Exhibit 99.1
Newpark Resources Reports First Quarter Earnings;
Sees Market Improvement Ahead
METAIRIE, La., May 5 /PRNewswire-FirstCall/ -- Newpark Resources, Inc.
(NYSE: NR) today announced that it earned net income of $1,224,000, or $0.02
per diluted share, on revenue of $90.6 million for the quarter ended
March 31, 2003. This compares to net income of $521,000, or $0.01 per diluted
share, on revenue of $75.1 million in the first quarter of 2002.
James D. Cole, Newpark's Chairman and CEO commented, "We believe that this
first quarter marks the beginning of the turnaround for our Gulf Coast
businesses. The Gulf Coast market in the first quarter accounted for 62% of
the Company's revenue where, historically, it would have constituted 70% of
the total, indicative of the low level of activity in that market during the
first quarter. We first saw improvement in the mat rental business beginning
late in the fourth quarter of 2002 and that trend has continued. Many of our
customers in the offshore Gulf of Mexico market have indicated that they will
soon be starting back to work and we believe that further improvement will be
seen across the remaining quarters of 2003."
He continued, "We believe that a review of the sequential changes in our
operations since the fourth quarter of 2002 is more relevant than year-over-
year comparisons as the business model of each of the operating units has
changed substantially, and we have focused our comments on the current market
and its effects on our operating results."
Drilling Fluids
Revenue from drilling fluids increased by $1.2 million or 2% to
$53.9 million from $52.7 million in the fourth quarter of 2002. First quarter
operating contribution of $2.8 million was equal to 5.2% of revenue for the
period, compared to $1.5 million or 2.9% margin in the preceding quarter. The
sequential quarter improvement was the result of seasonal improvement in both
revenue and operating income in the Western Canadian market and increased
drilling activity in the Mid-Continent and West Texas regions of the U.S.
"Newpark has focused on building a high-performance drilling fluids company
that will be recognized as a performance and technology leader in the
industry. As a consequence, we are highly leveraged to operations in the
offshore Gulf of Mexico. Newpark has been awarded a substantial number of new
projects for six key customers in this market during fiscal 2003 that in the
aggregate should contribute half of this year's expected 30% revenue growth in
the business unit. This premium work was slow to start in the first quarter,
averaging 2.5 rigs working in that period. This was consistent with our
expectations for the quarter and we have seen work for this group of customers
accelerate during April. We expect that activity for this customer group will
double in the second quarter as their projects begin," Mr. Cole said.
Mat Rentals and Sales
Mat rental and integrated services revenue increased to $23.5 million from
$22.8 million in the preceding quarter while segment operating contribution
and margin at $1.7 million and 7%, respectively, declined from $2.2 million
and 9.7% on a change in mix of revenues. As previously reported by the
Company, mat rental pricing in the Gulf Coast market began to improve late in
the fourth quarter of 2002. Average rental pricing in the first quarter was
$1.17 per square foot compared to $0.70 in the final quarter of 2002.
Oilfield market pricing averaged $1.03, with higher rental rates in other
markets adding $0.14 per square foot to the total. This accounted for a
$2.7 million improvement in rental revenue in the period. Declines in
composite mat sales and integrated services revenue offset most of the rental
revenue gains. "Early indications are that pricing should remain stable due
to the recent firming in customer activity and the benefit of this should
begin to be seen in higher re-rentals (the extended rental accruing after the
initial installation term) by the third quarter," Mr. Cole stated. Results
for the first quarter included the sale of 1,500 Dura-Base(R) composite mats
for use in Indonesia, marking the first shipment to Southeast Asia. A total
of 1,600 units were sold in the recent quarter, compared to 2,600 in the
fourth quarter of 2002.
E&P Waste Disposal
Waste Disposal revenue for the quarter totaled $13.2 million compared to
$13.8 million in the fourth quarter of 2002. Operations contributed
$2.6 million to income, equal to a 19.8% margin, compared to an operating
contribution of $2.9 million or 21% of revenue in the final quarter of 2002.
Total E&P waste volume declined by 31,000 barrels to 871,000 in the first
quarter on a 10% decline in Gulf Coast rig activity during the quarter.
Receipts from the offshore market in the quarter continued at the
17,000 barrel per rig per year annualized rate experienced since the mid-2002
change in regulations affecting that market. Pricing remained stable at
$13.00 per barrel. "First quarter receipts continued at substantially the
same pace as the second half of last year on a decrease in drilling activity.
We anticipate improving activity during the remainder of the year, and
continue to believe that volume for the year will meet or exceed the 4 million
barrel level implicit in our plans for this business unit," Mr. Cole stated.
Cash Flow, Liquidity and Balance Sheet
Newpark generated cash flow in the quarter of approximately $8 million
including $5.3 million in depreciation and amortization charges. This,
combined with $9 million of increased borrowings, was used principally to fund
$6.5 million in capital expenditures and $6.6 million in net working capital
additions, after a $4.7 million increase in cash at the end of the quarter.
Capital expenditures were concentrated in the ongoing construction of a new,
larger capacity barite mill in the Houston area supporting the Company's
drilling fluids operations and expansion of the Cameron, Louisiana operating
facility for the drilling fluids and waste disposal businesses. The amount of
capital expenditures in subsequent quarters is expected to decline consistent
with the company's $18.0 million plan for the year. Working capital additions
were concentrated in inventory, and included the $11.2 million purchase, at a
discount to the market, of the consigned barite inventory of a supplier
exiting the business. This investment will be recaptured from operations
during the next six to eight months. Other inventory additions in the period
included $2.1 million of composite mats for resale, substantially completing
the year's planned purchases in the quarter. "We expect that improving sales
of Dura-Base(R) composite mats in 2003 will be a significant source of free
cash flow that will be allocated to debt reduction in the period," commented
Mr. Cole.
Newpark ended the quarter with $46.5 million drawn against its
$100 million credit facility and $37.7 million available after consideration
of $15.8 million of letters of credit outstanding. Long-term debt comprised
36.8% of long term capital at the end of the period.
Newpark Resources, Inc. provides integrated fluids management,
environmental and oilfield services to the exploration and production
industry.
TWO PAGES OF FINANCIAL DATA TABLES FOLLOW
The Company will host a conference call to discuss these results at
10:00 AM EDT on Tuesday, May 6. The conference call can be accessed by
visiting Newpark's website at www.newpark.com .
The foregoing discussion contains 'forward-looking statements' within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended. There are risks and
uncertainties that could cause future events and results to differ materially
from those anticipated by management in the forward-looking statements
included in this press release. For further information regarding these and
other factors, risks and uncertainties affecting Newpark, reference is made to
the risk factors set forth in the Prospectus included in Newpark's
Registration Statement on Form S-3 filed on May 8, 2002 (File No. 333-87840),
and to the section entitled "Forward Looking Statements" on page 17 of that
Prospectus. In particular, as described on page 9 of that Prospectus, any
material decline in the level of oil and gas exploration and production
activity could result in fewer opportunities being available for the service
industry in general and Newpark in particular, and may adversely affect the
demand for our services. In addition, as described on page 13 of that
Prospectus, and rescission or relaxation of governmental regulations,
including in the discharge regulations recently implemented, could reduce the
demand for Newpark's services and reduce Newpark's revenues and income. You
are strongly urged to review these sections for a more detailed discussion of
these risks and uncertainties. Newpark's SEC filings can be obtained at no
charge at www.sec.gov , as well as through our Website, www.newpark.com .
Newpark Resources, Inc.
Year-Ago Quarter Comparison
(in thousands, except per share amounts)
1Q03 1Q02
Revenue
Drilling Fluids $53,929 $42,079
E&P Waste Disposal 13,165 11,064
Mat & Integrated Services 23,483 21,967
$90,577 $75,110
Operating Income
Drilling Fluids $2,813 $4,004
E&P Waste Disposal 2,609 554
Mat & Integrated Services 1,654 2,252
7,076 6,810
Corporate G&A 1,195 1,517
Foreign Currency (gain) loss (277) 4
Interest Income (325) (171)
Interest Expense 3,792 3,122
Pre-Tax 2,691 2,338
Income tax 996 842
Net income 1,695 1,496
Preferred Dividends 471 975
Net income to common $1,224 $521
Common share equivalents, diluted 77,803 70,941
Diluted EPS $0.02 $0.01
EBITDA
Pre-tax $2,691 $2,338
Interest 3,792 3,122
Depreciation & Amortization 5,290 6,076
Total $11,773 $11,536
% of Revenue 13.0% 15.4%
Waste Data (in thousands, except
per barrel amounts)
E&P Waste Volume 871 730
Average Revenue per Barrel $13.03 $12.94
E&P Revenue $12,047 $10,105
NORM 594 573
Industrial 524 386
$13,165 $11,064
Mat Rental Data - Gulf Coast (in millions,
except per square foot amounts)
Installation $5.6 $2.0
Re-rental 2.0 1.8
Total $7.6 $3.8
Average price per square foot $1.17 $0.61
Square feet installed 4.8 3.2
Drilling Fluids Data
Average Rigs Serviced (North America) 154 122
Annualized Rev. per Rig (000's) $1,233 $1,382
Consolidated Balance Sheets
(Unaudited) March 31, December 31,
(In thousands) 2003 2002
ASSETS
Current assets:
Cash and cash equivalents $7,486 $2,725
Trade accounts receivable, less allowance
of $2,128 in 2003 and $2,102 in 2002 99,134 97,657
Notes and other receivables 3,943 3,307
Inventories 69,040 55,473
Deferred tax asset 14,284 11,094
Other current assets 10,771 10,039
Total current assets 204,658 180,295
Property, plant and equipment, at cost,
net of accumulated depreciation 207,705 204,703
Goodwill and other intangibles 111,727 110,727
Deferred tax asset 6,056 8,950
Other assets 38,822 37,581
$568,968 $542,256
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Foreign bank lines of credit $7,442 $6,621
Notes payable and current maturities
of long-term debt 2,998 3,258
Accounts payable 42,891 35,568
Accrued liabilities 24,592 18,414
Total current liabilities 77,923 63,861
Long-term debt 180,259 172,049
Other non-current liabilities 1,588 923
Commitments and contingencies --- ---
Stockholders' equity:
Preferred Stock, $.01 par value,
1,000,000 shares authorized,
167,500 shares outstanding 41,875 41,875
Common Stock, $.01 par value,
100,000,000 shares authorized,
77,813,458 shares outstanding
in 2003 and 77,710,192 in 2002 778 777
Paid-in capital 376,731 376,278
Unearned restricted stock compensation (236) (281)
Accumulated other comprehensive income 1,188 (864)
Retained deficit (111,138) (112,362)
Total stockholders' equity 309,198 305,423
$568,968 $542,256
Ratio of long-term debt
to total capital 36.8% 36.0%