Exhibit 99.1
NEWPARK RESOURCES REPORTS SIX CENTS PER SHARE IN FIRST QUARTER ON 24% REVENUE
GAIN
METAIRIE, La., April 27 /PRNewswire-FirstCall/ -- Newpark Resources, Inc.
(NYSE: NR) today announced earnings of $4.9 million, or $.06 per diluted share,
on revenue of $129.1 million for the quarter ended March 31, 2005. This compares
to $1.4 million of net income, or $.02 per diluted share, on revenue of $104.3
million in the first quarter of 2004.
The earnings improvement was led by the mat rental and sales business unit,
the result of improved rental pricing in the Gulf Coast mat rental market,
increased non-oilfield rental revenue, and increased sales of Newpark's
DuraBase(TM) composite mats.
James D. Cole, Newpark's CEO said: "In addition to improvements in
operations during the quarter, two other events merit comment. First, we reached
agreement to acquire the third-party interest in our DuraBase(TM) mat
manufacturing facility and completed that transaction early in April. We now are
in a position to implement several improvements to that product family. In
addition, we announced the first applications of our new water treatment
technology in the E&P market. We believe this proprietary technology will solve
water quality problems in many markets, including coal bed methane gas
production and the heavy oil operations of Canada, and could mature into a new
stand-alone product line for the Company."
Mat Rentals and Sales
Mat segment revenue for the quarter increased by $11.1 million or 52%
compared to the 2004 quarter. Rental revenue increased by $4.9 million compared
to the 2004 quarter, with $2.9 million of the increase coming from non-oilfield
customers and $2.0 million from Gulf Coast oilfield operations. Mat sales
revenue rose by $6.0 million including 3,886 DuraBase(TM) composite mats and
5,000 wooden mats. Significant DuraBase(TM) sales were completed in the quarter
in support of several E&P operations in Canada and for use in Sakhalin Island,
Russia, while all of the wooden mats sold were for use in the Canadian market.
Gulf Coast oilfield mat rental footage installed in the quarter was 4.4
million square feet and was unchanged from the year-ago period. Average pricing
was $1.12 per square foot during the first quarter, an increase of 32% compared
to $0.85 a year ago. The increase in pricing accounted for $2 million of the
revenue gain and a similar improvement in operating income. Revenue from
non-oilfield rentals, a premium margin segment composed principally of utility
and infrastructure construction markets, increased to $3.4 million in the first
quarter of 2005 compared to $500,000 in the year ago period.
Mr. Cole commented, "For the last several years we have worked to reshape
Gulf Coast operations to meet the current reduced rig activity. The results of
those efforts are beginning to show up in operating results of the mat rental
and sales business. We anticipate further improvement in Gulf Coast operations
in the remainder of the company during the rest of the year. We have taken some
time to right-size the inventory and operations of the mat rental business to
meet the current market, and we have witnessed a consistent uptrend in pricing
since early in 2004 that we believe will continue throughout the remainder of
the year. The recent increase in drilling activity has enabled us to achieve
higher utilization rates and better pricing in the oilfield rental market, which
contributed to the improved quarter results."
Drilling Fluids
Drilling fluids revenue increased $15.5 million to $81.7 million in the
first quarter, compared to $66.2 million a year earlier. Operating earnings in
the drilling fluids segment rose only slightly to $6.8 million or 8.3% of
revenue due to less activity in high-margin deepwater work, which has a
disproportionate impact on revenue and margins, and a 28% increase in barite
costs affecting all markets. The barite cost increase resulted from higher ocean
freight rates and cost approximately $1.2 million in the quarter, but was
partially offset by recent price increases. Recent contractual agreements have
helped to stabilize barite costs, and increases in pricing are anticipated to
recapture these costs in the second half of 2005. The quarter was also adversely
impacted by a $1.8 million earnings decline in Canada related to the early
break-up and the cost of introducing a new drilling fluid system in that market.
"Projected EBIT margins for the year are expected to be impacted by about 1%
as a result of these factors, but we expect to increase revenue sufficiently to
achieve our profit objectives," Cole said. "Four factors point to improved
results in the Drilling Fluids segment during the remainder of the year: first,
we anticipate that deepwater work will pick up by mid- year. Second, we have
been offered contract opportunities to provide our high-performance water based
fluid systems in a number of foreign countries, which should build revenue and
margins. Third, the costs associated with introducing the New-100 fluid systems
in Canada should be past us in the second quarter, as eight systems were built
in the quarter. This fluid has demonstrated up to 30% increased penetration
rates on deep wells, and is rapidly gaining market acceptance. Subsequent reuse
of the same base systems will provide higher margins on incremental projects.
Finally, we believe that the seasonal factors in the Mid-Continent market will
improve revenue and income during the remainder of 2005."
E&P Waste Disposal
Waste processing revenue of $15.4 million declined $1.8 million from the
year ago quarter due to the early seasonal break-up in the Canadian market.
Operating earnings were $1.3 million or 9% compared to $2.8 million and 16% in
the 2004 period. The earnings decline resulted from the combined effect of the
revenue decline in Canada and the start-up costs associated with the new water
treatment operations in Wyoming. In the Gulf Coast market, changes in recycling
processes impacted capacity through part of the quarter. Total volume received
in Gulf Coast operations was 771,000 barrels at an average of $12.88 of revenue
per barrel.
"Because our capacity was restricted due to process changes for part of the
quarter," Cole indicated, "we had to defer certain work during the period, which
impacted revenue and operating income. The market is stronger than our recent
results indicate, and the second quarter is off to a better start consistent
with an improved outlook."
Water Treatment Solutions
During the first quarter, Newpark Water Treatment Solutions took delivery of
the first water treatment plant employing new proprietary Armel Activator
technology. The unit is being installed at Newpark's Boulder, Wyoming, plant and
will facilitate beneficial reuse of water produced with natural gas from the
Jonah-Pinedale field. The unit was also awarded its first contract for
processing produced water from coal bed methane production near Gillette,
Wyoming, and expects the plant to be on line in June. Field tests in the
Canadian oil sands market are also scheduled to begin in June.
Balance Sheet and Liquidity
Newpark ended the quarter with long-term debt of $191 million, including
$44.1 million borrowed under its $85 million bank credit facility. Long-term
debt made up 36.8% of the Company's capital structure at quarter-end. Capital
spending within established segments during the quarter totaled $6.5 million,
compared to $6.2 million in depreciation. The Company also invested $3.9 million
in the first quarter for acquisition of the first two water treatment systems.
Investor Conference Call
Newpark will host a conference call at 11:00 a.m. EDT (10:00 a.m. CDT),
Thursday, April 28th. Investors may access the call by dialing 800-862-9098, the
access code is Newpark. The call will be webcast live and can be accessed from
the Investor Relations page of the Company's web site at http://www.newpark.com.
Newpark Resources, Inc. is a provider of drilling fluids, environmental
waste treatment solutions, and temporary work sites and access roads for
oilfield and other commercial markets.
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 Exchange 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, we refer you 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), to the section entitled
"Forward Looking Statements" on page 17 of that Prospectus and to our periodic
reports filed with the Securities and Exchange Commission, including our Report
on Form 10-K for the year ended December 31, 2004. 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, 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. We
strongly urge you to review these filings 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.
Year-Ago Quarter Comparison
(in thousands, except per share amounts)
1Q05 1Q04
--------- ---------
Segment revenue
Drilling Fluids $ 81,689 $ 66,235
E&P Waste Disposal 15,386 17,180
Mat & Integrated Services 31,978 20,894
$ 129,053 $ 104,309
Segment Gross Profit
Drilling Fluids $ 6,775 $ 6,319
E&P Waste Disposal 1,347 2,808
Mat & Integrated Services 5,834 (431)
13,956 8,696
Corporate G&A 2,075 2,452
Operating income 11,881 6,244
Foreign currency (gain) loss (274) 108
Interest income (69) (121)
Interest expense 4,081 3,572
Pre-tax income 8,143 2,685
Income tax 3,029 1,007
Net income 5,114 1,678
Preferred dividends 225 263
Net income to common $ 4,889 $ 1,415
Common share equivalents, diluted 84,310 83,137
Diluted EPS $ 0.06 $ 0.02
EBITDA
Pre-tax $ 8,143 $ 2,685
Interest 4,081 3,572
Depreciation & amortization 6,230 5,284
Total $ 18,454 $ 11,541
% of revenue 14.3% 11.1%
Waste Data (dollars in millions,
except per barrel amounts)
Gulf Coast E&P waste volume (000's) 771 804
Gulf Coast average revenue per barrel $ 12.88 $ 12.11
Gulf Coast E&P revenue $ 10.3 $ 9.9
Wyoming and Canada E&P revenue 3.3 5.5
NORM 1.0 0.6
Industrial 0.8 1.2
$ 15.4 $ 17.2
Mat Rental Data - Gulf Coast
(dollars in millions, except per
square foot amounts)
Installation $ 4.9 $ 3.7
Re-rental 2.6 1.8
Total U.S. oilfield mat rental $ 7.5 $ 5.5
Non-oilfield mat rental 3.4 0.5
Integrated services and other 10.8 10.6
Canadian operations 3.9 1.4
Composite mat sales 6.4 2.9
$ 32.0 $ 20.9
Average price per square foot $ 1.12 $ 0.85
Square feet installed (MM) 4.4 4.4
Drilling Fluids Data (U.S. Market)
Average rigs serviced 968 843
Annualized revenue per rig (000's) $ 1,279 $ 1,318
Consolidated Balance Sheets
(Unaudited) March 31, December 31, (In thousands) 2005 2004
ASSETS
Current assets:
Cash and cash equivalents $ 8,621 $ 7,022
Trade accounts receivable, less
allowance of $415 in 2005
and $3,260 in 2004 114,691 100,587
Notes and other receivables 6,211 7,321
Inventories 77,101 84,044
Deferred tax asset 10,662 12,501
Other current assets 15,604 13,275
Total current assets 232,890 224,750
Property, plant and equipment, at
cost, net of accumulated depreciation 219,962 210,514
Goodwill and other intangibles 131,998 132,769
Deferred tax asset 3,154 4,063
Other assets 17,461 18,018
$ 605,465 $ 590,114
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Foreign bank lines of credit $ 9,736 $ 8,017
Notes payable and current
maturities of long-term debt 7,711 5,031
Accounts payable 33,389 38,822
Accrued liabilities 33,876 26,875
Total current liabilities 84,712 78,745
Long-term debt 191,012 186,286
Other non-current liabilities 1,723 2,118
Stockholders' equity:
Preferred Stock 20,000 20,000
Common Stock 842 840
Paid-in capital 402,976 402,248
Unearned restricted stock
compensation (413) (472)
Accumulated other comprehensive
income 7,574 8,199
Retained deficit (102,961) (107,850)
Total stockholders' equity 328,018 322,965
$ 605,465 $ 590,114
Ratio of long-term debt to
total capital 36.8% 36.6%
SOURCE Newpark Resources, Inc.
-0- 04/27/2005
/CONTACT: Matthew W. Hardey, Vice President of Finance of Newpark
Resources, Inc., +1-504-838-8222/
/Web site: http://www.sec.gov /
/Web site: http://www.newpark.com /