSTRIAL SOLUTIONS Power Infrastructure, O&G, 95% 30% FLUID SYSTEMS 5% OF SEGMENT ADJ. OF SEGMENT OF SEGMENT ADJ. Oil, Natural Gas, and Geothermal
Slide 8: Segment Approach Supports Growth & Shareholder Return
Segment Approach Supports Growth & Shareholder Return Net Capital Employed* TTM ADJ EBITDA** Market Outlook Approach $224M Industrial Solutions Inventory $74M Invest & AR, net of AP Rental fleet Grow Other long-lived assets, net $263M Optimize Fluids Systems Inventory $29M for Cash Generation AR, ne
Slide 9: Key Operational Highlights Aligned with Strategy
Key Operational Highlights Aligned with Strategy Disciplined Execution Delivering Shareholder Value Creation Power and Industrial Fluid Systems Adjusted EBITDA* Shares Outstanding Revenue (TTM) Net Capital Employed $165 $350 $25.0 96 $160 94 $155 $300 $20.0 92 $150 $250 $15.0 90 MILLIONS $145 MILL
Slide 10: Well Positioned in Substantial Energy Megatrends
Well Positioned in Substantial Energy Megatrends Multi-Trillion Dollar Markets Provide Long-Term Opportunities $14T+ $1T+ $12T+ Electrification Renewables Global Oil & Gas Investment in global Renewable Generation tie- O&G Investment is projected electrical grid to enable ins and grid hardening to m
Slide 11: Differentiated Model Exploiting Competitive Advantages
Differentiated Model Exploiting Competitive Advantages Over 50 Years of Technology & Service Innovation Positioning Us for Tomorrow’s Opportunities • Self-funding organic expansion in high-growth, high-returning infrastructure markets • Focused capital light Fluid Systems positioned to generate cas
Slide 12: Transformation Not Reflected in Valuation
Transformation Not Reflected in Valuation Strategic Focus on Growth in More Stable, Higher-Margin Industrial Markets Key to Long-Term Value Creation 2019 Q1 2023 Change Expanding EBITDA as we reposition the Company $82M $84M +2% Adjusted EBITDA** Adjusted EBITDA** (Annualized) Increasing EBITDA gene
Slide 13: End-Market Overview
End-Market Overview 13
Slide 14: Utilities Infrastructure Megatrend Powering Growth
Utilities Infrastructure Megatrend Powering Growth Significant Long-term Capital Investment in Innovation & Infrastructure Enhanced by Legislation The $1.2 trillion Infrastructure Investment and Jobs Infrastructure Investment and Jobs Act (IIJA) is investing significantly over next decade, $1.2T+ Ac
Slide 15: Industrial Solutions
Industrial Solutions Specialty Rental and Services Supporting Infrastructure Megatrends • Strategic investments in technology, scale, and service to drive specialty rental differentiation • Expansion of specialty rental fleet to meet long-term infrastructure build-out • Leverage R&D to launch higher
Slide 16: Global Demand for Oil and Gas Remains Resilient
Global Demand for Oil and Gas Remains Resilient Emergence of Alternative Energy Lags Global Demand OUTLOOK BY 2050 $12T+ Investment in Oil & Gas projected to meet global demand in Sustainable Development Scenario over next 30 years 80%+ World’s Energy which comes from fossil fuels today Access to af
Slide 17: Fluids Systems
Fluids Systems Agile, Capital-Light Technology & Services Capable of Cash Generation Through Cycles • Global footprint aligned to long-term, strategic markets • Reshaping balance sheet to drive “Capital-Light” model, and reduce return cyclicality • Strong focus on margin expansion through technology
Slide 18: Simplifying Business and Driving Efficiency
Simplifying Business and Driving Efficiency 20% 27% 6% Reduction in Net Capital Reduction in Corporate Office Average Borrowing Rate Employed from 2019 Levels Expense from 2019 Levels on Outstanding Debt NET CAPITAL EMPLOYED BY SEGMENT CORPORATE OFFICE (excl. depreciation) INTEREST EXPENSE $800 $40
Slide 19: Long-Term Capital Allocation Strategy
Long-Term Capital Allocation Strategy Disciplined Approach Balances Growth Investments with Return of Capital Maintain Target Return Excess Invest in Growth Leverage Cash to Investors • Target net leverage range Organic M&A • As assets in Fluids Systems of 0.5x–1.5x are monetized, returning a • Cont
Slide 20: Sustainability Embedded in Our DNA
Sustainability Embedded in Our DNA 2022 Sustainability Report Including SASB & TCFD Disclosures Available on Website Environmental Social Governance Safety Drives Everything We Do Board Independence Independent Board Diversity Shareholder Approval Rate of Committed to Local Personnel Across Our Oper
Slide 21: Why Invest in Newpark Resources?
Why Invest in Newpark Resources? Leading Provider of Sustainable Technologies and Services Meaningful growth opportunity tied to the energy transition Global presence in large-scale energy markets Proven technologies with economic and ESG benefits Demonstrated ability to adapt and grow Balancing inv
Slide 22: Summary of Key Financial Data
Summary of Key Financial Data 22
Slide 23: Business Segment Overview
Business Segment Overview Industrial Solutions Fluids Systems $250 Revenues $100 $750 Revenues $100 Adjusted EBITDA* Adjusted EBITDA* ADJUSTED EBITDA (MILLIONS) ADJUSTED EBITDA (MILLIONS) $200 $80 $625 $80 REVENUE (MILLIONS) REVENUE (MILLIONS) $500 $60 $150 $60 $375 $40 $100 $40 $250 $20 $50 $20 $12
Slide 24: Consolidated Statements of Operations (unaudited)
Consolidated Statements of Operations (unaudited) Three Months Ended March 31, December March 31, (In thousands, except per share data) 2023 31, 2022 2022 Revenues $ 200,030 $ 225,159 $ 176,438 Cost of revenues 164,738 186,980 150,988 Selling, general and administrative expenses 25,410 24,648 24,433
Slide 25: Operating Segment Results (unaudited)
Operating Segment Results (unaudited) Three Months Ended March 31, December March 31, (In thousands) 2023 31, 2022 2022 Revenues Fluids Systems $ 144,174 $ 167,705 $ 141,014 Industrial Solutions 55,856 57,454 35,424 Industrial Blending - - - Total revenues $ 200,030 $ 225,159 $ 176,438 Operating inc
Slide 26: Impact of 2022 Divestitures (unaudited)
Impact of 2022 Divestitures (unaudited) Summarized operating results (including impairments and other charges) of our Excalibar business and Gulf of Mexico operations, both included in the Fluids Systems segment historical results, are shown in the following tables: Three Months Ended March 31, Dece
Slide 27: Consolidated Balance Sheets (unaudited)
(In thousands, except share data) March 31, 2023 December 31, 2022 ASSETS Cash and cash equivalents $ 23,618 $ 23,182 Receivables, net 212,694 242,247 Inventories 149,989 149,571 Prepaid expenses and other current assets 9,962 10,966 Total current assets 396,263 425,966 Consolidated Property, plant
Slide 28: Consolidated Statements of Cash Flows (unaudited)
Consolidated Statements of Cash Flows (unaudited) Three Months Ended March 31, Three Months Ended March 31, (In thousands) 2023 2022 (In thousands) 2023 2022 Cash flows from operating activities: Net income $ 5,620 $ 2,521 Cash flows from investing activities: Adjustments to reconcile net income to
Slide 29: Non-GAAP Financial Measures (unaudited)
Non-GAAP Financial Measures (unaudited) The following tables reconcile the Company’s net income (loss) calculated in accordance with GAAP to the non-GAAP financial measures of EBITDA and Adjusted EBITDA: Consolidated Twelve Months Ended Three Months Ended TTM Q1 (In thousands) 2019 2020 2021 2022 20
Slide 30: Non-GAAP Financial Measures
The following tables reconcile the Company’s segment operating income (loss) calculated in accordance with GAAP to the non-GAAP financial measures of EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin: Non-GAAP Fluids Systems (In thousands) 2019 Twelve Months Ended 2020 2021 2022 Three Months Ended
Slide 31: Non-GAAP Financial Measures (unaudited)
Non-GAAP Financial Measures (unaudited) The following table reconciles the Company’s net cash provided by (used in) operating activities calculated in accordance with GAAP to the non-GAAP financial measure of free cash flow: Three Months Ended Consolidated Twelve Months Ended March 31, (In thousands
Slide 32: Non-GAAP Financial Measures (unaudited)
Non-GAAP Financial Measures (unaudited) The following table reconciles the Company’s ratio of total debt to capital calculated in accordance with GAAP to the non-GAAP financial measure of ratio of net debt to capital: Consolidated December 31, March 31 (In thousands) 2018 2019 2020 2021 2022 2023 Cu