2014

Newpark Resources Reports Net Income Of $0.20 Per Diluted Share For The Third Quarter 2012

THE WOODLANDS, Texas, Oct. 25, 2012 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its third quarter ended September 30, 2012.  Total revenues for the third quarter of 2012 were $259.6 million compared to $245.8 million for the second quarter of 2012 and $261.2 million for the third quarter of 2011.  Net income for the third quarter of 2012 was $18.7 million, or $0.20 per diluted share, compared to $14.5 million, or $0.15 per diluted share, for the second quarter of 2012, and $23.0 million, or $0.23 per diluted share, for the third quarter of 2011.

The third quarter 2012 provision for income taxes was $7.4 million, reflecting an effective tax rate of 28.3%.  The provision included a $1.0 million benefit ($0.01 per diluted share) associated with increased U.S. tax deductions identified for prior years, along with an increase in estimated U.S. tax deductions available for the 2012 fiscal year.  

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We are pleased with our performance in the third quarter, which was achieved despite a softening market in North America.  In particular, the results in our Mats and Integrated Services segment were outstanding, achieving record levels in both revenue and operating income during the quarter.  Operating results in our fluids business also improved sequentially, driven by strengthening in our international operations as all international regions posted sequential improvements in both revenues and operating income.  Meanwhile, not unlike other service companies, our North American fluids business is facing dual headwinds of the declining U.S. rig count and a slow seasonal recovery in Canada.  While our profit improvement initiatives in this business have continued, their impact has been somewhat muted by the North American market conditions. 

"In the last few quarters, we have also focused on reducing customer receivables in our U.S. fluids business, and we are pleased to report that receivables in this business declined by $34 million during the third quarter, contributing to a $38 million reduction in long-term debt during the period.

"Looking ahead, we remain focused on introducing differentiating technologies in both our fluids and mats businesses.  To that end, we expect to complete our first Evolution® well outside of North America, and we also anticipate having our spill containment system ready for deployment in the field by the end of the year," concluded Howes.

SEGMENT RESULTS
The Fluids Systems and Engineering segment generated revenues of $211.5 million in the third quarter of 2012 compared to $202.4 million in the second quarter of 2012 and $216.2 million in the third quarter of 2011.  Segment operating income was $14.8 million (7.0% operating margin) in the third quarter of 2012 compared to $13.5 million in the second quarter of 2012 (6.7% operating margin) and $25.6 million (11.9% operating margin) in the third quarter of 2011. 

The Mats and Integrated Services segment generated revenues of $35.1 million in the third quarter of 2012 compared to $30.1 million in the second quarter of 2012 and $30.2 million in the third quarter of 2011.  Segment operating income was $16.0 million (45.6% operating margin) in the third quarter of 2012 compared to $13.1 million in the second quarter of 2012 (43.5% operating margin) and $14.5 million (48.1% operating margin) in the third quarter of 2011. 

The Environmental Services segment generated revenues of $13.1 million in the third quarter of 2012 compared to $13.3 million in the second quarter of 2012 and $14.9 million in the third quarter of 2011.  Segment operating income was $3.1 million (23.6% operating margin) in the third quarter of 2012 compared to $3.5 million in the second quarter of 2012 (26.4% operating margin) and $5.0 million (33.4% operating margin) in the third quarter of 2011.

SHARE REPURCHASE PROGRAM
Consistent with its previously-announced program and in accordance with a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934, the Company repurchased a total of 1,640,458 outstanding shares of Newpark common stock at an average cost of $6.62 per share during the third quarter.  Combined with purchases completed earlier in the year, the Company has repurchased a total of 5.2 million outstanding shares at an average cost of $6.80 through the end of the third quarter 2012.

CONFERENCE CALL
Newpark has scheduled a conference call to discuss third quarter 2012 results, which will be broadcast live over the Internet, on Friday, October 26, 2012 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time.  To participate in the call, dial 480-629-9692 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 November 9, 2012 and may be accessed by dialing (303) 590-3030 and using pass code 4567351#.  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 Months Ended


Nine Months Ended

(In thousands, except per share data)


September 30,

2012


June 30,

2012


September 30,

2011


September 30,

2012


September 30,

2011












Revenues


$ 259,599


$ 245,756


$ 261,193


$ 767,691


$ 694,666












Cost of revenues


210,276


201,534


201,272


626,712


539,185












Selling, general and administrative expenses


20,878


19,944


20,802


62,135


57,770

Other operating income, net


(311)


(477)


(60)


(802)


(1,012)












Operating income 


28,756


24,755


39,179


79,646


98,723












Foreign currency exchange loss 


185


461


485


416


340

Interest expense, net


2,416


2,553


2,464


7,337


6,821












Income from operations before income taxes


26,155


21,741


36,230


71,893


91,562

Provision for income taxes


7,413


7,278


13,233


23,054


33,431












Net income 


$   18,742


$   14,463


$   22,997


$   48,839


$   58,131























Income per common share -basic:


$       0.22


$       0.16


$       0.25


$       0.55


$       0.65

Income per common share -diluted:


$       0.20


$       0.15


$       0.23


$       0.50


$       0.58












Calculation of Diluted EPS:











Net income 


$   18,742


$   14,463


$   22,997


$   48,839


$   58,131

Assumed conversion of Senior Notes 


1,396


1,283


1,236


3,944


3,674

Adjusted net income 


$   20,138


$   15,746


$   24,233


$   52,783


$   61,805












Weighted average number of common shares outstanding-basic


86,423


88,600


90,212


88,491


89,877

Add:  Dilutive effect of  stock options and restricted stock awards


695


457


1,025


756


883

           Dilutive effect of Senior Notes 


15,682


15,682


15,682


15,682


15,682












Diluted weighted average number of common shares outstanding


102,800


104,739


106,919


104,929


106,442












Income per common share - diluted


$       0.20


$       0.15


$       0.23


$       0.50


$       0.58

 

Newpark Resources, Inc.

Operating Segment Results

















(Unaudited)


Three Months Ended




September 30,


June 30,


September 30,

(In thousands)


2012


2012


2011









Revenues








Fluids systems and engineering


$ 211,457


$ 202,388


$ 216,160


Mats and integrated services


35,067


30,071


30,179


Environmental services


13,075


13,297


14,854


Total revenues


$ 259,599


$ 245,756


$ 261,193









Operating income (loss) 








Fluids systems and engineering


$  14,798


$  13,480


$  25,648


Mats and integrated services


15,992


13,075


14,509


Environmental services


3,089


3,514


4,958


Corporate office


(5,123)


(5,314)


(5,936)


Total operating income 


$  28,756


$  24,755


$  39,179









Segment operating margin








Fluids systems and engineering


7.0%


6.7%


11.9%


Mats and integrated services


45.6%


43.5%


48.1%


Environmental services


23.6%


26.4%


33.4%

 

Newpark Resources, Inc.

Consolidated Balance Sheets








(Unaudited)









September 30,


December 31,

(In thousands, except share data)


2012


2011








ASSETS






Cash and cash equivalents


$   35,457


$   25,247


Receivables, net


312,040


328,590


Inventories


181,188


175,929


Deferred tax asset


14,438


13,224


Prepaid expenses and other current assets


11,361


10,828



Total current assets


554,484


553,818









Property, plant and equipment, net 


247,329


231,055


Goodwill


75,796


71,970


Other intangible assets, net 


18,317


20,850


Other assets


8,529


9,144



Total assets


$ 904,455


$ 886,837








LIABILITIES AND STOCKHOLDERS' EQUITY






Short-term debt


$        799


$     2,232


Accounts payable


95,670


97,168


Accrued liabilities


36,767


47,443



Total current liabilities


133,236


146,843









Long-term debt, less current portion


200,838


189,876


Deferred tax liability


43,501


46,844


Other noncurrent liabilities


13,821


5,428



Total liabilities


391,396


388,991









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







and 95,652,486 and 94,497,526 shares issued, respectively


957


945


Paid-in capital


482,886


477,204


Accumulated other comprehensive (loss) income


(3,042)


789


Retained earnings 


83,822


34,983


Treasury stock, at cost; 8,035,100 and 2,803,987 shares, respectively 


(51,564)


(16,075)



Total stockholders' equity


513,059


497,846


Total liabilities and stockholders' equity


$ 904,455


$ 886,837

 

Newpark Resources, Inc.

Consolidated Statements of Cash Flows


(Unaudited)


Nine Months Ended September 30,

(In thousands)


2012


2011

Cash flows from operating activities:





Net income 


$  48,839


$ 58,131

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



Depreciation and amortization


24,406


21,162

Stock-based compensation expense


5,027


3,396

Provision for deferred income taxes


(4,654)


16,363

Net provision for doubtful accounts


1,282


1,165

 Loss on sale of assets


512


22

Change in assets and liabilities:





Decrease (increase) in receivables


11,964


(57,603)

Increase in inventories


(6,446)


(27,921)

Increase in other assets


(98)


(5,226)

Increase in accounts payable


2,905


28,893

Decrease in accrued liabilities and other


(3,085)


(3,655)

Net cash provided by operating activities


80,652


34,727






Cash flows from investing activities:





Capital expenditures


(34,858)


(28,136)

Business acquisition, net of cash acquired


-


(26,775)

Proceeds from sale of property, plant and equipment


823


434

Net cash used in investing activities


(34,035)


(54,477)






Cash flows from financing activities:





Borrowings on lines of credit


222,868


5,891

Payments on lines of credit


(213,221)


(5,754)

Proceeds from employee stock plans


1,007


1,768

Purchase of treasury stock


(35,698)


(599)

Post-closing payment for business acquisition


(11,892)


(2,055)

Other financing activities


(48)


(147)

Net cash used in financing activities


(36,984)


(896)






Effect of exchange rate changes on cash


577


538






Net increase (decrease) in cash and cash equivalents


10,210


(20,108)

Cash and cash equivalents at beginning of year


25,247


83,010






Cash and cash equivalents at end of period


$  35,457


$ 62,902

 

SOURCE Newpark Resources, Inc.



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