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Revenues and net income improve sequentially from second quarter 2009
THE WOODLANDS, Texas, Oct. 29 /PRNewswire-FirstCall/ -- Newpark Resources, Inc. (NYSE:NR) today announced results for its third quarter ended September 30, 2009. Total revenues were $118.2 million for the third quarter of 2009 compared to $109.6 million for the second quarter of 2009 and $226.2 million for the third quarter of 2008. The Company reported net income of $0.2 million, break-even on a per share basis, for the third quarter of 2009 compared to a net loss of $8.8 million, or $0.10 per share, in the second quarter of 2009 and net income of $10.4 million, or $0.12 per diluted share, for the third quarter of 2008.
Operating results in the third quarter of 2009 included $2.3 million of other income ($1.5 million after-tax) in the Environmental Services segment, reflecting proceeds from the settlement of business interruption insurance claims related to hurricanes and storms in 2008. Operating results in the second quarter of 2009 included $4.8 million of pre-tax charges ($3.1 million after-tax) related to employee termination and related costs associated with North American workforce reductions, the non-renewal of barge leases and asset write-downs.
Paul Howes, President and Chief Executive Officer of Newpark, stated, "Our third quarter revenues and net income improved nicely from the second quarter of this year. After sharp declines earlier in the year, we have seen U.S. drilling activity stabilize and improve during the third quarter. As a result of these improving market conditions and our cost cutting programs executed earlier this year, our Fluids Systems and Engineering segment returned to profitability in the third quarter. In addition, the Mats and Integrated Services segment generated improved operating results, while our Environmental Services segment continued to perform well.
"We remain focused on aggressively managing costs and reducing our debt levels as our total debt was reduced by an additional $10 million during the quarter," added Howes. "Meanwhile, we continued to be encouraged by our international businesses as Brazil activity continues to ramp-up and our Mediterranean operations remain stable."
Segment Results
The Fluids Systems and Engineering segment generated revenues of $99.4 million in the third quarter of 2009 compared to $89.6 million in the second quarter of 2009 and $189.0 million in the third quarter of 2008. Segment operating income was $2.5 million in the third quarter of 2009 compared to an operating loss of $1.7 million in the second quarter of 2009 and operating income of $25.6 million in the third quarter of 2008. North American revenues increased 8% from the second quarter of 2009 primarily due to higher drilling activity, market share gains and a seasonal rebound in Canada, while international revenues increased 16%, primarily due to the ramp-up of activity in Brazil. Compared to the third quarter of 2008, North American revenues decreased 60%, while international revenues increased 3%.
The Mats and Integrated Services segment generated revenues of $7.6 million in the third quarter of 2009 compared to $8.6 million in the second quarter of 2009 and $22.6 million in the third quarter of 2008. Segment operating loss was $0.9 million in the third quarter of 2009 compared to an operating loss of $4.8 million in the second quarter of 2009 and an operating profit of $1.1 million in the third quarter of 2008. Revenues were down 12% from the second quarter of 2009, as declines in mat sales were partially offset by an increase in well site construction activities. Compared to the third quarter of 2008, revenues were down 66%.
The Environmental Services segment generated revenues of $11.2 million in the third quarter of 2009 compared to $11.3 million in the second quarter of 2009 and $14.6 million in the third quarter of 2008. Segment operating income was $4.1 million in the third quarter of 2009, including $2.3 million of other income associated with the settlement of business interruption insurance claims, compared to operating income of $1.4 million in the second quarter of 2009 and $1.9 million in the third quarter of 2008. Compared to the third quarter of 2008, revenues were down 23%.
Corporate office expenses were $3.5 million in the third quarter of 2009, compared to $4.8 million in the second quarter of 2009 and $10.4 million in the third quarter of 2008. Compared to both prior periods, the decrease in expenses is attributable to lower legal and related expenses, along with lower personnel and related costs following the 2009 cost cutting programs. The third quarter of 2008 also included $3.5 million of legal and selling costs associated with the abandoned sale of the Environmental Services business.
CONFERENCE CALL
In conjunction with this release, Newpark has scheduled a conference call, which will be broadcast live over the Internet, on Friday, October 30, 2009 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (480) 629-9770 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 http://www.newpark.com/. For those who cannot listen to the live call, a replay will be available through November 6, 2009 and may be accessed by dialing (303) 590-3030 and using pass code 4160781#. Also, an archive of the webcast will be available shortly after the call at http://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 http://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, 2008, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, the instability and effect of the credit and capital markets on the economy in general and the oil and gas industry in particular; the access to the credit markets by both Newpark and Newpark's customers; the outlook for drilling activity in North America and the rest of the world; compliance with our debt covenants; the investigation of 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 and services. 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/.
Contacts: James E. Braun, CFO
Newpark Resources, Inc.
281-362-6800
Ken Dennard, Managing Partner
Dennard Rupp Gray & Easterly, LLC
713-529-6600
Newpark Resources, Inc.
Consolidated Statements of Operations
(Unaudited) Three Months Ended Nine Months Ended
----------- ------------------ -----------------
(In thousands,
except per share Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
data) 2009 2009 2008 2009 2008
----------------- ---- ---- ---- ---- ----
Revenues $118,208 $109,599 $226,184 $354,745 $631,417
Cost of revenues 103,985 103,906 184,401 332,442 514,695
Selling, general
and administrative
expenses 14,676 15,652 23,849 45,519 60,194
Other (income)
expense, net (2,691) (37) (305) (2,753) (342)
------ --- ---- ------ ----
Operating
income (loss) 2,238 (9,922) 18,239 (20,463) 56,870
Foreign currency
exchange
(gain) loss (1,011) (590) 36 (1,572) 133
Interest
expense, net 3,361 1,600 2,499 6,611 8,375
----- ----- ----- ----- -----
(Loss) income
from continuing
operations
before income
taxes (112) (10,932) 15,704 (25,502) 48,362
Provision for
income taxes (314) (2,145) 5,115 (4,913) 16,291
---- ------ ----- ------ ------
Income (loss) from
continuing
operations 202 (8,787) 10,589 (20,589) 32,071
Loss from discontinued
operations, net of tax - - (171) - (300)
--- --- ---- --- ----
Net income (loss) $202 $(8,787) $10,418 $(20,589) $31,771
==== ======= ======= ======== =======
Basic weighted
average common shares
outstanding 88,544 88,514 88,682 88,469 89,227
Diluted weighted
average common shares
outstanding 88,655 88,514 89,109 88,469 89,569
Income (loss) per
common share - basic:
Income (loss) from
continuing
operations $- $(0.10) $0.12 $(0.23) $0.36
Loss from discontinued
operations - - - - -
--- --- --- --- ---
Net income (loss) per
common share $- $(0.10) $0.12 $(0.23) $0.36
=== ====== ===== ====== =====
Income (loss)
per common
share - diluted:
Income (loss) from
continuing
operations $- $(0.10) $0.12 $(0.23) $0.36
Loss from
discontinued
operations - - - - (0.01)
--- --- --- --- -----
Net income (loss)
per common share $- $(0.10) $0.12 $(0.23) $0.35
=== ====== ===== ====== =====
Newpark Resources, Inc.
Operating Segment Results
(Unaudited) Three Months Ended
----------- ------------------
September 30, June 30, September 30,
(In thousands) 2009 2009 2008
-------------- ---- ---- ----
Revenues
Fluids systems and
engineering $99,421 $89,642 $188,975
Mats and integrated
services 7,578 8,638 22,593
Environmental
services 11,209 11,319 14,616
------ ------ ------
Total revenues $118,208 $109,599 $226,184
======== ======== ========
Operating income (loss)
Fluids systems and
engineering $2,541 $(1,722) $25,601
Mats and integrated
services (879) (4,774) 1,131
Environmental
services 4,070 (1) 1,385 1,874
Corporate office (3,494) (4,811) (10,367)
------ ------ -------
Total operating
income (loss) $2,238 $(9,922) $18,239
====== ======= =======
Segment operating margin
Fluids systems and
engineering 2.6% (1.9%) 13.5%
Mats and integrated
services (11.6%) (55.3%) 5.0%
Environmental
services 36.3% 12.2% 12.8%
(1) Includes $2.3 million of income reflecting proceeds from the
settlement of business interruption insurance claims.
Newpark Resources, Inc.
Consolidated Balance Sheets
------------------- ------------- ------------
(In thousands, September 30, December 31,
except share data) 2009 2008
------------------- ---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $6,299 $8,252
Receivables, net 108,287 211,366
Inventories 123,299 149,304
Deferred tax asset 8,887 22,809
Prepaid expenses and other current
assets 10,365 11,062
------ ------
Total current assets 257,137 402,793
Property, plant and equipment, net 228,875 226,627
Goodwill 62,186 60,268
Deferred tax asset, net 7,126 707
Other intangible assets, net 16,995 18,940
Other assets 5,493 4,344
----- -----
Total assets $577,812 $713,679
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Foreign bank lines of credit $8,437 $11,302
Current maturities of long-term debt 10,593 10,391
Accounts payable 45,412 89,018
Accrued liabilities 25,984 38,946
------ ------
Total current liabilities 90,426 149,657
Long-term debt, less current portion 115,885 166,461
Deferred tax liability 715 15,979
Other noncurrent liabilities 3,507 3,700
----- -----
Total liabilities 210,533 335,797
Common stock, $0.01 par value, 100,000,000
shares authorized 91,659,870 and
91,139,966 shares issued, respectively 917 911
Paid-in capital 459,331 457,012
Accumulated other comprehensive
income 9,065 1,296
Retained deficit (86,676) (66,087)
Treasury stock, at cost; 2,710,133
and 2,646,409 shares, respectively (15,358) (15,250)
------- -------
Total stockholders' equity 367,279 377,882
------- -------
Total liabilities and stockholders'
equity $577,812 $713,679
======== ========
Newpark Resources, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended
(Unaudited) September 30,
----------- -------------
(In thousands) 2009 2008
-------------- ---- ----
Cash flows from operating activities:
Net (loss) income $(20,589) $31,771
Adjustments to reconcile net (loss) income to
net cash provided by operations:
Net loss from discontinued operations - 300
Non-cash impairment charges 1,091 -
Depreciation and amortization 20,890 21,784
Stock-based compensation expense 2,262 4,034
Provision for deferred income taxes (7,718) 12,157
Provision for doubtful accounts 2,357 1,752
Gain on sale of assets (752) (345)
Change in assets and liabilities:
Decrease (increase) in receivables 103,397 (50,712)
Decrease (increase) in inventories 28,179 (6,913)
Increase in other assets (551) (3,462)
(Decrease) increase in accounts payable (44,911) 10,270
(Decrease) increase in accrued liabilities and
other (13,890) 14,024
------- ------
Net operating activities of continuing operations 69,765 34,660
Net operating activities of discontinued
operations - 2,352
--- -----
Net cash provided by operating activities 69,765 37,012
Cash flows from investing activities:
Capital expenditures (17,219) (16,937)
Proceeds from sale of property, plant and
equipment 1,255 522
----- ---
Net cash used in investing activities (15,964) (16,415)
Cash flows from financing activities:
Net (payments) borrowings on lines of credit (54,021) (1,625)
Principal payments on notes payable and long-term
debt (299) (2,116)
Proceeds from employee stock plans 104 1,897
Purchase of treasury stock (212) (15,093)
---- -------
Net financing activities of continuing operations (54,428) (16,937)
Net financing activities of discontinued operations - (63)
--- ---
Net cash used in financing activities (54,428) (17,000)
Effect of exchange rate changes on cash (1,326) 1,578
------ -----
Net (decrease) increase in cash and cash equivalents (1,953) 5,175
Cash and cash equivalents at beginning of period 8,252 5,741
----- -----
Cash and cash equivalents at end of period $6,299 $10,916
====== =======
DATASOURCE: Newpark Resources, Inc.
CONTACT: James E. Braun, CFO of Newpark Resources, Inc.,
+1-281-362-6800; or Ken Dennard, Managing Partner of Dennard Rupp Gray &
Easterly, LLC, +1-713-529-6600, , for Newpark Resources,
Inc.
Web Site: http://www.newpark.com/