UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 8, 2008
NEWPARK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-2960 | 72-1123385 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 2700 Research Forest Drive, Suite 100 The Woodlands, TX |
77381 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code: (281) 362-6800
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
James E. Braun, Vice President and Chief Financial Officer of Newpark Resources, Inc. (“Newpark”) will be attending the Pritchard Capital Partners Energize 2008 Conference and participating in other investor meetings during the week of, and beginning on, January 8, 2008. The information furnished in Exhibit 99.1 and 99.2 to this report will be provided in connection with the investor presentation or upon request to current and potential investors. Exhibit 99.1 and Exhibit 99.2 are incorporated in this Item 7.01 by reference. The presentation materials will also be posted in the Investor Information section of Newpark’s website, http://www.newpark.com for 90 days after the event.
The information referenced under Item 7.01 (including Exhibits 99.1 and 99.2 referenced in Item 9.01 below) of this Current Report on Form 8-K is being “furnished” under “Item 7.01. Regulation FD Disclosure” and, as such, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information set forth in this Current Report on Form 8-K (including Exhibits 99.1 and 99.2 referenced in Item 9.01 below) shall not be incorporated by reference into any registration statement, report or other document filed by Newpark pursuant to the Securities Act of 1933, as amended (the “Securities Act”), except as shall be expressly set forth by specific reference in such filing. Newpark does not undertake to update the information as posted on its website; however, it may post additional information included in future press releases and Forms 8-K, as well as posting its periodic Exchange Act reports.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Pritchard Capital Partners Energize 2008 Conference Presentation. | |
| 99.2 | Company Fact Sheet, dated January 2008. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NEWPARK RESOURCES, INC. | ||||||||
| Dated: January 8, 2008 | By: | /s/ James E. Braun | ||||||
| James E. Braun, Vice President and Chief Financial Officer (Principal Financial Officer) | ||||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Pritchard Capital Partners Energize 2008 Conference Presentation. | |
| 99.2 | Company Fact Sheet, dated January, 2008. | |
 1 New Leadership New Focus New Strategy Newpark Pritchard Capital Partners Energize 2008 Conference January 9, 2008 Newpark Resources, Inc. James E. Braun, Vice President and CFO Exhibit 99.1 |
 2 NYSE: NR Company Profile Specialized provider of: Fluids Systems and Engineering Mat and Integrated Services Environmental Services* Customers: Oil and Gas Industry Key markets: North America North Africa South America *Environmental Services to be divested |
 3 NYSE: NR Mission & Vision New leadership, new focus, new strategy Achieve best-in-class competitive positioning and performance in each business line Position for long-term growth through more disciplined approach to strategic investments Build a strong reputation with investors by delivering consistent performance to realize the inherent value of services |
 4 NYSE: NR New Leadership Paul Howes, President & CEO Jim Braun, VP & CFO Mark Airola, GC & Admin Officer Bruce Smith, President Fluids Systems and Engineering Tom Eisenman, President Excalibar Minerals LLC Sean Mikaelian, President Mat & Integrated Services Sammy Cooper, President Environmental Services |
 5 NYSE: NR New Focus New leadership brought in with industry experience Spent majority of 2006 cleaning house Exited poor return businesses Worked with Board to develop strategic growth plan New strategy rolled out in March 2007 based on the principles of: Growth Focus Discipline |
 6 NYSE: NR New Strategy Grow Fluids Systems and Engineering Organically / Acquisitions / Domestically / Internationally Expand scope and geographic position in Mat and Integrated Services Reorganized from 5 units to 1 unit; 15% headcount reduction Leverage relationships with existing customers Divest non-core operations – Batson Mill for $4MM Acquired SEM Construction, based in Western Colorado Exit Environmental Services No longer fits long term corporate goals Reached agreement in October to sell; close expected in first quarter of 2008 |
 7 NYSE: NR New Strategy Rationale – Fluids Core business line – 80% of revenues Technologically advanced & unique fluid systems DeepDrill, FlexDrill, DeepDrill II and family of specialized water-based
products, has performance applications for off-shore deepwater and shelf, as
well as land based drilling Opportunity to grow market share in a growing market Newpark is ranked 4 th in both domestic & global drilling fluids 12% domestic market share 1 7% global market share 2 Organic and acquisition growth Continued penetration of large integrated oil companies and NOC’s Continued investments in technology Targeted acquisitions 1 Source: Company estimate 2 Source: Spear & Associates, Inc. |
 8 NYSE: NR $215.5 $272.9 $384.2 $481.4 $0 $150 $300 $450 $600 2003 2004 2005 2006 Fluids Segment Revenues New Strategy Rationale – Fluids Strong Revenue Growth |
 9 NYSE: NR New Strategy Rationale – Fluids Strong Margin Growth 5.4% 7.9% 10.6% 13.2% 0% 3% 6% 9% 12% 15% 2003 2004 2005 2006* Fluids Operating Margins * 2006 margins excludes hurricane damage-related business insurance proceeds
|
 10 NYSE: NR New Strategy Rationale – Fluids Revenue Growth Operating Margin Growth *2006 margins exclude $4.3M of hurricane damage-related insurance proceeds
11.8% 12.5% 5% 10% 15% 1st Nine Months 2006* 1st Nine Months 2007 $352.3 $386.4 $200 $225 $250 $275 $300 $325 $350 $375 $400 1st Nine Months 2006 1st Nine Months 2007 |
 11 NYSE: NR Serves major North America basins Approximately 16% share of markets serviced in North America Substantial service facilities network Growing share vis-a-vis other players Well-positioned to expand into new customers and basins Scope of Operations North America Stronghold Harbor Island Port O’ Connor Victoria Laredo Galveston Houston Mexia Carthage Venice Port Fourchon Berwick Intercoastal City Spanish Lake Cameron Krebs Oklahoma City Woodward Sweetwater Clinton Booker Midland Denver Grand Junction Casper Evanston Opal Williston New Iberia Dyersburg Offices Barite Mills Offshore Docks Dallas Metairie Calgary Artesia Covington Snyder Edinburg Baytown Offices Barite Mills Offshore Docks 1 Source: Company estimate 1 |
 12 NYSE: NR Initial international market entry through acquisition of Ava, S.p.A. (Italy) Current key markets Mediterranean North Africa Eastern Europe Plans for market expansion Brazil Scope of Operations Expanding Internationally |
 13 NYSE: NR Quality processor and supplier of industrial minerals Barite, Barytes Calcium Carbonate Alumina Trihydrate (ATH) Applications Oilfield Industrial Integral to Fluids Systems and Engineering Scope of Operations Excalibar Minerals LLC |
 14 NYSE: NR New Strategy Rationale – Mats Leverage relationship with existing customers Advantage of often being first service provider “on site” Expand product and service offerings in the well site preparation market Expansion and diversification Growth opportunities beyond current Gulf Coast region Maximize rental versus sales mix |
 15 NYSE: NR $71.7 $80.8 $92.5 $100.5 $50 $75 $100 $125 2003 2004 2005 2006 Mat & Integrated Services Segment Revenues New Strategy Rationale – Mats |
 16 NYSE: NR New Strategy Rationale – Mats Aiming to Expand Margins 0.6% 7.2% 14.4% 15.2% 0% 3% 6% 9% 12% 15% 18% 2003 2004 2005 2006 Mat & Integrated Services Operating Margins |
 17 NYSE: NR New Strategy Rationale – Mats Revenue Operating Margin Focusing on Higher Margin Business & Customer Mix *2006 includes $19M in low margin mats sales in Canada 15.9% 17.2% 5% 10% 15% 20% 1st Nine Months 2006 1st Nine Months 2007 $82.9 $66.6 $10 $20 $30 $40 $50 $60 $70 $80 $90 1st Nine Months 2006* 1st Nine Months 2007 |
 18 NYSE: NR Improvements in Balance Sheet-Debt * Includes $21M of borrowings for acquisition of SEM in Q307 $220.9 $213.3 $195.1 $177.0 $178.2 $150 $175 $200 $225 $250 3rd Qtr 2006 4th Qtr 2006 1st Qtr 2007 2nd Qtr 2007 3rd Qtr 2007* |
 19 NYSE: NR Capital Structure $ in millions Sept. 2007 New Credit Facility Sept. 2007 Proforma Revolver $ 35.3 $ 85.3 $ 120.6 Term Loan 133.3 (83.3) 50.0 Other 9.6 9.6 Total Debt 178.2 2.0 180.2 Equity 352.8 (2.6) 350.2 Total Capitalization $ 531.0 $ (0.6) $ 530.4 Debt/Capitalization 33.6% 34.0% |
 20 NYSE: NR Investment Considerations New Leadership New management team with industry experience in place New Focus Greater discipline Focusing on improving profitability, returns and free cash flow New Strategy Growing Fluids organically and through acquisitions Growing Mats through additional products, services and geography Divesting non-core operations Driving results to maximize shareholder value |
 New Leadership New Focus New Strategy Newpark Thank you for your interest! |
 New Leadership New Focus New Strategy Newpark Appendix |
 23 NYSE: NR Financials Newpark Resources, Inc. Consolidated Statements of Operations (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except per share data) 2007 2006 2007 2006 Revenues 153,778 $ 147,618 $ 453,024 $ 435,160 $ Cost of revenues 133,756 122,846 393,176 376,028 20,022 24,772 59,848 59,132 General and administrative expenses 4,567 5,050 17,833 13,842 Operating income 15,455 19,722 42,015 45,290 Foreign currency exchange (gain) loss (57) 16 (279) (496) Interest expense, net 3,950 6,160 12,182 15,210 Income from continuing operations before income taxes 11,562 13,546 30,112 30,576 Provision for income taxes 3,950 3,813 10,586 9,936 Income from continuing operations 7,612 9,733 19,526 20,640 (Loss) income from discontinued operations, net of taxes (229) (11,998) 2,563 (10,797) Loss from disposal of discontinued operations, net of taxes - - (2,173) - Net income 7,383 $ (2,265) $ 19,916 $ 9,843 $ Basic weighted average common shares outstanding 90,085 89,417 89,965 89,281 Diluted weighted average common shares outstanding 90,542 89,658 90,503 89,872 Net income per common share (basic and diluted): Income from continuing operations 0.08 $
0.11 $
0.22 $
0.23 $
(Loss) income from discontinued operations (0.00) (0.14) 0.00 (0.12) Net income (loss) per common share 0.08 $
(0.03) $ 0.22 $
0.11 $
|
 24 NYSE: NR Financials Newpark Resources, Inc. Consolidated Balance Sheets (In thousands) September 30, 2007 December 31, 2006 (Unaudited) ASSETS Current assets: Cash and cash equivalents 7,412 $
12,736 $
Accounts receivable, net 142,141 141,790 Inventories 108,319 107,778 Deferred tax asset 20,076 23,001 Prepaid expenses and other current assets 16,566 12,176 Assets of discontinued operations 87,780 102,365 Total current assets 382,294 399,846 Property, plant and equipment, net 160,319 152,207 Goodwill 62,028 54,624 Deferred tax asset - 7,096 Other intangible assets, net 17,503 8,236 Other assets 7,052 7,440 629,196 $
629,449 $
LIABILITIES AND STOCKHOLDERS’ EQUITY Foreign bank lines of credit 5,928 $
10,938 $
Current maturities of long-term debt 3,066 4,058 Accounts payable 45,815 37,087 Accrued liabilities 35,299 40,439 Liabilities of discontinued operations 11,554 11,403 Total current liabilities 101,662 103,925 Long-term debt, less current portion 169,252 198,037 Deferred tax liability 858 - Other noncurrent liabilities 4,591 4,344 Total liabilities 276,363 306,306 Common Stock 901 897 Paid-in capital 448,940 444,763 Accumulated other comprehensive income 14,283 7,940 Retained deficit (111,291) (130,457) Total stockholders’ equity 352,833 323,143 629,196 $
629,449 $
|
 25 NYSE: NR Financials As previously announced, in the third quarter of 2007 Newpark completed the
sale of its Batson sawmill facility which had been included in
the Mat & Integrated Services segment. In October 2007, Newpark entered into an agreement to sell its U.S. Environmental Services business previously reported as the Environmental
Services segment. As a result, all assets, liabilities and
results of operations for the above businesses were reclassified to discontinued operations and Newpark presented such information in its Quarterly Report on Form 10-Q for the quarter ending
September 30, 2007. The following financial tables restate
segment results from continuing operations and update historical consolidated statements of operations to reflect such discontinued operations for the seven quarterly periods ended September 30,
2007. Newpark Resources, Inc. Restated Segment Results (Unaudited) March 31, 2006 June 30, 2006 September 30, 2006 December 31, 2006 March 31, 2007 June 30, 2007 September 30, 2007 Segment revenues Fluids systems and engineering 115,289 $ 111,868 $ 125,130 $ 129,091 $ 125,298 $ 131,163 $ 129,986 $ Mat and integrated services 29,251 31,133 22,488 17,657 23,966 18,819 23,792 Total segment revenues 144,540 $ 143,001 $ 147,618 $ 146,748 $ 149,264 $ 149,982 $ 153,778 $ Segment operating income Fluids systems and engineering 12,660 $
13,143 $
(1) 20,178 $
(1) 20,635 $
16,630 $ 16,323 $ 15,467 $
Mat and integrated services 4,343 4,216 4,594 2,078 4,600 2,273 4,555 Total segment operating income 17,003 $
17,359 $
24,772 $
22,713 $
21,230 $ 18,596 $ 20,022 $
Segment operating margin Fluids systems and engineering 11.0% 11.7% 16.1% 16.0% 13.3% 12.4% 11.9% Mat and integrated services 14.8% 13.5% 20.4% 11.8% 19.2% 12.1% 19.1% Total segment operating margin 11.8% 12.1% 16.8% 15.5% 14.2% 12.4% 13.0% (In thousands) Quarter Ended |
 26 NYSE: NR Financials Newpark Resources, Inc. Consolidated Statements of Operations Restated for Discontinued Operations (Unaudited) YTD (In thousands, except per share data) 03/31/07 6/30/07 9/30/07 9/30/07 Revenues 149,264 $ 149,982 $ 153,778 $ 453,024 $ Cost of revenues 128,034 131,386 133,756 393,176 21,230 18,596 20,022 59,848 General and administrative expenses 8,155 5,111 4,567 17,833 Operating income 13,075 13,485 15,455 42,015 Foreign currency exchange (gain) loss 108 (330) (57) (279) Interest expense, net 4,420 3,812 3,950 12,182 Income from continuing operations before income taxes 8,547 10,003 11,562 30,112 Provision for income taxes 2,786 3,850 3,950 10,586 Income from continuing operations 5,761 6,153 7,612 19,526 (Loss) income from discontinued operations, net of taxes 1,473 1,319 (229) 2,563 Loss from disposal of discontinued operations, net of taxes - (2,173) - (2,173) Net income 7,234 $ 5,299 $ 7,383 $ 19,916 $ Basic weighted average common shares outstanding 89,829 89,979 90,085 89,965 Diluted weighted average common shares outstanding 90,248 90,671 90,542 90,503 Net income per common share (basic and diluted): Income from continuing operations 0.06 $
0.07 $
0.08 $
0.22 $
(Loss) income from discontinued operations 0.02 (0.01) (0.00) 0.00 Net income (loss) per common share 0.08 $
0.06 $
0.08 $
0.22 $
Quarters Ending |
 27 NYSE: NR Financials Newpark Resources, Inc. Consolidated Statements of Operations Restated for Discontinued Operations (Unaudited) YTD (In thousands, except per share data) 03/31/06 6/30/06 9/30/06 12/31/06 12/31/06 Revenues 144,541 $ 143,001 $ 147,618 $ 146,748 $ 581,908 $ Cost of revenues 127,540 125,642 122,846 124,035 500,063 17,001 17,359 24,772 22,713 81,845 General and administrative expenses 3,329 5,463 5,050 6,179 20,021 Operating income 13,672 11,896 19,722 16,534 61,824 Foreign currency exchange (gain) loss 63 (575) 16 863 367 Interest expense, net 4,787 4,261 6,160 4,338 19,546 Income from continuing operations before income taxes 8,822 8,210 13,546 11,333 41,911 Provision for income taxes 3,206 2,918 3,813 3,915 13,852 Income from continuing operations 5,616 5,292 9,733 7,418 28,059 (Loss) income from discontinued operations, net of taxes 569 631 (11,998) (49,541) (60,339) Loss from disposal of discontinued operations, net of taxes - - - Net income 6,185 $ 5,923 $ (2,265) $ (42,123) $ (32,280) $ Basic weighted average common shares outstanding 89,048 89,373 89,417 89,333 89,965 Diluted weighted average common shares outstanding 90,131 89,874 89,658 89,333 90,503 Net income per common share (basic and diluted): Income from continuing operations 0.06 $
0.06 $
0.11 $
0.08 $
0.31 $
(Loss) income from discontinued operations 0.01 0.01 (0.14) (0.55) (0.67) Net income (loss) per common share 0.07 $
0.07 $
(0.03) $
(0.47) $
(0.36) $
Quarters Ending |
 28 NYSE: NR Paul L. Howes, President & CEO: Paul joined Newpark’s Board of Directors and was appointed its Chief Executive Officer in March 2006. In June 2006, Mr. Howes also was appointed as Newpark’s President. Mr. Howes’ career has included experience in the defense industry, chemicals and plastics
manufacturing, and the packaging industry. From 2002 until October
2005, he served as President and Chief Executive Officer of Astaris LLC, a primary chemicals company headquartered in St. Louis, Missouri, with operations
in North America, Europe and South America. Prior to this, from 1997 until
2002, he served as Vice President and General Manager, Packaging Division,
for Flint Ink Corporation, a global ink company headquartered in Ann Arbor, Michigan with operations in North America, Europe, Asia Pacific and Latin America. James E. Braun, VP & CFO: Jim joined Newpark in October 2006 as its Vice President and Chief Financial Officer. Before joining Newpark, since 2002, Mr. Braun was Vice President, Finance, of Baker Oil Tools, one of the largest divisions of Baker Hughes Incorporated, a leading provider of drilling,
formation evaluation, completion and production products and services to
the worldwide oil and gas industry. From 1998 until 2002, Mr. Braun was Vice
President, Finance and Administration, of Baker Petrolite, the oilfield
specialty chemical business division of Baker Hughes Incorporated.
Previously, he served as Vice President and Controller of Baker Hughes
Incorporated, and he was with Deloitte & Touche prior to joining Baker
Hughes Incorporated. Mark J. Airola, GC & Admin Officer: Mark joined Newpark in October 2006 as its Vice President, General Counsel and Chief Administrative Officer. Mr. Airola has practiced law for 22 years, primarily with large, publicly traded companies. Most recently, Mr. Airola was Assistant General Counsel and Chief Compliance Officer for BJ Services Company, a leading provider of pressure pumping and other oilfield services to
the petroleum industry, serving as an executive officer since 2003. From
1988 to 1995, he held the position of Senior Litigation Counsel at Cooper
Industries, Inc., a global manufacturer of electrical products and tools, with initial responsibility for managing environmental regulatory matters and litigation and subsequently managing the
company’s commercial litigation. Management Biographies |
 29 NYSE: NR Bruce C. Smith, President Fluids Systems and Engineering: Bruce joined Newpark in April 1998 as Vice President, International. Since October 2000, he has served as President of its subsidiary Newpark Drilling Fluids, L.P. Prior to joining Newpark, Mr. Smith was the Managing Director of the U.K. operations of M-I Swaco, a competitor of Newpark Drilling Fluids, where he was responsible for two business units,
including their drilling fluids unit. Sean D. Mikaelian, President Mat and Integrated Services: Sean joined Newpark in May 2006 as President of its subsidiary Soloco, LLC. Prior to joining Newpark, since 2003 he
managed the $225 million packaging division of Flint Group (formerly Flint Ink Corporation), a worldwide
supplier to the printing, converting and colorant industries, as Vice
President and General Manager. From 2000 to 2003, Mr. Mikaelian was Vice
President of National Accounts of the packaging division. Samuel L. Cooper, President Environmental Services: Sammy joined Newpark in August 2005 as Vice President-Sales and in November 2005 became President of its subsidiary,
Newpark Environmental Management Company, LLC. Prior to joining Newpark,
from February 2002 to July 2005, he was at USFilter, a Siemens business that recovers, recycles and reuses lubricants and fluids, where he
served as Southeast Regional Business Unit Manager then as Director of
Operations of the Hydrocarbon Recovery group. From August 1998 through October 2001, he served as Senior Vice President and then as Regional Vice President of
U.S. Liquids Inc., a provider of liquid waste management services. Thomas E. Eisenman, President Excalibar Minerals LLC:
Tom joined Newpark in August 1997 as President of Excalibar Minerals LLC, when Newpark purchased Excalibar Minerals Inc., an
industrial minerals processing and marketing company founded by Mr.
Eisenman in 1990. Prior to starting Excalibar Minerals he had served
as Vice-President of Minerals at Milpark Drilling Fluids Inc., a
division of Baker Hughes Inc. from 1986 thru 1990 and President of Eisenman Chemical Co. a wholesale chemical supplier with $65 million in annual sales to the drilling service industry from 1979 thru 1986. Management Biographies |
 30 NYSE: NR Forward-Looking Statements This presentation 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
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 presentation and in documents filed with the Securities and Exchange Commission by Newpark, particularly to its Form 10-K for the year ended
December 31, 2006, as well as others, could cause results to differ
materially from those stated. These factors include, but are not limited to,
the investigation of the matter by the Securities and Exchange Commission; claims by our former CEO and CFO related to their terminations of employment; 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 www.sec.gov, as well as through our website at
www.newpark.com. |
Exhibit 99.2
| January 2008 Company Fact Sheet NEWPARK RESOURCES, INC.
NYSE: NR New Leadership, New Focus, New Strategy |
 |
www.Newpark.com
| • | Recognized Name in Drilling Fluids. Newpark is one of the leading providers of proprietary drilling fluids to the oil and gas industry. Fluids segment revenues have experienced brisk growth of 31% compound annual growth rate over the last four fiscal years and accounts for over 80% of total Company revenues. |
| • | Broadening Scope of Mats & Integrated Services. Newpark’s Mats & Integrated Services segment is a leading provider of well site construction services. As one of the first service providers on site, providing road and worksite access construction, Newpark plans to leverage this customer relationship to expand service offerings and its geographic presence. The purchase of SEM Construction Co. in Colorado is consistent with this strategy, and expands segment operations to well site management and equipment rental. |
| • | International Growth. Newpark is targeting select international markets which provide exceptional growth opportunities. Through Ava, S.p.A, its Mediterranean-based fluids business, Newpark has established a solid foothold in the North African market and has expanded to the Eastern European market. Year-to-date Q3 2007 revenues at Ava have increased by 45%. Ava is expected to continue to drive growth over the coming periods. Newpark has also set up operations in Brazil and expects its first revenues in this region by year end 2007. |
| • | Deepwater Presence. With greater deepwater activity levels worldwide, it is essential that Newpark’s fluids product line meet the rigors of deepwater drilling. Newpark’s three-year contract to provide deepwater fluid systems to ENI is a major milestone and validates the Company’s competitiveness in this market. |
| • | Operational Focus and Capital Discipline. The Company’s strategic plan, initiated in early 2007, entails: (1) an operational refocusing with an emphasis on growing the Fluids and Mats & Integrated Services segments; (2) divestiture of non-core operations; and (3) debt reduction. Newpark has made significant progress on its plan. It has sold off non-performing assets and consolidated operations within Mats. Debt had steadily been paid down since the beginning of 2007. Once the pending sale of its environmental services business closes (expected to happen in 1Q08), Newpark expects to free up excess liquidity to better position itself to pursue growth opportunities in Fluids and Mats & Integrated Services. |
| Price (December 27, 2007) |
$ | 5.21 |
Stock Data
| Fiscal Year-End: |
December | |||
| Symbol / Exchange: |
NR / NYSE | |||
| 52-Week Range: |
$ | 4.87-$8.41 | ||
| Diluted Common Shares O/S: |
$ | 90.5mm | ||
| Market Capitalization: |
$ | 472mm | ||
| Total Enterprise Value (TEV) 1): |
$ | 643mm | ||
| Average Daily Volume (L3M): |
442,264 | |||
| Insider Ownership 2): |
2.3 | % | ||
| 13F Institutional Ownership 3): |
92.1 | % |
Financial Data
| 12/31/06 | 9/30/07 | |||||||
| Total Cash: |
$ | 12.7mm | $ | 7.4mm | ||||
| Total Debt: |
$ | 213.0mm | $ | 178.2mm | ||||
| Total Stockholders’ Equity: |
$ | 323.1mm | $ | 352.6mm | ||||
| Net Debt / Net Book Capital: |
38.3 | % | 32.6 | % | ||||
| 2006 | 9M2007 | |||||||
| Revenue ($mm) 4): |
$ | 581.9 | $ | 453.0 | ||||
| Operating Income ($mm) 4): |
$ | 61.8 | $ | 42.0 | ||||
| EPS 4): |
$ | 0.31 | $ | 0.22 | ||||
Segment Data
| Revenue Mix 4) |
9M2007 | |
| North America / International |
87% / 13% | |
| Fluid Systems / Mats |
85% / 15% |
Stock Price (1-year price performance)
| 1) | Total Enterprise Value (TEV) defined as market capitalization plus total debt less cash. |
| 2) | Represents executive officers and directors as disclosed in the latest Proxy Statement on file with the SEC. |
| 3) | As reported by Bigdough |
| 4) | Revenue, operating income, EPS and revenue mix data is based on results from continuing operations. |
©2008 Newpark Resources, Inc.
All Rights Reserved.
 |
January 2008 |
COMPANY OVERVIEW
Newpark Resources, Inc. is a worldwide provider of proprietary drilling fluids, temporary access roads for oilfield and other commercial markets, and well site construction, management and equipment rentals. The Company operates in the U.S. Gulf Coast, West Texas, the U.S. Mid-continent, the U.S. Rocky Mountains, Canada, Mexico, Brazil and areas of Europe and North Africa surrounding the Mediterranean Sea.
Fluids: Newpark’s Foundation and Platform for Growth
Drilling fluids represent the core of Newpark’s business, accounting for over 80% of total Company revenues. It has been Newpark’s fastest growing business segment, with a 31% compound annual growth rate (CAGR) over the last four years.
Drilling fluids serve a fundamental and critical function in oil and gas drilling as part of a rig’s “circulation system,” and different drilling conditions call for fluids of varying density, viscosity and weight. Fluids perform multiple functions, e.g., removing well cuttings, cleaning and cooling the drill bit, and well pressure control, under a host of conditions. Thus, fluids can be deceptively technological, and superior product performance can yield substantial benefits. Here, Newpark has excelled by providing versatile water-based drilling solutions, such as its DeepDrill and FlexDrill systems, that not only effectively address multiple performance applications, but are also environmentally friendly.
Newpark ranks fourth in both domestic and global drilling fluids market share, with a 12% domestic share and 7% global share. Long term, Newpark plans to leverage its strength in fluids to grow both organically and via targeted acquisitions worldwide.
Expanding Scope of Mats & Integrated Services
Newpark’s Mats & Integrated Services segment is the other significant foundation on which the Company’s growth story will be built upon. Revenues in this segment have grown at a 12% CAGR over the last four years.
This business is largely comprised of the rental and sale of interlocking composite and wooden mat systems to facilitate work in unstable soil conditions common around remote drilling worksites. Such services can also be used in other commercial applications. Because it is often one of the first service providers on a worksite, and the services are so fundamental to well site preparation, Newpark believes it can leverage this position to offer a broader array of services to its E&P customers. Newpark is also broadening the geographic reach of Mats & Integrated Services operations beyond its core Gulf Coast market, evidenced by its push into the northern Louisiana site construction business. Consistent with this strategic goal is the purchase of SEM Construction in Colorado, which expands Newpark into well site management as well as equipment rentals in Western Colorado.
Growing Presence in International & Deepwater Markets
Oil and gas activity will continue to move towards more challenging environments in less-explored areas of the globe. Newpark has targeted overseas markets as a major growth initiative, and its 2002 acquisition of Ava S.p.A, which gave the Company exposure in the Mediterranean and North African markets, has been pivotal in driving international growth. Recently, Ava sales have expanded to Eastern Europe. Ava’s revenues over the last three fiscal years have experienced a healthy 35% CAGR to nearly $62 million for 2006. Brisk growth at Ava continues in 2007, with revenues up 45% through the first nine months of 2007.
International expansion also has some overlap with the deepwater exploration play. For instance, Newpark has targeted the South American market and has been in the process of establishing operations in Brazil. The Company plans to first establish itself in the Brazilian land market, and then expand into the country’s offshore market. First revenues out of South America are expected by year end 2007. Newpark is also active in domestic deepwater development, as it was awarded a three-year deepwater Gulf of Mexico contract with ENI during the first quarter of 2007. This milestone award validates the Company’s competitively positioned fluids systems product offerings for the deepwater markets
Executing on the Strategic Plan
In March 2007, Newpark’s new management team, led by CEO Paul Howes, rolled out a new strategic plan that called for a refocusing of operations on growing and improving profitability within the Fluids and Mats & Integrated Services segments, the divestiture of non-core and poor performing assets, and a reduction of debt. 2007 has been a transitional year as these initiatives are implemented. Progress has been made since the plan rollout, including the consolidation of the Mats segment and sale of the Batson, Texas sawmill facility.
A cornerstone of the refocusing strategy is the Company’s exit from environmental services, which management deemed as not in Newpark’s long-term goals of profitability enhancement and growth. In late 2007, the Company announced the sale of its Environmental Services business for $81.5 million in cash, with a potential $8 million additional payment under a five-year earn-out provision. Closing of the sale is expected during 1Q08. Prior to the sale, Newpark had already reduced debt by about $35 million over the past three quarters. With proceeds from the Environmental Services sale, Newpark will be well-capitalized to pursue growth opportunities that build on its fluids and integrated oilfield services operations.
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January 2008 |
GROWING SHARE IN THE DRILLING & COMPLETION FLUIDS MARKET
Source: Spears & Associates, Inc.
STRONG REVENUE AND MARGIN GROWTH IN BOTH BUSINESS SEGMENTS
Source: Company Reports
INTERNATIONAL EXPANSION: PLANNING AND EXECUTING
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Newpark Resources, Inc.
Company Headquarters
2700 Research Forest Drive, Suite 100
The Woodlands, Texas 77381
(281) 362-6800
www.newpark.com
Reader Advisory and Forward Looking Statements
This Fact Sheet is presented as a brief company overview for the information of investors, analysts and other parties with an interest in the Company. Newpark’s management hopes that this Fact Sheet will encourage analysts and investors to investigate more about the Company through its Securities and Exchange Commission (SEC) filings, press releases and other public materials. This Fact Sheet does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company. This Fact Sheet 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 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 Fact Sheet 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, 2006, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, 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.This Fact Sheet does not purport to be all-inclusive or to contain all of the information that a reader may desire regarding the structure or the affairs of the Company. The information contained in this Fact Sheet is only current as of January 8, 2008 and the Company undertakes no obligation to update this Fact Sheet.
©2008 Newpark Resources, Inc.
All Rights Reserved.