EX-99.1 3 e15316ex99_1.txt PRESS RELEASE Exhibit 99.1 Newpark Resources Reports Second Quarter Earnings METAIRIE, La., July 28 /PRNewswire-FirstCall/ -- Newpark Resources, Inc. (NYSE: NR) today reported that it earned net income of $1,774,000, or $.02 per share, on revenue of $92.4 million in the second quarter ended June 30, 2003. This compares to a net loss of $786,000, equal to $.01 per share, on $77.6 million in revenue in the second quarter of the prior year. For the six months to date, Newpark reported net income of $2,998,000, or $0.04 per share, on revenue of $183.0 million, compared to a net loss of $265,000 on revenue of $152.7 million in the same period of 2002. "While the U.S. rig count has increased by 30% since the beginning of the year, Newpark's key Gulf Coast market has not participated in this trend and remains below the level at which we ended fiscal 2002. In spite of the flat market, Newpark's operations showed a small improvement from the first quarter levels," said James D. Cole, Newpark's Chairman and CEO. "We believe that the flat Gulf Coast rig count is a function of the changing risk profile of operations in that market, driven by the challenge of increasing geologic well depth, drilling prospect identification and the resultant higher cost of drilling. From review of our customers' plans going forward, we believe that they are adapting to this change and expect increased activity beginning in the second half of 2003," he added. Mat Sales, Rentals and Integrated Services Mat and Integrated Services produced operating income of $1.7 million on revenue of $25.6 million in the recent quarter. This compared to operating income of $421,000 on revenue of $17.6 million in the year-ago period. The revenue increase came principally from Canadian operations and a 52% improvement in pricing in the Gulf Coast mat rental business. Gulf Coast mat rental pricing averaged $0.97 per square foot in the quarter compared to $0.64 per square foot a year ago and reflects reduced mat inventory levels within the industry rather than a change related to market activity. On the strength of that pricing improvement, mat rental revenue in the Gulf Coast increased to $6.4 million in the 2003 quarter from $4.1 million a year ago. Composite mat sales revenues totaled $3.4 million compared to $2.0 million in the year-ago quarter, with 1,900 units shipped in the recent period and 1,100 in the year-ago period. "To date in 2003, composite mat sales have contributed $7.1 million to revenue including sales of 3,500 Dura-Base(R) mats and 4,200 Bravo(TM) Mats. We believe that visibility of future orders is improving and that second half results will be much improved," Cole said. E&P Waste Environmental services revenues in the recent quarter totaled $13.5 million, contributing operating income of $3.3 million, equal to 24.1% of revenues. This compares to revenues of $12.2 million in the year-ago quarter, generating $1.0 of operating income. Year-to-date revenues increased $3.4 million, or 15%, due primarily to higher waste volumes received from the offshore and inland waters drilling markets. The volume of waste per offshore rig has continued to climb as the result of the change in regulations that became effective late last year, reaching an annualized 17,000 barrels per rig compared to 14,000 in the first half of 2002. The remainder of the increase came from an increase in market share. For the first six months, segment operating contribution improved to $5.9 million, or 22.0%, of revenues from $1.6 million or 6.7% a year earlier. "We believe that with the prospect of some improvement in rig activity in the second half of the year, operating margins in the unit can return to the historic 25% to 30% range," Cole commented. Drilling Fluids Fluid sales and engineering revenue of $53.3 million in the second quarter of 2003 generated $2.8 million of operating profit. In the corresponding quarter of 2002, the segment contributed $3.5 million to operating earnings on revenues of $47.8 million. "In the recent quarter, we experienced a reduction in Gulf Coast market revenue which was the primary reason for reduced operating income in the period. Gulf Coast market results were flat sequentially with the first quarter and below the level achieved in 2002. Canadian operations were down from the first quarter level, as expected, due to the spring break-up, but well ahead of 2002 levels on stronger drilling activity. We expect the Canadian market to continue to improve throughout the remainder of 2003. Operations in the U.S. Mid-Continent region improved with rig activity, increasing both revenue and operating contribution in the sequential quarter and year-over-year comparisons. Our European fluids business, acquired just over a year ago, has made good progress, improving both revenue and operating income during the sequential quarter. The net improvement in non-Gulf Coast markets, however, was not sufficient to offset the weak conditions in that key market," Cole added. For the year to date, the segment revenue increased $17.4 million to $107.2 million and produced $5.6 million in operating profit. The May 2002 acquisition of Ava Drilling Fluids contributed $12.9 million of the increase, with the remainder from Canada and the Mid-Continent region. Excluding the effect of the acquisition, revenue grew 4% year over year. Balance Sheet, Liquidity and Capital Capital expenditures in the recent quarter totaled $6.2 million with capital spending for the remainder of the year expected to total $7 million, keeping the total within this year's forecast depreciation total of $22 million. Depreciation and amortization charges totaled $5.5 million for the quarter. Inventory levels increased $3.2 million in the quarter, concentrated in seasonal inventory build at Newpark's sawmill operation. Newpark ended the quarter with $42.0 million of borrowings on its $100 million bank credit facility, down from $46.5 million at the end of the first quarter. Interest expense for the recent quarter was $3.9 million, while the $1.8 million reported in the 2002 quarter was net of a $1.8 million benefit from the settlement of an interest rate swap transaction. At quarter-end, long-term debt amounted to 35.8% of capital. "We plan further debt reductions in the second half of 2003, as we continue to work towards our 30% target rate," Cole said. Outlook "We believe that in the first half of 2003 we have seen the bottom of the market, and expect a slow improvement in Gulf Coast drilling activity during the second half of the year. Our key customers in that market are making the transition to the heightened drilling risk profile, and we believe that the opportunity to assist them in this effort is one for which Newpark is very well positioned to participate with excellent incremental margins. We expect to see growth in the new non-oilfield opportunities within our matting segment and increasing composite mat sale opportunities as markets strengthen. These factors should contribute to much-improved results in the second half of 2003," Cole said, concluding, "Finally, we are planning the formal market introduction of the new Bravo(TM) Mat System in the fourth quarter, which should show positive results in 2004." About Newpark Resources, Inc. Newpark Resources, based in Metairie, LA, is a leading provider of high- performance, environmentally focused services and products to the domestic and international exploration and production industry. Products and services entail integrated drilling fluids systems, mat sales and rentals, along with site preparation services and E&P waste disposal. The stock trades on the New York Stock Exchange under the symbol NR. The Company will host a conference call to discuss these results at 3:00 PM EDT on Tuesday, July 29th. The conference call will be webcast and 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) 2Q03 2Q02 Revenue E&P Waste Disposal $13,483 $12,196 Mat & Integrated Services 25,581 17,581 Drilling Fluids 53,318 47,778 $92,382 $77,555 Operating Income E&P Waste Disposal $3,256 $1,003 Mat & Integrated Services 1,702 421 Drilling Fluids 2,819 3,506 7,777 4,930 Corporate G&A 911 1,617 Foreign currency (gain) loss (496) (79) Interest income (107) (177) Interest expense 3,901 1,821 Pre-tax 3,568 1,748 Income tax 1,357 629 Net income 2,211 1,119 Preferred stock dividends and accretion 437 850 Other non-cash preferred stock charges --- 1,055 Net income (loss) to common $1,774 $(786) Common share equiv's. (dil.) 79,670 71,940 Diluted EPS $0.02 $(0.01) EBITDA Net Income $2,211 $1,119 Income Tax 1,357 629 Pre-tax 3,568 1,748 Interest 3,901 1,821 Depreciation & amortization 5,462 5,579 Total $12,931 $9,148 % of Revenue 14.0% 11.8% Waste Data (in thousands, except per barrel amounts) E&P waste volume 923 725 Average revenue per barrel $12.48 $13.00 E&P revenue $12,155 $10,127 NORM 808 1,318 Industrial 520 751 $13,483 $12,196 Mat Rental Data - Gulf Coast (in millions, except per square foot amounts) Installation $4.1 $2.9 Re-rental 2.3 1.2 Total $6.4 $4.1 Average price per square foot $0.97 $0.64 Square feet installed 4.3 4.5 Drilling Fluids Data Average Rigs Serviced (North America) 124 112 Annualized revenue per rig (000's) $1,394 $1,575 Newpark Resources, Inc. Year-Ago Six Month Comparison (in thousands, except per share amounts) 6 Months 03 6 Months 02 Revenue E&P Waste Disposal $26,648 $23,260 Mat & Integrated Services 49,064 39,548 Drilling Fluids 107,247 89,857 $182,959 $152,665 Operating Income E&P Waste Disposal $5,865 $1,557 Mat & Integrated Services 3,356 2,673 Drilling Fluids 5,632 7,510 14,853 11,740 Corporate G&A 2,106 3,134 Foreign currency (gain) loss (773) (75) Interest income (432) (348) Interest expense 7,693 4,943 Pre-tax 6,259 4,086 Income tax 2,353 1,471 Net income 3,906 2,615 Preferred stock dividends and accretion 908 1,825 Other non-cash preferred stock charges 1,055 Net income (loss) to common $2,998 $(265) Common share equiv's. (dil.) 78,728 71,206 Diluted EPS $0.04 $(0.00) EBITDA Net income $3,906 $2,615 Income tax 2,353 1,471 Pre-tax 6,259 4,086 Interest 7,693 4,943 Depreciation & amortization 10,752 11,655 Total $24,704 $20,684 % of Revenue 13.5% 13.5% Waste Data (in thousands, except per barrel amounts) E&P waste volume 1,786 1,455 Average revenue per barrel $12.75 $12.97 E&P revenue $24,202 $20,232 NORM 1,402 1,891 Industrial 1,044 1,137 $26,648 $23,260 Mat Rental Data - Gulf Coast (in millions, except per square foot amounts) Installation $9.7 $4.9 Re-rental 4.3 3.1 Total $14.0 $7.9 Average price per square foot $1.07 $0.63 Square feet installed 9.0 7.7 Drilling Fluids Data Average Rigs Serviced (North America) 139 117 Annualized revenue per rig (000's) $1,305 $1,475 Consolidated Balance Sheets (Unaudited) June 30, Dec. 31, (In thousands) 2003 2002 ASSETS Current assets: Cash and cash equivalents $3,422 $2,725 Trade accounts receivable, net of allowance 100,426 97,657 Notes and other receivables 3,905 3,307 Inventories 72,233 55,473 Deferred tax asset 14,284 11,094 Other current assets 10,017 10,039 Total current assets 204,287 180,295 Property, plant and equipment, at cost, net of accumulated depreciation 207,639 204,703 Goodwill 112,978 110,727 Deferred tax asset 5,059 8,950 Other intangible assets, net of accumulated amortization 15,648 15,786 Other assets 21,378 21,795 $566,989 $542,256 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $7,257 $6,621 Current maturities of long-term debt 2,999 3,258 Accounts payable 45,034 35,568 Accrued liabilities 21,595 18,414 Total current liabilities 76,885 63,861 Long-term debt 174,861 172,049 Other non-current liabilities 2,278 923 Commitments and contingencies --- --- Stockholders' equity: Preferred Stock 30,000 41,875 Common Stock 806 777 Paid-in capital 389,476 376,278 Unearned restricted stock compensation (607) (281) Accumulated other comprehensive income 2,658 (864) Retained deficit (109,368) (112,362) Total stockholders' equity 312,965 305,423 $566,989 $542,256 Ratio of long-term debt to total capital 35.8% 36% SOURCE Newpark Resources, Inc. -0- 07/28/2003 /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 / (NR) CO: Newpark Resources, Inc. ST: Louisiana IN: OIL ENV SU: ERN CCA MAV