Newpark Resources Reports Net Income Of $0.20 Per Diluted Share For The Third Quarter 2013 Company announces plans to expand mat manufacturing facility

THE WOODLANDS, Texas, Oct. 24, 2013 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its third quarter ended September 30, 2013.  Total revenues for the third quarter of 2013 increased 10% to $285.7 million compared to $259.6 million in the third quarter of 2012.  Net income for the third quarter of 2013 was $18.8 million, or $0.20 per diluted share, compared to $18.7 million, or $0.20 per diluted share, in the third quarter of 2012.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We are pleased with our continued growth, setting another quarterly revenue record in the third quarter.   Revenues in our drilling fluids segment rose 10% on a worldwide basis compared to last year's third quarter.  North American revenues increased 9% from a year ago and rose 2% sequentially.  International revenues in this segment grew 13% from a year ago, but declined 5% sequentially largely due to expected declines in our EMEA and Asia Pacific regions.  Fluid margins were negatively impacted by continued operating losses in completions services, as well as lower margins in the U.S., EMEA and Asia Pacific regions.  As previously announced, we have been considering strategic alternatives for our completion services business and are now planning to exit this business.  Subsequent to the end of the third quarter, we completed the sale of a portion of the assets associated with that business and are currently evaluating offers for the remaining parts of that business.  

"Our mats segment had an extremely strong quarter, setting a new record for quarterly revenues.  Rental revenues increased 30% from a year ago and 5% sequentially, while mat sales, which were down 21% from the prior year period, roughly doubled on a sequential basis from the prior quarter.  Additionally, we are pleased to announce a $40 million expansion of our mats manufacturing facility in Louisiana, which reflects a critical element of our long-term strategy for this business, as we seek to provide innovative solutions to meet our customers' needs," added Howes. 

SEGMENT RESULTS

The Fluids Systems and Engineering segment generated revenues of $233.0 million in the third quarter of 2013 compared to $211.5 million in the third quarter of 2012, a 10% increase.  Segment operating income was $17.1 million (7.4% operating margin) in the third quarter of 2013 compared to $14.8 million (7.0% operating margin) in the third quarter of 2012.

The Mats and Integrated Services segment generated revenues of $35.1 million in the third quarter of 2013 and the third quarter of 2012.  Segment operating income was $15.3.million (43.7% operating margin) in the third quarter of 2013 compared to $16.0 million (45.6% operating margin) in the third quarter of 2012. 

The Environmental Services segment generated revenues of $17.6 million in the third quarter of 2013 compared to $13.1 million in the third quarter of 2012, a 34% increase.  Segment operating income was $4.7 million (26.5% operating margin) in the third quarter of 2013 compared to $3.1 million (23.6% operating margin) in the third quarter of 2012.

EXPANSION OF MAT MANUFACTURING FACILITY

The Company announced plans to expand its mat manufacturing facility, located in Carencro, Louisiana.  The $40 million expansion project is expected to be completed in early 2015.  Upon completion, the project will significantly increase our production capacity and support expansion into new markets, both domestically and internationally.  The new facility will also include a research and development center, intended to drive continued new product development efforts.

LEADERSHIP ANNOUNCEMENT

The Company announced that Phil Vollands has been appointed to the role of President, North America, Fluids Systems and Engineering, reporting to Bruce Smith, President, Fluids Systems and Engineering.  Most recently, Mr. Vollands served as Vice President, Tubular Running Services for Weatherford International.  Prior to that, Mr. Vollands served in a variety of sales and operational leadership positions for National Oilwell Varco and brings years of global oilfield service leadership experience.

CONFERENCE CALL

Newpark has scheduled a conference call to discuss third  quarter 2013 results, which will be broadcast live over the Internet, on Friday, October 25, 2013 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 November 8, 2013 and may be accessed by dialing (303) 590-3030 and using pass code 4641682#.  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, 2012, as well as others, could cause results to differ materially from those stated. These risk factors include, but are not limited to, our ability to execute our business strategy and make successful business acquisitions and capital investments, our customers' activity levels in exploration and drilling, operating hazards inherent  in the oil and natural gas industry, particularly offshore, our international operations, the availability of raw materials and skilled personnel, our customer concentration and cyclical nature of our industry, our market competition, the cost and continued availability of borrowed funds, legal and regulatory matters, including environmental regulations, inherent limitations in insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, and the impact of severe weather, particularly in the U.S. Gulf Coast.  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 ▪ Lascar Associates


713-529-6600

 

 

Newpark Resources, Inc.

Consolidated Statements of Operations












(Unaudited)


Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,


September 30,


September 30,

(In thousands, except per share data)


2013


2013


2012


2013


2012












Revenues


$        285,708


$        276,622


$        259,599


$        844,848


$        767,691












Cost of revenues


230,206


225,244


210,276


685,856


626,712












Selling, general and administrative expenses


25,433


24,662


20,878


74,277


62,135

Other operating income, net


(232)


(201)


(311)


(872)


(802)












Operating income 


30,301


26,917


28,756


85,587


79,646












Foreign currency exchange loss 


975


475


185


1,082


416

Interest expense, net


2,728


2,802


2,416


8,050


7,337












Income from operations before income taxes


26,598


23,640


26,155


76,455


71,893

Provision for income taxes


7,838


7,976


7,413


24,656


23,054












Net income 


$          18,760


$          15,664


$          18,742


$          51,799


$          48,839























Income per common share -basic:


$              0.22


$              0.19


$              0.22


$              0.61


$              0.55

Income per common share -diluted:


$              0.20


$              0.17


$              0.20


$              0.54


$              0.50












Calculation of Diluted EPS:











Net income 


$          18,760


$          15,664


$          18,742


$          51,799


$          48,839

Assumed conversion of Senior Notes 


1,374


1,279


1,396


3,921


3,944

Adjusted net income 


$          20,134


$          16,943


$          20,138


$          55,720


$          52,783












Weighted average number of common shares outstanding-basic


85,775


84,813


86,423


84,902


88,491

Add:  Dilutive effect of  stock options and restricted stock awards












1,503


1,810


695


1,718


756

           Dilutive effect of Senior Notes 


15,682


15,682


15,682


15,682


15,682












Diluted weighted average number of common shares outstanding


102,960


102,305


102,800


102,302


104,929












Income per common share - diluted


$              0.20


$              0.17


$              0.20


$              0.54


$              0.50

 

 

Newpark Resources, Inc.

Operating Segment Results

















(Unaudited)


Three Months Ended




September 30,


June 30,


September 30,

(In thousands)


2013


2013


2012









Revenues








Fluids systems and engineering


$         233,020


$ 233,964


$         211,457


Mats and integrated services


35,112


25,412


35,067


Environmental services


17,576


17,246


13,075


Total revenues


$         285,708


$ 276,622


$         259,599









Operating income (loss) 








Fluids systems and engineering


$           17,140


$  17,684


$           14,798


Mats and integrated services


15,345


10,341


15,992


Environmental services


4,656


5,321


3,089


Corporate office


(6,840)


(6,429)


(5,123)


Total operating income 


$           30,301


$  26,917


$           28,756









Segment operating margin








Fluids systems and engineering


7.4%


7.6%


7.0%


Mats and integrated services


43.7%


40.7%


45.6%


Environmental services


26.5%


30.9%


23.6%

 

 

Newpark Resources, Inc.

Consolidated Balance Sheets







(Unaudited)








September 30,


December 31,

(In thousands, except share data)


2013


2012







ASSETS






Cash and cash equivalents


$           69,409


$          46,846


Receivables, net


316,276


323,439


Inventories


203,926


209,734


Deferred tax asset


9,972


11,596


Prepaid expenses and other current assets


11,889


12,441



Total current assets


611,472


604,056









Property, plant and equipment, net 


279,298


253,990


Goodwill


89,360


87,388


Other intangible assets, net 


30,771


41,018


Other assets


6,985


8,089



Total assets


$      1,017,886


$        994,541








LIABILITIES AND STOCKHOLDERS' EQUITY






Short-term debt


$           12,242


$            2,599


Accounts payable


99,863


114,377


Accrued liabilities


50,603


42,620



Total current liabilities


162,708


159,596









Long-term debt, less current portion


219,795


256,832


Deferred tax liability


44,115


46,348


Other noncurrent liabilities


20,805


18,187



Total liabilities


447,423


480,963














Common stock, $0.01 par value, 200,000,000 shares authorized and 97,777,995 and 95,733,677 shares issued, respectively


978


957



Paid-in capital


501,319


484,962


Accumulated other comprehensive loss 


(8,247)


(734)


Retained earnings 


146,814


95,015


Treasury stock, at cost; 10,413,402 and 10,115,951 shares, respectively 


(70,401)


(66,622)



Total stockholders' equity


570,463


513,578


Total liabilities and stockholders' equity


$      1,017,886


$        994,541

 

 

Newpark Resources, Inc.

Consolidated Statements of Cash Flows






(Unaudited)


Nine Months Ended September 30,

(In thousands)


2013


2012

Cash flows from operating activities:





Net income 


$  51,799


$  48,839

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




Depreciation and amortization


33,138


24,406

Stock-based compensation expense


6,954


5,027

Provision for deferred income taxes


(311)


(4,654)

Net provision for doubtful accounts


221


1,282

(Gain) loss on sale of assets


(437)


512

Excess tax benefit from stock-based compensation


(2,020)


-

Change in assets and liabilities:





   Decrease in receivables


1,210


11,964

   Decrease (increase) in inventories


2,964


(6,446)

   Decrease (increase) in other assets


828


(98)

   (Decrease) increase in accounts payable


(11,832)


2,905

   Increase (decrease) in accrued liabilities and other


13,175


(3,085)

Net cash provided by operating activities


95,689


80,652






Cash flows from investing activities:





Capital expenditures


(52,550)


(34,858)

Proceeds from sale of property, plant and equipment


1,248


823

Net cash used in investing activities


(51,302)


(34,035)






Cash flows from financing activities:





Borrowings on lines of credit


215,994


222,868

Payments on lines of credit


(243,141)


(213,221)

Proceeds from employee stock plans


8,102


1,007

Post-closing payment for business acquisition


-


(11,892)

Purchase of treasury stock


(4,227)


(35,698)

Excess tax benefit from stock-based compensation


2,020


-

Other financing activities


(25)


(48)

Net cash used in financing activities


(21,277)


(36,984)






Effect of exchange rate changes on cash


(547)


577






Net increase in cash and cash equivalents


22,563


10,210

Cash and cash equivalents at beginning of year


46,846


25,247






Cash and cash equivalents at end of period


$  69,409


$  35,457

 

SOURCE Newpark Resources, Inc.



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