Exhibit 99.1
Newpark Resources Reports Second Quarter, Six Months Results
METAIRIE, La., July 26 /PRNewswire-FirstCall/ -- Newpark Resources, Inc.
(NYSE: NR) today announced that it earned net income of $1,342,000, equal to
$0.02 per diluted share, on revenue of $104.6 million for the quarter ended
June 30, 2004. This compares to net income of $1,774,000, or $0.02 per
diluted share, on revenue of $92.4 million for the second quarter of 2003.
Compared to the first quarter of 2004, operating results in the period were
reduced by $0.02 per share from the unusually lengthy seasonal road bans in
Western Canada, which restricted operations in that market throughout the
quarter.
For the six months ended June 30, 2004, Newpark earned net income of
$2,757,000, or $.03 per share, on revenue of $208.9 million. This compares to
net income of $2,998,000, equal to $.04 per share, and revenue of
$182.9 million for the six months ended June 30, 2003. In addition to the
reductions affecting the second quarter described above, the company has
expended litigation costs equal to $0.02 per share during the first six months
of 2004 in order to protect certain trade secrets within its drilling fluids
business. The litigation was settled in July.
James D. Cole, Newpark's chairman and CEO commented: "Despite the issues
encountered in the quarter, Newpark made substantial progress in implementing
its long-term strategy in the period. We continued to improve penetration of
the Gulf Coast drilling fluids business, increased non-oilfield mat rental
revenue, improved pricing in the oilfield mat rental business, and made
significant improvement in composite mat sales. Based on these trends, which
are discussed below and are continuing, we expect improved results for the
third quarter."
Drilling Fluids Segment
Revenue from drilling fluids totaled $58.4 million, $7.8 million below the
level of the first quarter, principally on weather-related weakness in Western
Canada. U.S. Gulf Coast revenue increased 7% vs. the first quarter.
Drilling fluids' contribution to operating profit declined by $3.8 million
from the first quarter level as a result of lower revenue in the Western
Canadian market. Cole stated, "While we always anticipate and forecast a
second quarter seasonal decline in that market, this year's decline was
extended and exacerbated by adverse weather conditions. The normal seasonal
recovery is now underway and we anticipate earnings to increase by
approximately $0.01 per share from this market in the third quarter."
"The Gulf Coast drilling fluids unit serviced an average of 38 rigs during
the second quarter. We anticipate a 30% sequential increase in the number of
rigs serviced and a similar revenue gain in the Gulf Coast market during the
third quarter as key projects have now begun. Thus far in July, Newpark's
share of the U.S. market is approximately 19%, the highest in its history.
The combination of a recovery in the Canadian market, continued penetration of
the Gulf Coast market, and continued strength in the balance of the U.S.
market should increase earnings from the drilling fluids business by about
$0.03 in the third quarter," Cole said.
Mat Sales and Mat Rentals
Revenue from the Mat and Integrated Services segment was $31.2 million in
the second quarter, compared to $20.9 million for the first quarter, an
increase of $10.3 million or 49%. Pricing and activity in the Gulf Coast
market improved and mat sales rebounded in the second quarter. Operating
results improved by $3.9 million on the revenue gain.
Mat segment revenue increased $5.6 million, or 22%, compared to the year
ago quarter, with increased sales of composite mats accounting for most of the
increase. During the quarter, 5,500 composite mats were sold at an average
unit price of $1,200. This compares to 2,200 in the first quarter at an
average of $1,300 per mat.
Mat rental volume for the quarter was 4.7 million square feet, up 10% from
the first quarter level. Pricing averaged $1.04 per square foot in the second
quarter, up 22% from $0.85 reported in the first quarter of the year. "We
anticipate that an additional improvement in average pricing will result from
a further increase in the non-oilfield volume during the remainder of the
year, based on customer indications of planned projects. The non-oilfield
rental market is premium-priced and carries high incremental margins that
should contribute to further improvement in results from the mat segment in
the third quarter," Cole concluded.
E&P Waste Services
E&P Waste Services results are closely tied to the Gulf Coast offshore and
inland waters rig count that has languished for the past year. Rig activity
in that portion of the market has declined 6% over the past year and is not
expected to improve in the immediate future. Near term growth is expected to
continue to come from the Jonah-Pinedale market in Wyoming and from Western
Canada.
Second quarter revenue from E&P waste services was $15.1 million,
declining $2.1 million or 12% from the first quarter and reflecting the
seasonally lower revenue from Western Canadian operations and the effect of
first quarter event business in the industrial market that did not recur in
the second quarter. Gulf Coast E&P waste volume increased about 6% to 848,800
barrels, while average revenue per barrel at $11.64 declined slightly on
changes in mix.
Gulf Coast E&P revenue declined $1.7 million compared to the year ago
quarter reflecting the continued slow Gulf Coast market conditions.
Components of the change included an 8% decline in volume and 7% lower average
revenue per barrel due to changes in mix and competitive factors. Segment
operating income was $1.6 million, or 10.4% of revenue, compared to
$2.8 million and 16.3% in 2003. The decline was due principally to the lower
contribution from Canadian operations in the quarter and slower pace of
industrial disposal activity in the period.
Legal Proceedings
As reported in a Form 8-K filed on May 14, 2004, Newpark was recently
awarded a judgment in the full amount of its complaint against The Loma
Company, LLC, the manufacturer of the composite mats rented and sold by the
company. The litigation involved a pricing dispute related to the composite
mats manufactured by Loma and sold and rented by Newpark. As a result of the
judgment, Newpark expects future cost of the mats to be reduced, improving the
economic returns in the matting business.
Newpark also earlier disclosed that it had filed suit against a smaller
competitor in the drilling fluids business and certain of its affiliates
alleging, among other things, misappropriation of trade secrets and unfair
competition, and seeking injunctive relief and damages. A settlement of this
litigation was reached through mediation on July 15, 2004. While the final
settlement documents have not been executed at this writing, Newpark expects
to recover its cumulative legal and other costs over the term of the
settlement and will avoid related legal costs in future periods. Newpark's
cost to date has been $2.3 million with $1.2 million reported in General and
Administrative expense for the second quarter.
Balance Sheet Data
Since December 31, 2003, Newpark has reduced borrowings by $17.1 million,
lowering the role of debt in its long-term capital structure from 37% to 34.5%
at June 30, 2004. In the recent quarter, proceeds from the collection of an
$8.2 million note received in connection with the 1996 sale of a former
shipyard operation were received and applied to reduce borrowings under
Newpark's credit facility. Interest income of $0.8 million was recorded upon
collection of the note. At June 30th, borrowings under the facility totaled
$36.5 million, with $13.5 million in letters of credit issued and $35 million
of the $85 million facility unused. "We plan to continue reducing debt from
free cash flow, working toward a 30% debt to total capital target," Cole
concluded.
Newpark's net working capital increased by $5.4 million, with increases
concentrated in cash, prepaid items and the current deferred tax asset.
Accounts receivable declined by $2.4 million as the collection cycle improved
by 5 days while inventories declined by $1.9 million, principally the result
of composite mat sales in the period.
Capital expenditures in the second quarter were $5.5 million and
$7.3 million year to date, while dispositions to date have totaled
$5.9 million, the largest portion of which resulted from the sale of excess
composite mats from the Gulf Coast rental fleet. Depreciation and
amortization in the quarter totaled $4.5 million.
Newpark Resources, Inc. provides integrated fluids management,
environmental and oilfield services to the exploration and production
industry.
Investor Conference Call
Newpark will host a conference call at 10:30 AM EDT, Tuesday, July 27.
That call will be webcast and can be accessed from the Investor Relations page
of the Company's web site at www.newpark.com .
FINANCIAL DATA FOLLOWS
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.
Consolidated Statements of Operations
For the Three and Six Month Periods Ended June 30
(Unaudited) Three Months Ended Six Months Ended
June 30, June 30,
(In thousands, except
per share data)
2004 2003 2004 2003
Revenue:
Drilling fluids $ 58,358 $ 50,978 $ 124,593 $ 101,500
E&P waste disposal 15,076 15,822 32,256 32,394
Mat & integrated services 31,199 25,582 52,093 49,065
104,633 92,382 208,942 182,959
Operating income:
Drilling fluids 2,481 2,970 8,800 5,875
E&P waste disposal 1,561 3,174 4,369 5,782
Mat & integrated services 3,495 1,702 3,064 3,356
7,537 7,846 16,233 15,013
General and administrative
expenses 2,419 980 4,871 2,266
Operating income 5,118 6,866 11,362 12,747
Foreign currency (gain) loss 34 (496) 142 (773)
Interest income (1,016) (107) (1,137) (432)
Interest expense 3,552 3,901 7,124 7,693
Income before income taxes 2,548 3,568 5,233 6,259
Provision for income taxes 981 1,357 1,988 2,353
Net income 1,567 2,211 3,245 3,906
Less:
Preferred stock dividends 225 437 488 908
Net income applicable to common
and common equivalent shares $ 1,342 $ 1,774 $ 2,757 $ 2,998
Basic and diluted income
per common and common
equivalent shares $ 0.02 $ 0.02 $ 0.03 $ 0.04
Depreciation and Amortization 4,548 5,462 9,832 10,752
Drilling Fluids Data
Average Rigs Serviced
(North America) 157 124 161 139
Annualized Revenue
per Rig (000's) 1,174 1,225 1,214 1,158
E&P Waste Disposal Data
Gulf Coast E&P Waste Volume
(barrels in 000's) 849 923 1,624 1,786
Average Revenue per Barrel $11.64 $12.48 $11.87 $12.07
Gulf Coast E&P Revenue
(millions) $10.0 $11.7 $19.9 $23.3
Non-Gulf Coast E&P Revenue
(millions) $4.0 $2.8 $9.5 $6.7
Mat Rental Data (Gulf Coast)
Installation Revenue (millions) $4.2 $4.1 $7.8 $9.7
Re-rental Revenue (millions) $1.1 $2.3 $2.9 $4.3
Average Price (per square foot) $1.04 $0.97 $0.94 $1.08
Volume (million square
feet installed) 4.7 4.3 9.1 9.1
Newpark Resources, Inc.
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
(In thousands, except share data) 2004 2003
ASSETS
Current assets:
Cash and cash equivalents $ 7,966 $ 4,692
Restricted cash --- 8,029
Trade accounts receivable, less allowance
of $2,983 in 2004 and $2,920 in 2003 97,569 99,948
Notes and other receivables 6,253 5,428
Inventories 72,898 74,846
Deferred tax asset 11,377 8,698
Prepaid expenses and other current assets 12,275 8,510
Total current assets 208,338 210,151
Property, plant and equipment, at cost, net of
accumulated depreciation 197,744 206,238
Goodwill 114,553 115,869
Deferred tax asset 4,939 8,778
Other intangible assets, net
of accumulated amortization 14,308 14,947
Other assets 21,390 19,517
$ 561,272 $ 575,500
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Foreign bank lines of credit $ 12,482 $ 10,610
Current maturities of long-term debt 3,266 3,259
Accounts payable 32,255 40,479
Accrued liabilities 28,989 21,894
Total current liabilities 76,992 76,242
Long-term debt, less current portion 166,466 183,600
Other non-current liabilities 2,824 1,697
Stockholders' equity:
Preferred Stock 20,000 30,000
Common Stock 838 811
Paid-in capital 401,360 390,788
Unearned restricted stock compensation (637) (803)
Accumulated other comprehensive income 2,539 5,033
Retained deficit (109,110) (111,868)
Total stockholders' equity 314,990 313,961
$ 561,272 $ 575,500
SOURCE Newpark Resources, Inc.
-0- 07/26/2004
/CONTACT: Matthew W. Hardey, Vice President of Finance of Newpark
Resources, Inc., +1-504-838-8222/
/Web site: http://www.newpark.com /
(NR)
CO: Newpark Resources, Inc.
ST: Louisiana
IN: OIL
SU: ERN CCA MAV