Newpark Resources Reports 2012 First Quarter Results

Apr 26, 2012, 16:15 ET from Newpark Resources, Inc.

THE WOODLANDS, Texas, April 26, 2012 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its first quarter ended March 31, 2012.  Total revenues for the first quarter of 2012 were $262.3 million compared to $263.5 million for the fourth quarter 2011 and $202.7 million for the first quarter of 2011.  Net income for the first quarter of 2012 was $15.6 million, or $0.16 per diluted share, compared to $21.9 million, or $0.22 per diluted share, for the fourth quarter of 2011, and $15.9 million, or $0.16 per diluted share, for the first quarter of 2011.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We are pleased that revenue remained strong in the first quarter, however, we were disappointed by the profitability within our U.S. operations of the Fluids Systems and Engineering segment.  North American drilling fluids revenues increased 30% from the first quarter of 2011, however, were down 2% sequentially due to deterioration in our mid-continent completion services and equipment rental business, reduced activity in certain dry gas regions in the U.S. and an early Spring break-up in Canada.  Our Evolution® drilling fluid system continues its solid performance, generating revenues of $23 million in the first quarter.  International drilling fluids revenues were flat sequentially but increased 22% from the first quarter of 2011, primarily reflecting our strategic entry into the Asia Pacific market in April of 2011. Our Mats and Integrated Services and our Environmental Services segments' revenue grew 32% and 46%, respectively, from the first quarter of 2011, and also grew on a sequential basis.

"While drilling fluid revenues were strong, we did experience operating margin declines in the U.S., resulting from increased raw material costs, particularly barite, as we were unable to pass these cost increases along to our customers in a timely manner.  In addition, due to the tightness in barite supply, we temporarily reduced our third party barite sales during the first quarter, further deteriorating operating margins.  The period was also negatively impacted by a reduction in dry gas activity in certain regions of the U.S., weakness in our completions services and equipment rental business, and continued support costs associated with our ERP system implementation.  We are taking actions to address these margin-related issues and remain focused on improving our profitability as we continue to build the foundation for solid revenue growth," concluded Howes.

Segment Results

The Fluids Systems and Engineering segment generated revenues of $218.5 million in the first quarter of 2012 compared to $221.1 million in the fourth quarter of 2011 and $170.5 million in the first quarter of 2011.  Segment operating income was $14.0 million (6.4% operating margin) in the first quarter of 2012, compared to $25.0 million in the fourth quarter of 2011 (11.3% operating margin) and $19.2 million (11.3% operating margin) in the first quarter of 2011. 

The Mats and Integrated Services segment generated revenues of $30.5 million in the first quarter of 2012 compared to $29.4 million in the fourth quarter of 2011 and $23.1 million in the first quarter of 2011.  Segment operating income was $14.3 million (47.0% operating margin) in the first quarter of 2012, compared to $11.7 million in the fourth quarter of 2011 (39.7% operating margin) and $11.8 million (51.1% operating margin) in the first quarter of 2011. 

The Environmental Services segment generated revenues of $13.3 million in the first quarter of 2012 compared to $13.0 million in the fourth quarter of 2011 and $9.1 million in the first quarter of 2011.  Segment operating income was $3.6 million (26.9% operating margin) in the first quarter of 2012, compared to $2.4 million in the fourth quarter of 2011 (18.1% operating margin) and $1.6 million (17.8 % operating margin) in the first quarter of 2011.

SHARE REPURCHASE PROGRAM

During the first quarter of 2012, the Company announced the approval of a $50 million share repurchase program.  Following this announcement, the Company established a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934 and repurchased $15 million of outstanding shares of Newpark common stock at an average cost of $8.06 per share, reducing common shares outstanding by approximately 1.9 million shares.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss first quarter 2012 results, which will be broadcast live over the Internet, on Friday, April 27, 2012 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time.  To participate in the call, dial 480-629-9835 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 May 4, 2012 and may be accessed by dialing (303) 590-3030 and using pass code 4528279#.  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, 2011, as well as others, could cause results to differ materially from those stated. These risk factors include, but are not limited to, the availability of raw materials and skilled personnel, the impact of restrictions on offshore drilling activity in the Gulf of Mexico, our customer concentration and cyclical nature of our industry, our market competition, the cost and continued availability of borrowed funds, our international operations, legal and regulatory matters, including environmental regulations, inherent limitations in insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, the impact of severe weather, particularly in the U.S. Gulf Coast, and our ability to execute our business strategy and make successful capital investments and business acquisitions.  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:

Gregg Piontek, VP & CFO

Newpark Resources, Inc.

281-362-6800

Ken Dennard, Managing Partner

Karen Roan, SVP

Dennard Rupp Gray & Lascar, LLC

713-529-6600

 

Newpark Resources, Inc.

Consolidated Statements of Operations

(Unaudited)

Three Monthes Ended

March 31,

December 31,

March 31,

(In thousands, except per share data)

2012

2011

2011

Revenues

$  262,336

$        263,514

$  202,651

Cost of revenues

214,902

204,991

159,002

Selling, general and administrative expenses

21,313

23,902

15,818

Other operating income, net

(14)

580

(117)

Operating income 

26,135

34,041

27,948

Foreign currency exchange (gain) loss

(230)

182

323

Interest expense, net

2,368

2,405

2,257

Income from operations before income taxes

23,997

31,454

25,368

Provision for income taxes

8,363

9,568

9,514

Net income 

$    15,634

$          21,886

$    15,854

Income per common share -basic:

$        0.17

$              0.24

$        0.18

Income per common share -diluted:

$        0.16

$              0.22

$        0.16

Calculation of Diluted EPS:

Net income 

$    15,634

$          21,886

$    15,854

Assumed conversion of Senior Notes 

1,257

1,356

1,194

Adjusted net income 

$    16,891

$          23,242

$    17,048

Weighted average number of common shares outstanding-basic

90,473

90,454

89,621

Add:  Dilutive effect of  stock options and 

           restricted stock awards

1,198

1,026

823

           Dilutive effect of Senior Notes 

15,682

15,682

15,682

Diluted weighted average number of common shares outstanding

107,353

107,162

106,126

Income per common share - diluted

$        0.16

$              0.22

$        0.16

 

Newpark Resources, Inc.

Operating Segment Results

(Unaudited)

Three Months Ended

March 31,

December 31,

March 31,

(In thousands)

2012

2011

2011

Revenues

Fluids systems and engineering

$      218,496

$        221,125

$  170,467

Mats and integrated services

30,533

29,376

23,063

Environmental services

13,307

13,013

9,121

Total revenues

$  262,336

$        263,514

$  202,651

Operating income (loss) 

Fluids systems and engineering

$        13,995

$          25,044

$    19,199

Mats and integrated services

14,339

11,655

11,784

Environmental services

3,575

2,351

1,620

Corporate office

(5,774)

(5,009)

(4,655)

Total operating income 

$    26,135

$          34,041

$    27,948

Segment operating margin

Fluids systems and engineering

6.4%

11.3%

11.3%

Mats and integrated services

47.0%

39.7%

51.1%

Environmental services

26.9%

18.1%

17.8%

 

Newpark Resources, Inc.

Consolidated Balance Sheets

(Unaudited)

March 31,

December 31,

(In thousands, except share data)

2012

2011

ASSETS

Cash and cash equivalents

$    30,369

$          25,247

Receivables, net

354,712

328,590

Inventories

189,285

175,929

Deferred tax asset

13,230

13,224

Prepaid expenses and other current assets

10,269

10,828

Total current assets

597,865

553,818

Property, plant and equipment, net 

240,719

231,055

Goodwill

75,081

71,970

Other intangible assets, net 

20,028

20,850

Other assets

8,793

9,144

Total assets

$  942,486

$        886,837

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term debt

$      1,548

$            2,232

Accounts payable

106,277

97,168

Accrued liabilities

44,800

47,443

Total current liabilities

152,625

146,843

Long-term debt, less current portion

225,874

189,876

Deferred tax liability

46,941

46,844

Other noncurrent liabilities

5,498

5,428

Total liabilities

430,938

388,991

Common stock, $0.01 par value, 200,000,000 shares authorized 

and 94,551,917 and 94,497,526 shares issued, respectively

946

945

Paid-in capital

478,771

477,204

Accumulated other comprehensive income

4,784

789

Retained earnings 

50,617

34,983

Treasury stock, at cost; 3,726,258 and 2,803,987 shares, respectively 

(23,570)

(16,075)

Total stockholders' equity

511,548

497,846

Total liabilities and stockholders' equity

$  942,486

$        886,837

 

Newpark Resources, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

Three Months Ended March 31,

(In thousands)

2012

2011

Cash flows from operating activities:

Net income 

$ 15,634

$ 15,854

Adjustments to reconcile net income to net cash provided by operations:

Depreciation and amortization

8,018

6,430

Stock-based compensation expense

1,383

975

Provision for deferred income taxes

81

7,567

Net provision for doubtful accounts

414

(44)

 Loss (gain) on sale of assets

244

(17)

Change in assets and liabilities:

Increase in receivables

(24,439)

(1,063)

(Increase) decrease in inventories

(12,144)

1,453

(Increase) decrease in other assets

(1,755)

285

Increase (decrease) in accounts payable

9,008

(3,895)

Decrease in accrued liabilities and other

(2,852)

(9,648)

Net cash (used in) provided by operating activities

(6,408)

17,897

Cash flows from investing activities:

Capital expenditures

(17,302)

(6,188)

Proceeds from sale of property, plant and equipment

8

66

Net cash used in investing activities

(17,294)

(6,122)

Cash flows from financing activities:

Borrowings on lines of credit

85,951

1,193

Payments on lines of credit

(50,632)

(2,332)

Proceeds from employee stock plans

234

87

Purchase of treasury stock

(7,598)

(95)

Other financing activities

10

9

Net cash provided by (used in) financing activities

27,965

(1,138)

Effect of exchange rate changes on cash

859

1,719

Net  increase in cash and cash equivalents

5,122

12,356

Cash and cash equivalents at beginning of year

25,247

83,010

Cash and cash equivalents at end of year

$ 30,369

$ 95,366

 

SOURCE Newpark Resources, Inc.



RELATED LINKS

http://www.newpark.com