EX-99.1 2 nr2552ex991.txt 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 /