Newpark Resources Reports 2008 Third Quarter Results
Income from continuing operations increased 53% to $0.13 per diluted share
THE WOODLANDS, Texas, Oct 30, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its third quarter ended September 30, 2008. Total revenues were $211.6 million for the third quarter of 2008 compared to $153.8 million for the third quarter of 2007. The Company reported income from continuing operations of $11.7 million, or $0.13 per diluted share, compared to $7.6 million, or $0.08 per diluted share, in the third quarter of 2007. Net income was $10.4 million, or $0.12 per diluted share, compared to $7.4 million, or $0.08 per diluted share, in the third quarter of 2007.
Paul Howes, President and Chief Executive Officer of Newpark, stated, "I am very pleased with our third quarter results as we continue to realize the benefits from our strategic investments in new markets and revenue streams. Our core drilling fluids and engineering segment performed exceptionally well both domestically and internationally, with revenues increasing 45% year-to-year and 12% sequentially. Meanwhile, we expect to sign the Lot B contract with Petrobras in November, which serves as another key milestone in our efforts to expand into the deepwater market in Brazil.
"Looking ahead, the volatility in credit markets and commodity prices has created an uncertain outlook for drilling activity. Accordingly, we have sharpened our focus on ensuring that we have plans in place to react quickly to market changes and meet the needs of our customers. We believe we are well positioned to continue gaining share in the markets we serve during these unsettling times."
SEGMENT RESULTS
The Fluids Systems and Engineering segment generated revenues of $189.0 million and a 13.5% operating margin in the third quarter of 2008 compared to revenues of $130.0 million and an 11.9% operating margin during the third quarter of 2007. Third quarter 2008 revenues were driven by strong growth in both the North American and Mediterranean regions. North American revenues increased 43% over the third quarter of 2007 on solid revenue gains from both the U.S. and Canadian markets, while Mediterranean revenues increased 27% compared to the third quarter of 2007. Brazil also contributed to revenue growth, generating a $4.7 million increase in the third quarter of 2008 as the Company continues to expand its presence in the Brazilian market.
The Mats and Integrated Services segment generated revenues of $22.6 million and a 5.0% operating margin in the third quarter of 2008 compared to revenues of $23.8 million and a 19.1% operating margin in the third quarter of 2007. The decline in revenues is attributable to a $1.6 million decrease in composite mat sales, partially offset by higher mat rental and related services revenue. The third quarter 2008 results included $0.9 million of expenses for the transportation of composite mats to the United Kingdom for rental use in the utility industry.
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. During the third quarter of 2008, the Company repurchased 732,195 shares for an aggregate price of $5.1 million. As of September 30, 2008, the Company has repurchased 2,618,195 outstanding shares for an aggregate price of $15.1 million, an average per share price of $5.77.
ENVIRONMENTAL SERVICES UPDATE
On October 23, 2008, the Federal Trade Commission ("FTC") filed suit seeking a Temporary Restraining Order and Preliminary Injunction to prevent the Company and CCS, Inc. from concluding the previously announced sale of the Company's environmental services business. The FTC alleges that the proposed combination of CCS and the Company's environmental services business would have an anti-competitive impact on the alleged markets. The Company disagrees with the FTC's position and intends to oppose the FTC's request to obtain a preliminary injunction to prevent consummation of the proposed transaction.
CONFERENCE CALL
In conjunction with this release, Newpark has scheduled a conference call, which will be broadcast live over the Internet, on Friday, October 31, 2008 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (303) 262-2137 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 November 7, 2008 and may be accessed by dialing (303) 590-3000 and using pass code 11119474#. 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, the instability and effect of the credit and capital markets on the economy in general and the oil and gas industry in particular, the access to the credit markets by both Newpark and Newpark's customers, the outlook for drilling activity in North America and the rest of the world, 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.
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
Newpark Resources, Inc.
Consolidated Statements of Operations
(Unaudited) Three Months Nine Months
(In thousands, except per share Ended September 30, Ended September 30,
data) 2008 2007 2008 2007
Revenues $211,568 $153,778 $584,067 $453,024
Cost of revenues 184,836 133,756 515,656 393,176
26,732 20,022 68,411 59,848
General and administrative
expenses 6,816 4,567 16,593 17,833
Operating income 19,916 15,455 51,818 42,015
Foreign currency exchange loss
(gain) 36 (57) 133 (279)
Interest expense, net 2,499 3,950 8,375 12,182
Income from continuing operations
before income taxes 17,381 11,562 43,310 30,112
Provision for income taxes 5,714 3,950 14,301 10,586
Income from continuing operations 11,667 7,612 29,009 19,526
(Loss) income from discontinued
operations, net of tax (1,249) (229) 2,762 2,563
Loss from disposal of discontinued
operations, net of tax - - - (2,173)
Net income $10,418 $7,383 $31,771 $19,916
Basic weighted average common
shares outstanding 88,682 90,085 89,227 89,965
Diluted weighted average common
shares outstanding 89,109 90,542 89,569 90,503
Income per common share (basic
and diluted):
Income from continuing operations $0.13 $0.08 $0.32 $0.22
(Loss) income from discontinued
operations (0.01) - 0.03 -
Net income per common share $0.12 $0.08 $0.35 $0.22
Newpark Resources, Inc.
Operating Segment Results
(Unaudited) Three Months Ended
September 30, June 30, September 30,
(In thousands) 2008 2008 2007
Segment revenues
Fluids systems and engineering $188,975 $169,128 $129,986
Mats and integrated services 22,593 24,904 23,792
Total segment revenues $211,568 $194,032 $153,778
Segment operating income
Fluids systems and engineering $25,601 $18,104 $15,467
Mats and integrated services 1,131 2,417 4,555
Total segment operating income $26,732 $20,521 $20,022
Segment operating margin
Fluids systems and engineering 13.5% 10.7% 11.9%
Mats and integrated services 5.0% 9.7% 19.1%
Total segment operating margin 12.6% 10.6% 13.0%
Newpark Resources, Inc.
Consolidated Balance Sheets
September 30, December 31,
(In thousands, except share data) 2008 2007
(Unaudited)
ASSETS
Cash and cash equivalents $10,888 $5,741
Receivables, net 186,628 141,949
Inventories 121,226 120,202
Deferred tax asset 23,359 28,439
Prepaid expenses and other current assets 13,586 12,131
Assets of discontinued operations 80,556 86,628
Total current assets 436,243 395,090
Property, plant and equipment, net 165,183 159,094
Goodwill 61,913 62,616
Deferred tax asset, net 383 408
Other intangible assets, net 16,425 18,474
Other assets 4,471 6,097
Total assets $684,618 $641,779
LIABILITIES AND STOCKHOLDERS' EQUITY
Foreign bank lines of credit $9,234 $7,297
Current maturities of long-term debt 10,397 11,565
Accounts payable 71,269 62,505
Accrued liabilities 31,787 20,367
Liabilities of discontinued operations 14,022 10,456
Total current liabilities 136,709 112,190
Long-term debt, less current portion 153,635 158,616
Deferred tax liability 10,977 5,923
Other noncurrent liabilities 3,697 4,386
Total liabilities 305,018 281,115
Common Stock, $0.01 par value, 100,000,000
shares authorized 91,064,717 and 90,215,715
shares issued, respectively 910 902
Paid-in capital 455,856 450,319
Accumulated other comprehensive income 10,701 13,988
Retained deficit (72,774) (104,545)
Less treasury stock, at cost; 2,618,195
shares (15,093) -
Total stockholders' equity 379,600 360,664
Total Liabilities and Stockholders' Equity $684,618 $641,779
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended
September 30,
(In thousands) 2008 2007
Cash flows from operating activities:
Net income $31,771 $19,916
Adjustments to reconcile net income
to net cash provided by operations:
Net income from discontinued operations (2,762) (2,563)
Net loss on disposal of discontinued
operations - 2,173
Depreciation and amortization 18,283 14,835
Stock-based compensation expense 4,034 2,270
Provision for deferred income taxes 10,130 8,385
Provision for doubtful accounts 1,752 530
(Gain) loss on sale of assets (345) 193
Change in assets and liabilities:
(Increase) decrease in receivables (49,170) 3,872
Increase in inventories (7,038) (1,340)
Increase in other assets (3,871) (3,994)
Increase in accounts payable 9,635 7,606
Increase (decrease) in accrued
liabilities and other 10,901 (4,099)
Net operating activities of continuing
operations 23,320 47,784
Net operating activities of discontinued
operations 13,899 15,018
Net cash provided by operating activities 37,219 62,802
Cash flows from investing activities:
Capital expenditures (16,621) (13,227)
Proceeds from sale of property, plant
and equipment 522 888
Business acquisitions - (21,919)
Net investing activities of continuing
operations (16,099) (34,258)
Net investing activities of discontinued
operations (551) 153
Net cash used in investing activities (16,650) (34,105)
Cash flows from financing activities:
Net payments on lines of credit (1,625) (15,766)
Principal payments on notes payable
and long-term debt (2,116) (20,806)
Proceeds from exercise of stock options
and ESPP 1,897 2,016
Purchase of treasury stock (15,093) -
Net financing activities of continuing
operations (16,937) (34,556)
Net financing activities of discontinued
operations (63) (45)
Net cash used in financing activities (17,000) (34,601)
Effect of exchange rate changes 1,578 580
Net increase (decrease) in cash and
cash equivalents 5,147 (5,324)
Cash and cash equivalents at beginning of year 5,741 12,736
Cash and cash equivalents at end of year $10,888 $7,412
SOURCE Newpark Resources, Inc.
http://www.newpark.com