Newpark Resources Reports 2008 Second Quarter Results
Company reports income from continuing operations of $0.10 per diluted share
THE WOODLANDS, Texas, July 31 /PRNewswire-FirstCall/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its second quarter ended June 30, 2008. Total revenues were $194.0 million for the second quarter of 2008 compared to $150.0 million for the second quarter of 2007. The Company reported income from continuing operations of $8.7 million, or $0.10 per diluted share, compared to $6.1 million, or $0.07 per diluted share, in the second quarter of 2007. Net income was $10.0 million, or $0.11 per diluted share, compared to $5.3 million, or $0.06 per diluted share, in the second quarter of 2007.
Paul Howes, President and Chief Executive Officer of Newpark, stated, "During the second quarter, we continued our focus on growing our core drilling fluids business where revenues were up 29% in a year-over-year comparison and 8% sequentially from the first quarter of 2008. While this segment's operating margins were lower on a sequential basis, this decline is partially attributable to the seasonal slow-down in the Canadian market, along with start-up costs and short-term inefficiencies associated with new and future revenue streams.
"Meanwhile, despite continued challenges in the Gulf Coast region, our Mats and Integrated Services business rebounded from the first quarter of 2008, increasing its operating margin to almost 10%. We are continuing to reduce the operating costs in this business, and under the leadership of our new division President Bill Moss, we expect to see more benefits ahead."
Segment Results
The Fluids Systems and Engineering segment generated revenues of $169.1 million and a 10.7% operating margin in the second quarter of 2008 compared to revenues of $131.2 million and a 12.4% operating margin during the second quarter of 2007. Second quarter 2008 revenues were driven by strong growth in both the North American and Mediterranean regions. North American revenues increased 21% over the second quarter of 2007 on solid revenue gains from the U.S. market, while our Mediterranean region revenues increased 53% compared to the second quarter of 2007. Brazil also contributed to revenue growth, generating a $3.5 million increase in the second quarter of 2008. Operating margins in this segment were negatively impacted by several factors, including new customer activity which is initially at lower margins due to start-up inefficiencies, unfavorable product mix and inflationary cost increases related to personnel and materials. In addition, the Company incurred start-up costs associated with future revenue streams.
The Mats and Integrated Services segment generated revenues of $24.9 million and a 9.7% operating margin in the second quarter of 2008 compared to revenues of $18.8 million and a 12.1% operating margin in the second quarter of 2007. The growth in revenues is attributable to an $8.3 million increase in composite mat sales, partially offset by lower mat rental and related services revenue. The revenue decline in mat rental and related services, as well as the segment's year-to-year operating margin decline, is primarily attributable to continued weakness in the South Louisiana land rig count, resulting in reduced demand along with pricing pressure.
Share Repurchase Program Update
As previously announced, Newpark's Board of Directors approved a stock repurchase program in February 2008, authorizing the Company to purchase up to $25.0 million of outstanding shares of Newpark common stock. As of June 30, 2008, the Company has repurchased 1,886,000 outstanding shares for an aggregate price of $10.0 million, an average per share price of $5.32.
CONFERENCE CALL
In conjunction with this release, Newpark has scheduled a conference call, which will be broadcast live over the Internet, on Friday, August 1, 2008 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (303) 262-2130 and ask for the Newpark Resources conference call at least 10 minutes prior to the start time, or access it live over the Internet at http://www.newpark.com. For those who cannot listen to the live call, a replay will be available through August 8, 2008 and may be accessed by dialing (303) 590-3000 and using pass code 11115505#. Also, an archive of the webcast will be available shortly after the call at http://www.newpark.com for 90 days.
Newpark Resources, Inc. is a worldwide provider of drilling fluids, temporary worksites and access roads for oilfield and other commercial markets, and environmental waste treatment solutions. For more information, visit our website at http://www.newpark.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act that are based on management's current expectations, estimates and projections. All statements that address expectations or projections about the future, including Newpark's strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like "expects," "anticipates," "plans," "intends," "projects," "indicates," and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Newpark, particularly its Annual Report on Form 10-K for the year ended December 31, 2007, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, Newpark's successful completion of the proposed sale of the environmental business, the investigation of the certain accounting matters by the Securities and Exchange Commission; changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which Newpark does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials, research and development of new products, including regulatory approval and market acceptance; and seasonality of sales of Newpark products. Newpark's filings with the Securities and Exchange Commission can be obtained at no charge at http://www.sec.gov, as well as through our website at http://www.newpark.com.
Newpark Resources, Inc.
Consolidated Statements of Operations
(Unaudited) Three Months Six Months
(In thousands, except per share Ended June 30, Ended June 30,
data) 2008 2007 2008 2007
Revenues $194,032 $149,982 $372,499 $299,246
Cost of revenues 173,511 131,386 330,820 259,420
20,521 18,596 41,679 39,826
General and administrative
expenses 4,996 5,111 9,777 13,266
Operating income 15,525 13,485 31,902 26,560
Foreign currency exchange (gain)
loss (199) (331) 97 (222)
Interest expense, net 2,649 3,812 5,876 8,232
Income from continuing operations
before income taxes 13,075 10,004 25,929 18,550
Provision for income taxes 4,410 3,859 8,587 6,636
Income from continuing operations 8,665 6,145 17,342 11,914
Income (loss) from discontinued
operations, net of tax 1,337 (846) 4,011 619
Net income $10,002 $5,299 $21,353 $12,533
Basic weighted average common
shares outstanding 88,762 89,979 89,454 89,907
Diluted weighted average common
shares outstanding 89,073 90,671 89,671 90,359
Income per common share (basic
and diluted):
Income from continuing operations $0.10 $0.07 $0.19 $0.13
Income (loss) from discontinued
operations 0.01 (0.01) 0.05 0.01
Net income per common share $0.11 $0.06 $0.24 $0.14
Newpark Resources, Inc.
Operating Segment Results
Three Months Ended
(Unaudited) June 30, March 31, June 30,
(In thousands) 2008 2008 2007
Segment revenues
Fluids systems and engineering $169,128 $157,216 $131,163
Mats and integrated services 24,904 21,251 18,819
Total segment revenues $194,032 $178,467 $149,982
Segment operating income
Fluids systems and engineering $18,104 $21,107 $16,323
Mats and integrated services 2,417 51 2,273
Total segment operating
income $20,521 $21,158 $18,596
Segment operating margin
Fluids systems and engineering 10.7% 13.4% 12.4%
Mats and integrated services 9.7% 0.2% 12.1%
Total segment operating
margin 10.6% 11.9% 12.4%
Newpark Resources, Inc.
Consolidated Balance Sheets
June 30, December 31,
(In thousands, except share data) 2008 2007
(Unaudited)
ASSETS
Cash and cash equivalents $10,243 $5,741
Receivables, net 174,974 141,949
Inventories 122,574 120,202
Deferred tax asset 27,383 28,439
Prepaid expenses and other current assets 12,846 12,131
Assets of discontinued operations 84,834 86,628
Total current assets 432,854 395,090
Property, plant and equipment, net 159,534 159,094
Goodwill 63,355 62,616
Deferred tax asset, net 399 408
Other intangible assets, net 16,648 18,474
Other assets 6,250 6,097
Total assets $679,040 $641,779
LIABILITIES AND STOCKHOLDERS' EQUITY
Foreign bank lines of credit $10,028 $7,297
Current maturities of long-term debt 11,400 11,565
Accounts payable 67,331 62,505
Accrued liabilities 26,454 20,367
Liabilities of discontinued operations 11,687 10,456
Total current liabilities 126,900 112,190
Long-term debt, less current portion 157,787 158,616
Deferred tax liability 13,913 5,923
Other noncurrent liabilities 2,291 4,386
Total liabilities 300,891 281,115
Common Stock, $0.01 par value, 100,000,000
shares authorized 90,953,756 and
90,215,175 shares issued, respectively 909 902
Paid-in capital 453,481 450,319
Accumulated other comprehensive income 16,990 13,988
Retained deficit (83,192) (104,545)
Less treasury stock, at cost;
1,886,000 shares (10,039) -
Total stockholders' equity 378,149 360,664
Total Liabilities and Stockholders' Equity $679,040 $641,779
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
(Unaudited) Six Months Ended June 30,
(In thousands) 2008 2007
Cash flows from operating activities:
Net income $21,353 $12,533
Adjustments to reconcile net income
to net cash provided by operations:
Net income from discontinued
operations (4,011) (619)
Depreciation and amortization 12,272 9,952
Stock-based compensation expense 2,314 1,197
Provision for deferred income taxes 9,119 5,883
Provision for doubtful accounts 1,336 549
Loss on sale of assets 445 795
Change in assets and liabilities:
Increase in receivables (32,170) (5,569)
Increase in inventories (832) (2,488)
Increase in other assets (961) (1,083)
Increase in accounts payable 3,431 10,068
Increase (decrease) in accrued
liabilities and other 2,939 (7,400)
Net operating activities of
continuing operations 15,235 23,818
Net operating activities of
discontinued operations 8,099 13,232
Net cash provided by operating
activities 23,334 37,050
Cash flows from investing activities:
Capital expenditures (11,465) (9,302)
Proceeds from sale of property, plant
and equipment 78 633
Net investing activities of
continuing operations (11,387) (8,669)
Net investing activities of
discontinued operations (115) (2,230)
Net cash used in investing activities (11,502) (10,899)
Cash flows from financing activities:
Net borrowings (payments) on lines
of credit 2,098 (30,555)
Principal payments on notes payable
and long-term debt (1,014) (6,080)
Proceeds from exercise of stock
options and ESPP 1,241 1,702
Purchase of treasury stock (10,039) -
Net financing activities of
continuing operations (7,714) (34,933)
Net financing activities of
discontinued operations (63) (31)
Net cash used in financing activities (7,777) (34,964)
Effect of exchange rate changes 447 222
Net increase (decrease) in cash and
cash equivalents 4,502 (8,591)
Cash and cash equivalents at
beginning of year 5,741 12,736
Cash and cash equivalents at end of
year $10,243 $4,145
Contacts: James E. Braun, CFO
Newpark Resources, Inc.
281-362-6800
Ken Dennard, Managing Partner
Dennard Rupp Gray & Easterly, LLC
ksdennard@drg-e.com
713-529-6600
SOURCE Newpark Resources, Inc.
-0- 07/31/2008
/CONTACT: James E. Braun, CFO of Newpark Resources, Inc.,
+1-281-362-6800; or Ken Dennard, Managing Partner of Dennard Rupp Gray &
Easterly, LLC, +1-713-529-6600, ksdennard@drg-e.com, for Newpark Resources,
Inc./
/Web site: http://www.newpark.com /
(NR)
CO: Newpark Resources, Inc.
ST: Texas
IN: OIL
SU: ERN CCA
DA-CD
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2688 07/31/2008 16:05 EDT http://www.prnewswire.com