Newpark Resources Reports 2012 First Quarter Results

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.



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