Newpark Resources Reports Fourth Quarter and Full Year 2009 Results
For the full year 2009, total revenues were $490.3 million compared to $858.4 million for the full year 2008. The Company reported a net loss of $20.6 million, or $0.23 per share for the full year 2009, compared to net income of $38.5 million, or $0.43 per diluted share for 2008.
Paul Howes, President and Chief Executive Officer of Newpark, stated, "Our fourth quarter revenues and operating income showed sequential improvement from the third quarter, which had also improved from our second quarter of 2009. We have seen U.S. drilling activity continue to strengthen over the second half of 2009 and in the early part of 2010. As a result of these improving market conditions and our cost cutting programs executed earlier in 2009, all of our operating segments returned to profitability during the fourth quarter of 2009.
"During the past year, we have continued to aggressively manage the balance sheet, resulting in a total debt reduction of $12 million during the fourth quarter and $65 million for the full year 2009," added Howes. "Meanwhile, our international businesses continue to grow, and we are focused on actively managing our cost structure in the developing Brazil business as activity continues to ramp-up.
"Looking forward, we are encouraged with the current domestic and global trends for recovery in our principal markets and are pleased to have managed our way back to profitability at this point," concluded Howes.
The results for the fourth quarter of 2009 included a provision for income taxes that totaled $2.7 million, reflecting a 99% effective tax rate in the period. This high effective tax rate for the fourth quarter of 2009 is the result of lower than previously anticipated full year 2009 losses from the United States, offset by higher losses in certain foreign countries, for which the recording of a tax benefit is not permitted. This change in our geographic income mix reduced our full year tax benefit rate to 10% from the 19% rate recorded through the third quarter of 2009.
Operating results in the third quarter of 2009 included $2.3 million of other income ($1.5 million after-tax) in the Environmental Services segment, reflecting proceeds from the settlement of business interruption insurance claims related to hurricanes in 2008. Operating results in the fourth quarter of 2008 included $4.6 million of pre-tax charges ($3.0 million after-tax) related to the termination of the sale of the U.S. Environmental Services business and the resolution of a lawsuit with the Company's former Chief Executive Officer.
Segment Results
The Fluids Systems and Engineering segment generated revenues of $113.8 million in the fourth quarter of 2009 compared to $99.4 million in the third quarter of 2009 and $191.0 million in the fourth quarter of 2008. Segment operating income was $6.7 million in the fourth quarter of 2009 compared to $2.5 million in the third quarter of 2009 and $22.4 million in the fourth quarter of 2008. North American revenues increased 17% from the third quarter of 2009 primarily due to higher drilling activity, market share gains and a seasonal rebound in Canada, while international revenues increased 10%, primarily due to normal quarterly fluctuations in the Mediterranean region and the ramp-up of activity in Brazil. Compared to the fourth quarter of 2008, North American revenues decreased 53%, while international revenues increased 10%.
The Mats and Integrated Services segment generated revenues of $12.4 million in the fourth quarter of 2009 compared to $7.6 million in the third quarter of 2009 and $20.9 million in the fourth quarter of 2008. Segment operating income was $1.2 million in the fourth quarter of 2009 compared to an operating loss of $0.9 million in the third quarter of 2009 and an operating loss of $1.8 million in the fourth quarter of 2008. Revenues were up 64% from the third quarter of 2009, primarily due to a $4.9 million increase in mat sales, while well site construction activities remained relatively flat. Compared to the fourth quarter of 2008, segment revenues were down 41%.
The Environmental Services segment generated revenues of $9.3 million in the fourth quarter of 2009 compared to revenues of $11.2 million in the third quarter of 2009 and $15.1 million in the fourth quarter of 2008. Segment operating income was $1.1 million in the fourth quarter of 2009, compared to operating income of $4.1 million in the third quarter of 2009 and $0.4 million in the fourth quarter of 2008. The third quarter of 2009 included $2.3 million of other income associated with the settlement of business interruption insurance claims, while the fourth quarter of 2008 included $2.6 million of asset write-offs following the abandoned sale of this business unit. Fourth quarter 2009 revenues were down 17% from the third quarter 2009 and down 38% from the fourth quarter of 2008. The decline from the third quarter of 2009 is primarily attributable to lower NORM and industrial waste disposals.
Corporate office expenses were $3.9 million in the fourth quarter of 2009, compared to $3.5 million in the third quarter of 2009 and $6.5 million in the fourth quarter of 2008. The fourth quarter of 2008 included $2.0 million of legal and related costs associated with the abandoned sale of the Environmental Services business and the final resolution of a lawsuit with the Company's former Chief Executive Officer.
CONFERENCE CALL
Newpark has scheduled a conference call to discuss the fourth quarter and full year 2009 results, which will be broadcast live over the Internet, on Friday, February 19, 2009 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial 480-629-9722 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 www.newpark.com. For those who cannot listen to the live call, a replay will be available through February 26, 2009 and may be accessed by dialing (303) 590-3030 and using pass code 4199995#. Also, an archive of the webcast will be available shortly after the call at 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 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, 2008, 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; compliance with our debt covenants; the investigation of 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 and services. Newpark's filings with the Securities and Exchange Commission can be obtained at no charge at www.sec.gov, as well as through our website at 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 Ended Year Ended
----------- ------------------ ----------
December September December December December
(In thousands, 31, 30, 31, 31, 31,
except per share data) 2009 2009 2008 2009 2008
----------------------- -------- --------- -------- -------- --------
Revenues $135,530 $118,208 $226,933 $490,275 $858,350
Cost of
revenues 115,182 103,985 188,735 447,624 703,430
Selling, general
and administrative
expenses 15,686 14,676 21,200 61,205 81,394
Other (income)
expense, net (476) (2,691) 2,372 (3,229) 2,030
---- ------ ----- ------ -----
Operating income (loss) 5,138 2,238 14,626 (15,325) 71,496
Foreign currency
exchange (gain) loss (298) (1,011) 1,136 (1,870) 1,269
Interest expense 2,723 3,361 2,506 9,334 10,881
----- ----- ----- ----- ------
Income (loss) from
continuing operations
before income taxes 2,713 (112) 10,984 (22,789) 59,346
Provision for income
taxes 2,697 (314) 3,755 (2,216) 20,046
----- ---- ----- ------ ------
Income (loss) from
continuing operations 16 202 7,229 (20,573) 39,300
Loss from discontinued
operations, net of tax - - (542) - (842)
--- --- ---- --- ----
Net income (loss) $16 $202 $6,687 $(20,573) $38,458
=== ==== ====== ======== =======
Basic weighted average
common shares
outstanding 88,598 88,544 88,199 88,500 88,987
Diluted weighted average
common shares
outstanding 88,704 88,655 88,239 88,500 89,219
Income (loss) per common
share (basic and
diluted):
Income (loss) from
continuing
operations $- $- $0.08 $(0.23) $0.44
Loss from discontinued
operations - - - - (0.01)
--- --- --- --- -----
Net income (loss)
per common share $- $- $0.08 $(0.23) $0.43
=== === ===== ====== =====
Newpark Resources, Inc.
Operating Segment Results
(Unaudited) Three Months Ended
----------- ------------------
(In thousands) December 31, September 30, December 31,
2009 2009 2008
-------------- ------------ ------------- ------------
Revenues
Fluids systems and
engineering $113,799 $99,421 $190,968
Mats and integrated
services 12,397 7,578 20,906
Environmental
services 9,334 11,209 15,059
----- ------ ------
Total revenues $135,530 $118,208 $226,933
======== ======== ========
Operating income (loss)
Fluids systems and
engineering $6,749 $2,541 $22,437
Mats and integrated
services 1,227 (879) (1,752)
Environmental
services 1,099 4,070 (1) 427 (2)
Corporate office (3,937) (3,494) (6,486) (3)
------ ------ ------
Total operating income
(loss) $5,138 $2,238 $14,626
====== ====== =======
Segment operating margin
Fluids systems and
engineering 5.9% 2.6% 11.7%
Mats and integrated
services 9.9% (11.6%) (8.4%)
Environmental
services 11.8% 36.3% 2.8%
(1) Includes $2.3 million of income reflecting proceeds from the
settlement of business interruption insurance claims.
(2) Includes $2.6 million of charges for asset write-offs following the
abandoned sale of the business unit.
(3) Includes $2.0 million of legal costs associated with the abandoned
sale of the Environmental Services business and the final resolution of a
lawsuit with the Company's former Chief Executive Officer.
Newpark Resources, Inc.
Consolidated Balance Sheets
(Unaudited)
-----------
December 31, December 31,
(In thousands, except share data) 2009 2008
--------------------------------- ---- ----
ASSETS
Cash and cash equivalents $11,534 $8,252
Receivables, net 122,386 211,366
Inventories 115,495 149,304
Deferred tax asset 7,457 22,809
Prepaid expenses and other current assets 11,740 11,062
------ ------
Total current assets 268,612 402,793
Property, plant and equipment, net 224,625 226,627
Goodwill 62,276 60,268
Other intangible assets, net 16,037 18,940
Other assets 13,564 5,051
------ -----
Total assets $585,114 $713,679
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Foreign bank lines of credit $6,901 $11,302
Current maturities of long-term debt 10,319 10,391
Accounts payable 62,992 89,018
Accrued liabilities 25,290 38,946
------ ------
Total current liabilities 105,502 149,657
Long-term debt, less current portion 105,810 166,461
Deferred tax liability 2,083 15,979
Other noncurrent liabilities 3,697 3,700
----- -----
Total liabilities 217,092 335,797
Common stock, $0.01 par value, 100,000,000
shares authorized 91,672,871 and 91,139,966
shares issued, respectively 917 911
Paid-in capital 460,544 457,012
Accumulated other comprehensive income 8,635 1,296
Retained deficit (86,660) (66,087)
Treasury stock, at cost; 2,727,765 and
2,646,409 shares, respectively (15,414) (15,250)
------- -------
Total stockholders' equity 368,022 377,882
------- -------
Total liabilities and stockholders' equity $585,114 $713,679
======== ========
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
Year Ended
(Unaudited) December 31,
----------- -------------
(In thousands) 2009 2008
-------------- ---- ----
Cash flows from operating activities:
Net (loss) income $(20,573) $38,458
Adjustments to reconcile net (loss) income
to net cash provided by operations:
Net loss from discontinued operations - 842
Non-cash impairment charges 1,166 3,840
Depreciation and amortization 28,138 27,343
Stock-based compensation expense 3,436 5,128
Provision for deferred income taxes (6,916) 12,773
Provision for doubtful accounts 2,301 2,664
Gain on sale of assets 233 (245)
Change in assets and liabilities:
Decrease (increase) in receivables 89,341 (67,741)
Decrease (increase) in inventories 35,182 (37,002)
(Increase) decrease in other assets (800) 4,651
(Decrease) increase in accounts payable (28,710) 21,340
(Decrease) increase in accrued
liabilities and other (13,979) 16,090
------- ------
Net operating activities of continuing
operations 88,819 28,141
Net operating activities of discontinued
operations - 546
--- ---
Net cash provided by operating activities 88,819 28,687
Cash flows from investing activities:
Capital expenditures (18,544) (22,494)
Proceeds from sale of property, plant
and equipment 1,400 510
Business acquisitions - (1,184)
--- ------
Net cash used in investing activities (17,144) (23,168)
Cash flows from financing activities:
Net payments on lines of credit (55,701) 23,593
Principal payments on notes payable
and long-term debt (10,439) (12,252)
Proceeds from employee stock plans 143 1,910
Purchase of treasury stock (268) (15,250)
---- -------
Net financing activities of continuing
operations (66,265) (1,999)
Net financing activities of discontinued
operations - (63)
--- ---
Net cash used in financing activities (66,265) (2,062)
Effect of exchange rate changes on cash (2,128) (946)
------ ----
Net increase (decrease) in cash and cash
equivalents 3,282 2,511
Cash and cash equivalents at beginning of year 8,252 5,741
----- -----
Cash and cash equivalents at end of year $11,534 $8,252
======= ======
SOURCE Newpark Resources, Inc.