Exhibit 99.1
Newpark Resources Reports Weather Impacted Third Quarter and Nine Months
Earnings
METAIRIE, La., Oct. 25 /PRNewswire-FirstCall/ -- Newpark Resources, Inc.
(NYSE: NR) today announced that it earned net income of $735,000, equal to
$0.01 per diluted share, on revenue of $110.8 million for the quarter ended
September 30, 2004. This compares to net income of $446,000, or $0.01 per
diluted share, on revenue of $95.6 million for the third quarter of 2003.
For the nine months ended September 30, 2004, Newpark earned net income of
$3,492,000, or $.04 per share, on revenue of $319.7 million. This compares to
net income of $3,444,000, equal to $.04 per share, and revenue of
$278.6 million for the nine months ended September 30, 2003.
James D. Cole, Newpark's Chairman and CEO, stated: "Newpark's third-
quarter earnings were negatively impacted by approximately $0.05 per share as
a result of unusual weather conditions affecting two key market areas during
the period. In the Gulf of Mexico market, Hurricanes Frances and Ivan and
other tropical systems interrupted operations throughout the market and
delayed new project starts during the period. This directly impacted our
environmental business, which experienced a sequential decline in drilling-
related revenue due to weather-related disruption of operations with a net
income effect of $0.01 per share. The impact in the matting segment was
approximately $0.02 per share, including both oilfield drilling projects and
non-oilfield mat rental operations. Newpark's non-oilfield rentals are a
relatively new line of business, focused primarily on providing site access
for electrical transmission line upgrades and maintenance. Much of that
industry's capacity was diverted to Florida and adjacent storm-affected areas
of the southeast for emergency repair operations throughout the recent
quarter."
"Drilling Fluids operations in the Gulf of Mexico market were burdened
with a significant number of non-revenue days as storms shut in operations for
a portion of the period. In addition, the unusually wet weather that
persisted in western Canada throughout the quarter delayed rig moves and the
start of new projects. While total revenue and earnings in the segment were
up sharply on a sequential basis, identified project delays affected the
period by the net income equivalent of $0.02 per share. Gulf of Mexico
operations have subsequently rebounded to a level consistent with the
improvement forecast by the Company for the third quarter and should be
demonstrated in Newpark's fourth quarter results," he concluded.
Drilling Fluids Sales & Engineering
Third quarter segment revenue increased 25% to $71.4 million compared to
$57.1 million in the year ago period. Operating income doubled to
$5.0 million or 7% of revenue versus $2.8 million and 4.9% of revenue in the
third quarter of 2003. For the nine months to date, Drilling Fluids revenue
of $196.0 million grew 24% compared to the year-ago period. Profitability for
the nine months improved to $13.8 million, or 7% of revenue, versus
$8.7 million or 5.5% in the prior year. Third quarter margins were negatively
impacted by a sharp increase in barite costs. Pricing adjustments are now
under way which will improve margins over the next several quarters. In
addition to barite, pricing for other products and services are also being
increased across the company.
"The revenue growth tracks the increased acceptance of Newpark's high-
performance water-based fluids in the U.S. market," Cole said, "which is
reflected in the increase in market share that we have achieved. Newpark's
rig share in the key US markets served by the company improved to 19% in the
quarter from 13% a year ago. We have achieved a strong market position, and
will now focus on improving pricing and margins, including selected
infrastructure cost improvements made possible due to the recent higher
activity level."
Mat Sales and Rentals
The mat segment revenue in the third quarter was $24.0 million, an
increase of 21% from the 2003 quarter, producing an operating profit of
$1.2 million. This compares to a loss of $0.6 million in the year-ago quarter
on revenues of $19.9 million. Compared to the year-ago quarter, current
period results benefited from increased sales of composite mats and increased
mat rentals to customers outside of the company's traditional oilfield market,
a focus of expected future revenue growth. These two product lines accounted
for the earnings improvement. Non-oilfield rentals are concentrated in the
electric power transmission market. While generating $1.8 million of revenue
in the quarter, this industry was negatively impacted by recent weather events
as operations moved to emergency repair work in Florida and other storm-
damaged areas. As a result, activity in this sub-market is not expected to
fully recover until early 2005. Gulf Coast oilfield rental revenue was
similar on better pricing but lower volume in the quarter due to project
delays. Further pricing improvement is anticipated in the oilfield market
during 2005.
For the nine months just ended, mat revenues totaled $76.1 million, rising
10% from the year ago period. The year-to-year revenue gain arose from
increased composite mat sales, which rose by $10.4 million, and non-oilfield
rentals, which accounted for $3.1 million of the increase. These were
partially offset by lower volume of extended rentals reflecting the changing
mix of drilling in the Gulf Coast land market. Year to date, segment
operating income was $4.2 million compared to $2.8 in 2003.
Cole commented, "The outlook for improvement in the segment is focused on
efforts currently underway to further improve oilfield rental pricing and to
complete implementation of a plan already in process to reduce fixed costs by
a net of $700,000 per month by mid-year 2005. In addition, we will continue
to focus on expanding non-oilfield rentals and DuraBase(TM) and Bravo(TM)
composite mat sales worldwide."
E&P Waste Disposal
Tropical weather in the quarter constrained revenue and earnings within
the E&P Waste segment. Revenue totaled $15.4 million, down 17% from the
$18.6 million reported in the corresponding quarter of 2003. Waste volumes in
the quarter were 32% below the prior year level due to both lower average
drilling activity in the offshore Gulf of Mexico and the effects of tropical
weather in the recent quarter. Pricing was stable across the period, with a
small decline in average revenue per barrel due to changes in the mix of waste
received. "E&P volume from drilling projects in the third quarter was 640,000
barrels, a 25% sequential decline from the second quarter in a product line
that carries very high incremental margins," Cole said, adding, "Waste volume
has recovered thus far in the fourth quarter."
For the year to date, segment revenue has totaled $47.6 million, a decline
of $3.4 million or 7% compared to the prior year. Oilfield waste volume for
the nine months was 2.3 million barrels, a decline of 467,000 compared to the
same period of 2003, with most of that difference arising in the third
quarter. Average revenue per barrel has trended downward due to the decline
in premium-priced offshore work and has averaged $11.90 to date compared to
$12.63 in the 2003 period.
"We believe that the outlook for the historic revenue stream within the
E&P Waste segment is stable, tied largely to Gulf Coast rig activity. We do
not see this activity as growing in the near term. Our current task is to
further reduce our cost structure to improve profitability in the Gulf Coast
market," Cole said, continuing, "Revenue growth will come from new water
treatment markets that we are entering with new and proprietary treatment
technology for beneficial reuse of wastewater. The first such unit is
scheduled for late October delivery at our disposal facility in Wyoming's
Jonah-Pinedale field. Each water treatment unit must be specifically
engineered to the customer's project, and can range in capacity from several
thousand to several hundred thousand barrels per day. We are currently
working with several customers to define their project requirements for this
new technology and expect to be active in this new market during 2005."
Liquidity and Balance Sheet
During the quarter, Newpark closed a $15 million project financing of its
recently completed barite mill, and $6.7 million in support of the new mat
rental operation in Mexico. Proceeds from these transactions were applied to
reduce advances under Newpark's bank credit facility. Borrowings under that
facility were $31.3 million at September 30, with $28.4 million available for
cash advances and $10.8 million of letters of credit outstanding.
Additions to property, plant and equipment included the transfer of
$6.8 million of mats from inventory to equip our Mexican rental operation.
Capital expenditures in the quarter were $6.5 million, concentrated in
infrastructure expansion in the drilling fluids business and acquisition of
new water treatment equipment supporting a new business initiative, bringing
the year-to-date total to $13.8 million, consistent with the Company's
anticipated annual spending plan.
Corporate costs rose by $1.1 million compared to the same quarter of 2003,
with the increase composed primarily of $400,000 of litigation costs in a case
initiated by Newpark to protect certain confidential business data that was
settled in August, increased insurance costs similar in amount, and start-up
costs of $250,000 associated with the new Mexican mat rental operation. Year-
to-date, corporate costs are $3.7 million higher than 2003, due principally to
the $2.3 million cost of the previously mentioned litigation and the start-up
costs of the Mexican operations.
Newpark Resources, Inc. provides integrated fluids management,
environmental and oilfield services to the exploration and production
industry.
TWO PAGES OF FINANCIAL DATA FOLLOW
Investor Conference Call
Newpark will host a conference call at 10:30 AM EDT on Tuesday,
October 26th to discuss these results and the outlook for the company.
Investors may access the conference call by dialing (800) 862-9098. The call
will be webcast and can be accessed from Newpark's Investor Relations page at
http://www.newpark.com .
For further information contact:
Matthew W. Hardey
Vice President of Finance
Newpark Resources, Inc.
3850 N. Causeway, Suite 1770
Metairie, Louisiana 70002
(504) 838-8222
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 http://www.sec.gov , as well as through our Website,
http://www.newpark.com .
Newpark Resources, Inc.
Consolidated Statements of Operations
For the Three and Nine Month Periods Ended September 30
(Unaudited) Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands,
except per share data) 2004 2003 2004 2003
Revenue:
Drilling fluids $71,448 $57,089 $196,041 $158,589
E&P waste disposal 15,363 18,634 47,619 51,028
Mat & integrated services 23,979 19,870 76,072 68,935
110,790 95,593 319,732 278,552
Operating income:
Drilling fluids 4,978 2,791 13,778 8,666
E&P waste disposal 1,243 3,908 5,612 9,690
Mat & integrated services 1,168 (560) 4,232 2,796
7,389 6,139 23,622 21,152
General and administrative
expenses 2,122 979 6,993 3,245
Operating income 5,267 5,160 16,629 17,907
Foreign currency (gain) loss 76 16 218 (757)
Interest income (118) (138) (1,255) (570)
Interest expense 3,760 3,719 10,884 11,412
Income before income taxes 1,549 1,563 6,782 7,822
Provision for income taxes 589 779 2,577 3,132
Net income 960 784 4,205 4,690
Less:
Preferred stock dividends 225 338 713 1,246
Net income applicable to
common and common
equivalent shares $735 $446 $3,492 $3,444
Basic and diluted income
per common and common
equivalent shares $0.01 $0.01 $0.04 $0.04
Depreciation and
Amortization $5,148 $5,298 $15,340 $16,050
Drilling Fluids Data
Average Rigs Serviced
(North America) 190 133 170 136
Annualized Revenue per
Rig (000's) $1,258 $1,2801 $1,240 $1,198
E&P Waste Disposal Data
Gulf Coast E&P Waste Volume
(barrels in 000's) 701 945 2,354 2,740
Average Revenue per Barrel $11.97 $12.41 $11.90 $12.63
Gulf Coast E&P Revenue
(millions) $9.3 $11.9 $29.2 $35.1
Mat Rental Data (Gulf Coast)
Installation Revenue
(millions) $3.5 $2.9 $12.3 $12.5
Re-rental Revenue
(millions) $1.5 $2.3 $4.4 $6.6
Average Price (per square
foot) $1.04 $0.72 $0.97 $0.85
Volume (million square feet
installed) 3.4 3.9 12.7 12.6
Newpark Resources, Inc.
Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
(In thousands, except share data) 2004 2003
ASSETS
Current assets:
Cash and cash equivalents $4,331 $4,692
Restricted cash --- 8,029
Trade accounts receivable, net 107,923 99,948
Notes and other receivables 5,250 5,428
Inventories 71,529 74,846
Deferred tax asset 11,400 8,698
Prepaid expenses and other current assets 11,744 8,510
Total current assets 212,177 210,151
Property, plant and equipment, at cost,
net of accumulated depreciation 205,682 206,238
Goodwill 115,454 115,869
Deferred tax asset 4,160 8,778
Other intangible assets, net of accumulated
amortization 15,766 14,947
Other assets 21,261 19,517
$574,500 $575,500
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Foreign bank lines of credit $6,637 $10,610
Current maturities of long-term debt 3,896 3,259
Accounts payable 36,016 40,479
Accrued liabilities 26,858 21,894
Total current liabilities 73,407 76,242
Long-term debt, less current portion 180,496 183,600
Other non-current liabilities 2,706 1,697
Stockholders' equity:
Preferred Stock 20,000 30,000
Common Stock 839 811
Paid-in capital 401,737 390,788
Unearned restricted stock compensation (555) (803)
Accumulated other comprehensive income 4,245 5,033
Retained deficit (108,375) (111,868)
Total stockholders' equity 317,891 313,961
$574,500 $575,500
SOURCE Newpark Resources, Inc.
-0- 10/25/2004
/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