Newpark Resources Reports First Quarter 2008 Results
Company reports income from continuing operations of $0.10 per diluted share
THE WOODLANDS, Texas, May 1 /PRNewswire-FirstCall/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2008. Total revenues were $178.5 million for the first quarter of 2008 compared to $149.3 million for the first quarter of 2007. Income from continuing operations was $8.7 million, or $0.10 per diluted share, compared to $5.8 million, or $0.06 per diluted share, in the first quarter of 2007. Net income was $11.4 million, or $0.13 per diluted share, compared to $7.2 million, or $0.08 per diluted share, in the first quarter of 2007.
Paul Howes, President and Chief Executive Officer of Newpark, stated, "We are pleased to report continued improvement in our Fluids Systems and Engineering segment, which accounts for over 80% of the Company's revenue. This segment experienced solid revenue growth of 25% in a year-over-year comparison and 15% sequentially from the fourth quarter of 2007. However, we are experiencing continued softness in our Mats and Integrated Services business, primarily in the Gulf Coast region where the declining rig count in southern Louisiana has impacted demand and pricing.
"I am very pleased to announce that we have signed a multi-year contract with a super major to provide drilling fluids and related services for the deepwater market in Brazil. With this new contract, we are investing in a new fluids plant and supporting infrastructure in Brazil, which we believe will position us for growth in one of the fastest developing deepwater markets in the world," added Howes. "Additionally, we began repurchasing our shares during the quarter, and have continued to do so in April," concluded Howes.
Segment Results
The Fluids Systems and Engineering segment generated revenues of $157.2 million and a 13.4% operating margin in the first quarter of 2008 compared to revenues of $125.3 million and a 13.3% operating margin during the first quarter of 2007. First quarter 2008 revenues were driven by strong growth in both the North American and Mediterranean regions. North American revenues increased 17% over the first quarter of 2007 and included solid revenue gains from both the U.S. and Canadian markets, while Mediterranean region revenues increased 87%, compared to the first quarter of 2007.
The Mats and Integrated Services segment generated revenues of $21.3 million and a 0.2% operating margin in the first quarter of 2008 compared to revenues of $24.0 million and a 19.2% operating margin in the first quarter of 2007. The 2008 first quarter decline in this segment's operating margin is primarily attributable to continued weakness in the South Louisiana land rig count, resulting in reduced demand along with pricing pressure for mat rentals and related services. In addition, the first quarter 2008 results include pre-tax charges of $1.2 million related primarily to inventory and receivable write downs, as well as severance costs associated with restructuring activities within the segment.
Share Repurchase Program Update
In February 2008, Newpark's Board of Directors approved a stock repurchase program, authorizing the Company to purchase up to $25 million of outstanding shares of Newpark common stock. As part of this stock repurchase program, the Company established a repurchase program under Rule 10b5-1 of the Securities Exchange Act of 1934 during the first quarter and repurchased 784,000 outstanding shares for an aggregate price of $3.8 million, at an average per share price of $4.80.
CONFERENCE CALL
In conjunction with this release, Newpark has scheduled a conference call, which will be broadcast live over the Internet, on Friday, May 2, 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 May 9, 2008 and may be accessed by dialing (303) 590-3000 and using pass code 11111119#. 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 statements about the timing and completion of the proposed sale of the environmental business, 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 Ended March 31,
(In thousands, except per share data) 2008 2007
Revenues $178,467 $149,264
Cost of revenues 157,309 128,034
21,158 21,230
General and administrative expenses 4,781 8,155
Operating income 16,377 13,075
Foreign currency exchange loss 296 109
Interest expense, net 3,227 4,420
Income from continuing operations
before income taxes 12,854 8,546
Provision for income taxes 4,177 2,777
Income from continuing operations 8,677 5,769
Income from discontinued operations,
net of tax 2,674 1,465
Net income $11,351 $7,234
Basic weighted average common shares
outstanding 90,099 89,829
Diluted weighted average common
shares outstanding 90,332 90,248
Income per common share (basic and
diluted):
Income from continuing operations $0.10 $0.06
Income from discontinued operations 0.03 0.02
Net income per common share $0.13 $0.08
Newpark Resources, Inc.
Operating Segment Results
(Unaudited) Three Months Ended
March 31, December 31, March 31,
(In thousands) 2008 2007 2007
Segment revenues
Fluids systems and engineering $157,216 $136,267 $125,298
Mats and integrated services 21,251 23,473 23,966
Total segment revenues $178,467 $159,740 $149,264
Segment operating income
Fluids systems and engineering $21,107 $17,645 $16,630
Mats and integrated services 51 1,342 4,600
Total segment operating income $21,158 $18,987 $21,230
Segment operating margin
Fluids systems and engineering 13.4% 12.9% 13.3%
Mats and integrated services 0.2% 5.7% 19.2%
Total segment operating margin 11.9% 11.9% 14.2%
Newpark Resources, Inc.
Consolidated Balance Sheets
March 31, December 31,
(In thousands, except share data) 2008 2007
(unaudited)
ASSETS
Cash and cash equivalents $8,200 $5,741
Receivables, net 168,069 141,949
Inventories 133,247 120,202
Deferred tax asset 36,227 28,439
Prepaid expenses and other current assets 11,402 12,131
Assets of discontinued operations 85,744 86,628
Total current assets 442,889 395,090
Property, plant and equipment, net 159,551 159,094
Goodwill 63,283 62,616
Deferred tax asset, net 395 408
Other intangible assets, net 17,558 18,474
Other assets 5,958 6,097
Total assets $689,634 $641,779
LIABILITIES AND STOCKHOLDERS' EQUITY
Foreign bank lines of credit $10,429 $7,297
Current maturities of long-term debt 11,399 11,565
Accounts payable 64,081 62,505
Accrued liabilities 27,449 20,367
Liabilities of discontinued operations 8,458 10,456
Total current liabilities 121,816 112,190
Long-term debt, less current portion 178,190 158,616
Deferred tax liability 18,313 5,923
Other noncurrent liabilities 2,524 4,386
Total liabilities 320,843 281,115
Common stock, $0.01 par value,
100,000,000 shares authorized
90,623,560 and 90,215,175 shares
issued, respectively 906 902
Paid-in capital 451,685 450,319
Accumulated other comprehensive income 13,210 13,988
Retained deficit (93,194) (104,545)
Less treasury stock, at cost;
795,000 shares (3,816) -
Total stockholders' equity 368,791 360,664
Total liabilities and stockholders'
equity $689,634 $641,779
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
(Unaudited) Three Months Ended March 31,
(In thousands) 2008 2007
Cash flows from operating activities:
Net income $11,351 $7,234
Adjustments to reconcile net income
to net cash provided by operations:
Net income from discontinued operations (2,674) (1,465)
Depreciation and amortization 5,892 4,912
Stock-based compensation expense 1,656 682
Provision for deferred income taxes 5,618 3,341
Provision for doubtful accounts 660 18
Gain on sale of assets (16) (33)
Change in assets and liabilities:
Increase in receivables (24,755) (6,861)
(Increase) decrease in inventories (11,396) 6,251
Decrease in other assets 1,830 1,295
Increase (decrease) in accounts payable 178 (4,562)
Increase (decrease) in accrued liabilities
and other 1,885 (5,671)
Net operating activities of continuing
operations (9,771) 5,141
Net operating activities of discontinued
operations 1,693 5,162
Net cash (used in) provided by operating
activities (8,078) 10,303
Cash flows from investing activities:
Capital expenditures (5,728) (3,399)
Proceeds from sale of property, plant
and equipment 16 457
Net investing activities of continuing
operations (5,712) (2,942)
Net investing activities of discontinued
operations (81) (2,001)
Net cash used in investing activities (5,793) (4,943)
Cash flows from financing activities:
Net borrowings (payments) on lines of
credit 22,401 (12,310)
Principal payments on notes payable and
long-term debt (592) (6,491)
Proceeds from exercise of stock options
and ESPP - 970
Purchase of treasury stock (3,197) -
Net financing activities of continuing
operations 18,612 (17,831)
Net financing activities of discontinued
operations (52) 402
Net cash provided by (used in) financing
activities 18,560 (17,429)
Effect of exchange rate changes (2,230) 88
Net (decrease) increase in cash and cash
equivalents 2,459 (11,981)
Cash and cash equivalents at beginning of year 5,741 12,736
Cash and cash equivalents at end of year $8,200 $755
Cash paid for:
Income taxes (net of refunds) $854 $1,130
Interest $3,081 $4,463
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.
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)