NEWS RELEASE
Exhibit 99.1
| Contacts: | James E. Braun, CFO | |||
| Newpark Resources, Inc. | ||||
| 281-362-6800 | ||||
| Ken Dennard, Managing Partner | ||||
FOR IMMEDIATE RELEASE | Dennard Rupp Gray & Easterly, LLC | |||
| ksdennard@drg-e.com | ||||
| 713-529-6600 |
NEWPARK RESOURCES REPORTS
FOURTH QUARTER AND YEAR-END 2007 RESULTS
FOURTH QUARTER AND YEAR-END 2007 RESULTS
Company also announces $25 million stock repurchase program
THE WOODLANDS, TX — February 22, 2008 — Newpark Resources, Inc. (NYSE: NR) today announced results for the fourth quarter and year ended December 31, 2007. Total revenues were $159.7 million for the fourth quarter of 2007 compared to $146.7 million for the fourth quarter of 2006. The fourth quarter 2007 results include a pretax charge of $4.0 million ($2.7 million after-tax) related to the repayment and termination of the Company’s previous credit facilities. As a result, the Company reported income from continuing operations of $5.5 million, or $0.06 per diluted share. Excluding the $4.0 million charge, income from continuing operations was $8.2 million, or $0.09 per diluted share. ANon-GAAP Earnings Reconciliationis included in the financial tables below. The Company also announced a $25 million stock repurchase program.
Paul Howes, President and Chief Executive Officer of Newpark, stated, “The fourth quarter continued to be an extremely tough environment for oil service companies in North America. Many of the headwinds the industry faced during the third quarter remained in effect through the end of the year. Nevertheless, in spite of this uncertain and soft market, our fluids business showed strong revenue growth and improved margins on a sequential basis. We continue to grow this business and gain acceptance in the market place as a leading provider of fluids and related services, as evidenced by market share gains in the Rockies where we picked up work on all of the rigs for a major independent in this region.
“Looking internationally, drilling activity continued to show strength. We’ve benefited greatly from this long-term trend, as our AVA business grew 41% in 2007, with much of this growth due to a strong North African market. We successfully completed our second test well in Egypt, which now puts us in position to grow our business in this important market. Our AVA business, which consists of our European and North African operations, generated $87 million of revenue for the full year in 2007. We also saw revenues from Brazil for the first time as we are now providing both fluids and services to land-based rigs there. Our goal is to leverage our presence in Brazil and expand into the country’s deepwater market.
“Finally, we are very pleased to announce that the Board has authorized a $25 million stock repurchase program. We will look for opportunities to buy back shares as we believe the stock is undervalued at the current share price,” concluded Howes.
FOURTH QUARTER 2007 SEGMENT RESULTS
The Fluids Systems and Engineering segment generated revenues of $136.3 million and a 12.9% operating margin in the fourth quarter of 2007 compared to the $129.1 million of revenue and a 16.0% operating margin generated during the fourth quarter of 2006. Operating margin in the Fluids segment for the 2007 fourth quarter declined from year ago levels primarily due to higher barite, transportation, fuel and labor costs that could not be fully recovered through customer pricing increases.
The Mats and Integrated Services segment generated revenues of $23.5 million and a 5.7% operating margin in the fourth quarter of 2007 compared to revenues of $17.7 million and an 11.8% operating margin in the fourth quarter of 2006. The 2007 fourth quarter decline in operating margins is mainly attributable to continued weakness and a falling rig count in southern Louisiana, which contributed to pricing pressure and lower demand for mat rentals and related services.
2007 RESULTS
Total revenues for 2007 were $612.8 million compared to revenues of $581.9 million for 2006. Income from continuing operations was $25.0 million for 2007, or $0.28 per diluted share, compared to $28.1 million, or $0.31 per diluted share, for 2006. As set forth on the attachedNon-GAAP Earnings Reconciliation,2007 income from continuing operations excluding the fourth quarter charge of $4.0 million related to the termination of the previous credit facility and $2.4 million of legal costs incurred during the first quarter of 2007, was $29.4 million, or $0.32 per diluted share. For 2006, excluding certain items as set forth on the attachedNon-GAAP Earnings Reconciliation, income from continuing operations was $28.2 million, or $0.31 per diluted share.
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In 2007, the Fluid Systems and Engineering segment generated revenues of $522.7 million and a 12.6% operating margin compared to $481.4 million in revenues and a 13.8% operating margin in 2006. Full-year 2006 results included $4.3 million in business interruption insurance proceeds due to Hurricanes Katrina and Rita received during the second and third quarters.
The Mats and Integrated Services segment generated revenues of $90.1 million and a 14.2% operating margin in 2007 compared to revenues of $100.5 million and a 15.1% operating margin in the 2006.
STOCK REPURCHASE PROGRAM
Newpark’s Board of Directors has approved a stock repurchase program that authorizes the Company to purchase up to $25 million of outstanding shares of Newpark common stock. These purchases will be funded with borrowings under the Company’s revolving credit facility. As part of the stock repurchase program, the Company’s management has been authorized to establish trading plans under Rule 10b5-1 of the Securities Exchange Act of 1934, which the Company intends to establish as soon as practicable.
CONFERENCE CALL
In conjunction with this release, Newpark has scheduled a conference call, which will be broadcast live over the Internet, on Friday, February 22, 2008 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (303) 262-2139 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 February 29, 2008 and may be accessed by dialing (303) 590-3000 and using pass code 11105800#. Also, an archive of the webcast will be available shortly after the call at www.newpark.com for 90 days.
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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 atwww.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 statements about 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, 2006, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, the investigation of the 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. 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.
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Newpark Resources, Inc.
Consolidated Statements of Operations
Consolidated Statements of Operations
| Three Months | Year Ended | |||||||||||||||
| (Unaudited) | Ended December 31, | December 31, | ||||||||||||||
| (In thousands, except per share data) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
| Revenues | $ | 159,740 | $ | 146,748 | $ | 612,764 | $ | 581,908 | ||||||||
| Cost of revenues | 140,753 | 124,034 | 533,929 | 500,062 | ||||||||||||
| 18,987 | 22,714 | 78,835 | 81,846 | |||||||||||||
| General and administrative expenses | 5,090 | 6,180 | 22,923 | 20,022 | ||||||||||||
| Operating income | 13,897 | 16,534 | 55,912 | 61,824 | ||||||||||||
| Foreign currency exchange (gain) loss | (804 | ) | 863 | (1,083 | ) | 367 | ||||||||||
| Interest expense, net | 8,069 | 4,336 | 20,251 | 19,546 | ||||||||||||
| Income from continuing operations before income taxes | 6,632 | 11,335 | 36,744 | 41,911 | ||||||||||||
| Provision for income taxes | 1,114 | 3,915 | 11,700 | 13,851 | ||||||||||||
| Income from continuing operations | 5,518 | 7,420 | 25,044 | 28,060 | ||||||||||||
| Income (loss) from discontinued operations, net of taxes | 1,228 | (49,544 | ) | 3,231 | (60,341 | ) | ||||||||||
| Loss from disposal of discontinued operations, net of taxes | — | — | (1,613 | ) | — | |||||||||||
| Net income | $ | 6,746 | $ | (42,124 | ) | $ | 26,662 | $ | (32,281 | ) | ||||||
| Basic weighted average common shares outstanding | 90,162 | 89,488 | 90,015 | 89,333 | ||||||||||||
| Diluted weighted average common shares outstanding | 90,540 | 89,961 | 90,527 | 89,871 | ||||||||||||
| Net income per common share (basic and diluted): | ||||||||||||||||
| Income from continuing operations | $ | 0.06 | $ | 0.08 | $ | 0.28 | $ | 0.31 | ||||||||
| Income (loss) from discontinued operations | 0.01 | (0.55 | ) | 0.01 | (0.67 | ) | ||||||||||
| Net income (loss) per common share | $ | 0.07 | $ | (0.47 | ) | $ | 0.29 | $ | (0.36 | ) | ||||||
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Newpark Resources, Inc.
Non-GAAP Earnings Reconciliation
Continuing Operations
Non-GAAP Earnings Reconciliation
Continuing Operations
The table below presents measures not derived in accordance with generally accepted accounting principles (“GAAP”). Non-GAAP measures of financial performance exclude items that the Company believes are infrequent or not indicative of operating performance. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes these non-GAAP financial measures are helpful, however, and management uses them in comparing the historical results to current results and measuring operating earnings trends.
| (Unaudited) | Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
| (In thousands, except per share data) | 2007 | 2006 | 2007 | 2006 | ||||||||||||
| Income from continuing operations before income taxes — GAAP | $ | 6,632 | $ | 11,335 | $ | 36,744 | $ | 41,911 | ||||||||
| Adjustments: | ||||||||||||||||
| Capitalized financing cost write-off associated with debt re-financing | 3,955 | — | 3,955 | 1,207 | ||||||||||||
| Business insurance proceeds related to Hurricanes Katrina and Rita | — | — | — | (4,271 | ) | |||||||||||
| Legal and accounting expenses related to 2005 restatement and related litigation | — | 1,259 | 2,441 | 3,275 | ||||||||||||
| Income from continuing operations before income taxes — Non-GAAP | 10,587 | 12,594 | 43,140 | 42,122 | ||||||||||||
| Provision for income taxes on adjusted income | 2,374 | 4,331 | 13,737 | 13,921 | ||||||||||||
| Income from continuing operations — Non-GAAP | $ | 8,214 | $ | 8,263 | $ | 29,403 | $ | 28,201 | ||||||||
| Diluted shares outstanding | 90,540 | 89,961 | 90,527 | 89,871 | ||||||||||||
| Income from continuing operations per common share (basic and diluted): | ||||||||||||||||
| Net income per common share — GAAP | $ | 0.06 | $ | 0.08 | $ | 0.28 | $ | 0.31 | ||||||||
| Impact of adjustments | 0.03 | 0.01 | 0.04 | 0.00 | ||||||||||||
| Income from continuing operations per common share — Non-GAAP | $ | 0.09 | $ | 0.09 | $ | 0.32 | $ | 0.31 | ||||||||
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Newpark Resources, Inc.
Operating Segment Results
Operating Segment Results
| (Unaudited) | Quarter Ended | Year Ended | ||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | December 31, | ||||||||||||||||
| (In thousands) | 2007 | 2007 | 2007 | 2007 | 2007 | |||||||||||||||
Segment revenues | ||||||||||||||||||||
| Fluids systems and engineering | $ | 125,298 | $ | 131,163 | $ | 129,986 | $ | 136,267 | $ | 522,714 | ||||||||||
| Mats and integrated services | 23,966 | 18,819 | 23,792 | 23,473 | 90,050 | |||||||||||||||
| Total segment revenues | $ | 149,264 | $ | 149,982 | $ | 153,778 | $ | 159,740 | $ | 612,764 | ||||||||||
Segment operating income | ||||||||||||||||||||
| Fluids systems and engineering | $ | 16,630 | $ | 16,323 | $ | 15,467 | $ | 17,645 | $ | 66,065 | ||||||||||
| Mats and integrated services | 4,600 | 2,273 | 4,555 | 1,342 | 12,770 | |||||||||||||||
| Total segment operating income | $ | 21,230 | $ | 18,596 | $ | 20,022 | $ | 18,987 | $ | 78,835 | ||||||||||
Segment operating margin | ||||||||||||||||||||
| Fluids systems and engineering | 13.3 | % | 12.4 | % | 11.9 | % | 12.9 | % | 12.6 | % | ||||||||||
| Mats and integrated services | 19.2 | % | 12.1 | % | 19.1 | % | 5.7 | % | 14.2 | % | ||||||||||
| Total segment operating margin | 14.2 | % | 12.4 | % | 13.0 | % | 11.9 | % | 12.9 | % | ||||||||||
| (Unaudited) | Quarter Ended | Year Ended | ||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | December 31, | ||||||||||||||||
| (In thousands) | 2006 | 2006 | 2006 | 2006 | 2006 | |||||||||||||||
Segment revenues | ||||||||||||||||||||
| Fluids systems and engineering | $ | 115,289 | $ | 111,868 | $ | 125,130 | $ | 129,091 | $ | 481,378 | ||||||||||
| Mats and integrated services | 29,251 | 31,133 | 22,489 | 17,657 | 100,530 | |||||||||||||||
| Total segment revenues | $ | 144,540 | $ | 143,001 | $ | 147,619 | $ | 146,748 | $ | 581,908 | ||||||||||
Segment operating income | ||||||||||||||||||||
| Fluids systems and engineering | $ | 12,660 | $ | 13,143 | $ | 20,178 | $ | 20,635 | $ | 66,616 | ||||||||||
| Mats and integrated services | 4,343 | 4,216 | 4,592 | 2,079 | 15,230 | |||||||||||||||
| Total segment operating income | $ | 17,003 | $ | 17,359 | $ | 24,770 | $ | 22,714 | $ | 81,846 | ||||||||||
Segment operating margin | ||||||||||||||||||||
| Fluids systems and engineering | 11.0 | % | 11.7 | % | 16.1 | % | 16.0 | % | 13.8 | % | ||||||||||
| Mats and integrated services | 14.8 | % | 13.5 | % | 20.4 | % | 11.8 | % | 15.1 | % | ||||||||||
| Total segment operating margin | 11.8 | % | 12.1 | % | 16.8 | % | 15.5 | % | 14.1 | % | ||||||||||
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Newpark Resources, Inc.
Consolidated Balance Sheets
Consolidated Balance Sheets
| (Unaudited) | ||||||||
| (In thousands) | December 31, 2007 | December 31, 2006 | ||||||
ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 8,019 | $ | 12,736 | ||||
| Receivables, net | 141,949 | 141,790 | ||||||
| Inventories | 120,202 | 107,778 | ||||||
| Deferred tax asset | 28,439 | 23,001 | ||||||
| Prepaid expenses and other current assets | 12,131 | 12,176 | ||||||
| Assets of discontinued operations | 86,628 | 19,880 | ||||||
| Total current assets | 397,368 | 317,361 | ||||||
| Property, plant and equipment, net | 159,094 | 152,207 | ||||||
| Goodwill | 62,616 | 54,624 | ||||||
| Deferred tax asset | 408 | 7,096 | ||||||
| Other intangible assets, net | 18,474 | 8,236 | ||||||
| Other assets | 6,097 | 7,440 | ||||||
| Assets of discontinued operations | — | 82,485 | ||||||
| Total assets | $ | 644,057 | $ | 629,449 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Foreign bank lines of credit | $ | 7,297 | $ | 10,938 | ||||
| Current maturities of long-term debt | 11,565 | 4,058 | ||||||
| Accounts payable | 64,783 | 56,087 | ||||||
| Accrued liabilities | 20,367 | 21,439 | ||||||
| Liabilities of discontinued operations | 10,456 | 9,475 | ||||||
| Total current liabilities | 114,468 | 101,997 | ||||||
| Long-term debt, less current portion | 158,616 | 198,037 | ||||||
| Deferred tax liability | 5,923 | — | ||||||
| Other noncurrent liabilities | 4,386 | 4,344 | ||||||
| Liabilities of discontinued operations | — | 1,928 | ||||||
| Total liabilities | 283,393 | 306,306 | ||||||
| Common Stock | 902 | 897 | ||||||
| Paid-in capital | 450,319 | 444,763 | ||||||
| Accumulated other comprehensive income | 13,988 | 7,940 | ||||||
| Retained deficit | (104,545 | ) | (130,457 | ) | ||||
| Total stockholders’ equity | 360,664 | 323,143 | ||||||
| $ | 644,057 | $ | 629,449 | |||||
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Newpark Resources, Inc.
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
| (Unaudited) | Year Ended December 31, | |||||||
| (In thousands) | 2007 | 2006 | ||||||
Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 26,662 | $ | (32,281 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operations: | ||||||||
| Net (income) loss from discontinued operations | (3,231 | ) | 60,341 | |||||
| Net loss on disposal of discontinued operations | 1,613 | — | ||||||
| Depreciation and amortization | 19,285 | 20,612 | ||||||
| Stock-based compensation expense | 3,434 | 2,000 | ||||||
| Provision for deferred income taxes | 7,983 | 6,124 | ||||||
| Provision for doubtful accounts | 1,282 | 1,693 | ||||||
| (Loss) gain on sale of assets | 30 | (863 | ) | |||||
| Change in assets and liabilities: | ||||||||
| Decrease (increase) in receivables | 4,038 | (13,250 | ) | |||||
| Increase in inventories | (12,762 | ) | (21,017 | ) | ||||
| Decrease (increase) in other assets | 2,298 | (6,262 | ) | |||||
| Increase (decrease) in accounts payable | 7,223 | (3,895 | ) | |||||
| (Decrease) increase in accrued liabilities and other | (5,070 | ) | 7,370 | |||||
| Net operating activities of continuing operations | 52,785 | 20,572 | ||||||
| Net operating activities of discontinued operations | 17,681 | 6,231 | ||||||
Net cash provided by operating activities | 70,466 | 26,803 | ||||||
Cash flows from investing activities: | ||||||||
| Capital expenditures | (17,036 | ) | (25,790 | ) | ||||
| Proceeds from sale of property, plant and equipment | 986 | 2,622 | ||||||
| Insurance proceeds from property, plant and equipment claim | — | 3,471 | ||||||
| Business acquisitions | (23,203 | ) | — | |||||
| Net investing activities of continuing operations | (39,253 | ) | (19,697 | ) | ||||
| Net investing activities of discontinued operations | (1,039 | ) | (10,601 | ) | ||||
Net cash used in investing activities | (40,292 | ) | (30,298 | ) | ||||
Cash flows from financing activities: | ||||||||
| Net borrowings on lines of credit | 67,369 | 10,858 | ||||||
| Principal payments on notes payable and long-term debt | (155,026 | ) | (157,796 | ) | ||||
| Long-term borrowings | 50,000 | 150,132 | ||||||
| Proceeds from exercise of stock options and ESPP | 2,243 | 5,622 | ||||||
| Tax benefit from exercise of stock options | — | 644 | ||||||
| Net financing activities of continuing operations | (35,414 | ) | 9,460 | |||||
| Net financing activities of discontinued operations | (235 | ) | (887 | ) | ||||
Net cash (used in) provided by financing activities | (35,650 | ) | 8,573 | |||||
| Effect of exchange rate changes | 758 | 314 | ||||||
| Net (decrease) increase in cash and cash equivalents | (4,717 | ) | 5,392 | |||||
| Cash and cash equivalents at beginning of year | 12,736 | 7,344 | ||||||
| Cash and cash equivalents at end of year | $ | 8,019 | $ | 12,736 | ||||
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