EX-99.1 2 c81435exv99w1.htm EXHIBIT 99.1 Filed by Bowne Pure Compliance
         
(LOGO)    
 



NEWS RELEASE

Contacts: 





James E. Braun, CFO
Newpark Resources, Inc.
281-362-6800
 
        
FOR IMMEDIATE RELEASE
      Ken Dennard, Managing Partner
Dennard Rupp Gray & Easterly, LLC
ksdennard@drg-e.com
713-529-6600
NEWPARK RESOURCES REPORTS 2008 FOURTH QUARTER AND FULL YEAR RESULTS
THE WOODLANDS, TX – February 19, 2009 – Newpark Resources, Inc. (NYSE: NR) today announced results for its fourth quarter and year ended December 31, 2008. Total revenues were $226.9 million for the fourth quarter of 2008 compared to $173.0 million for the fourth quarter of 2007. The Company reported income from continuing operations of $7.2 million, or $0.08 per diluted share for the fourth quarter of 2008, compared to $6.8 million, or $0.07 per diluted share, in the fourth quarter of 2007. Net income was $6.7 million, or $0.08 per diluted share for the quarter, compared to $6.7 million, or $0.07 per diluted share, in the fourth quarter of 2007. Operating results in the fourth quarter of 2008 included $4.6 million in pre-tax charges ($3.0 million after-tax) related to the termination of the sale of the U.S. Environmental Services business and the anticipated resolution of a lawsuit with the Company’s former Chief Executive Officer. Operating results in the fourth quarter of 2007 included a $4.0 million pre-tax charge ($2.9 million after-tax) related to the repayment and termination of the Company’s previous credit facilities. As set forth in the attached Non-GAAP Earnings Reconciliation, excluding these charges from both the fourth quarter 2008 and 2007 periods, fourth quarter 2008 income from continuing operations was $10.2 million, or $0.12 per diluted share, compared to fourth quarter 2007 income from continuing operations of $9.7 million, or $0.11 per diluted share.
For the full year 2008, total revenues were $858.4 million, compared to $671.2 million in 2007. Net income was $38.5 million, or $0.43 per diluted share in 2008 compared to $26.7 million, or $0.29 per diluted share in 2007. Operating results in 2008 included $8.1 million in pre-tax charges, as described above, compared to $6.4 million in certain pre-tax charges in 2007. As set forth in the attached Non-GAAP Earnings Reconciliation, excluding these charges in both 2008 and 2007, income from continuing operations was $44.7 million, or $0.50 per diluted share in 2008, compared to income from continuing operations of $36.1 million, or $0.40 per diluted share in 2007.

 

 

 

As previously reported, Newpark had entered into an agreement in April 2008 to sell its U.S. Environmental Services business to CCS, Inc. (“CCS”). In October 2008, the Federal Trade Commission (“FTC”) filed suit seeking a Temporary Restraining Order and Preliminary Injunction to prevent the completion of the sale to CCS. In November 2008, we reached a mutual agreement with CCS to terminate the sale agreement. Following the termination of this agreement, the U.S. Environmental Services business, which had been reported within discontinued operations, is now reported in continuing operations as a third reportable segment of the Company. Prior period results included in this release reflect the reclassification of the U.S. Environmental Services business as continuing operations.
Paul Howes, President and Chief Executive Officer of Newpark, stated, “Fourth quarter revenue results in our core drilling fluids and engineering segment were strong, up 40% year over year. While domestic drilling activity slowed towards the end of the quarter, our international opportunities have been steadily growing. Highlights in our international fluids segment during the quarter include our signing a major contract with Petroleo Brasileiro S.A. to provide drilling fluids and related services for both onshore and offshore locations beginning in 2009. Additionally, we have recently won contract awards from other major operators in that market.
“While the decline in E&P spending is expected to negatively impact our operating results in 2009, as compared to the results achieved during 2008, we began taking actions during the fourth quarter to reduce headcount and operating costs, in an effort to meet the lower activity levels,” concluded Howes.
SEGMENT RESULTS
The Fluids Systems and Engineering segment generated revenues of $191.0 million and a 11.7% operating margin in the fourth quarter of 2008 compared to revenues of $136.3 million and a 12.9% operating margin during the fourth quarter of 2007. Fourth quarter 2008 revenues were driven by strong growth in both North American and international markets. North American revenues increased 40% over the fourth quarter of 2007 on solid revenue gains from the U.S. market, while international revenues increased 43% compared to the fourth quarter of 2007, including a 20% increase from the Mediterranean region. Brazil also contributed to the international revenue growth, generating a $6.1 million increase in the fourth quarter of 2008 as the Company continues to expand its presence in the Brazilian market.

 

2

 

The Mats and Integrated Services segment generated revenues of $20.9 million and an operating loss of $1.8 million in the fourth quarter of 2008 compared to revenues of $23.5 million and an operating profit of $1.3 million in the fourth quarter of 2007. The decline in revenues is attributable to lower drilling activity in our key markets. Fourth quarter 2008 results included $1.0 million of pre-tax charges for asset write-downs, following the decision to exit certain product offerings and dispose of assets.
The Environmental Services segment, which is now back in continuing operations, generated revenues of $15.1 million and a 2.8% operating margin in the fourth quarter of 2008 compared to revenues of $13.2 million and a 19.1% operating margin in the fourth quarter of 2007. The margin decline is due primarily to pre-tax charges totaling $2.6 million related to asset write-offs taken following the termination of our sale agreement with CCS.
CONFERENCE CALL
In conjunction with this release, Newpark has scheduled a conference call, which will be broadcast live over the Internet, on Friday, February 20, 2009 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time. To participate in the call, dial (303) 262-2053 and ask for the Newpark Resources conference call at least 10 minutes prior to the start time, or access it live over the Internet at www.newpark.com. For those who cannot listen to the live call, a replay will be available through February 27, 2009 and may be accessed by dialing (303) 590-3000 and using pass code11124367#. Also, an archive of the webcast will be available shortly after the call at www.newpark.com for 90 days.
Newpark Resources, Inc. is a worldwide provider of drilling fluids, temporary worksites and access roads for oilfield and other commercial markets, and environmental waste treatment solutions. For more information, visit our website at www.newpark.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act that are based on management’s current expectations, estimates and projections. All statements that address expectations or projections about the future, including Newpark’s strategy for growth, product development, market position, expected expenditures and financial results are forward-looking statements. Some of the forward-looking statements may be identified by words like “expects,” “anticipates,” “plans,” “intends,” “projects,” “indicates,” and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, including those discussed more fully elsewhere in this release and in documents filed with the Securities and Exchange Commission by Newpark, particularly its Annual Report on Form 10-K for the year ended December 31, 2007, as well as others, could cause results to differ materially from those stated. These factors include, but are not limited to, the instability and effect of the credit and capital markets on the economy in general and the oil and gas industry in particular; the access to the credit markets by both Newpark and Newpark’s customers; the outlook for drilling activity in North America and the rest of the world; the investigation of certain accounting matters by the Securities and Exchange Commission; changes in the laws, regulations, policies and economic conditions, including inflation, interest and foreign currency exchange rates, of countries in which Newpark does business; competitive pressures; successful integration of structural changes, including restructuring plans, acquisitions, divestitures and alliances; cost of raw materials, research and development of new products, including regulatory approval and market acceptance; and seasonality of sales of Newpark products and services. Newpark’s filings with the Securities and Exchange Commission can be obtained at no charge at www.sec.gov, as well as through our website at www.newpark.com.

 

3

 

Newpark Resources, Inc.
Consolidated Statements of Operations
                                 
    Three Months        
(Unaudited)   Ended December 31,     Year Ended December 31,  
(In thousands, except per share data)   2008     2007     2008     2007  
 
                                
Revenues
   $ 226,933     $ 172,961     $ 858,350     $ 671,207  
 
                                
Cost of revenues
     205,821       151,444       760,224       581,881  
 
                        
 
     21,112       21,517       98,126       89,326  
 
                                
General and administrative expenses
     6,486       5,090       26,630       22,923  
 
                        
 
                                
Operating income
     14,626       16,427       71,496       66,403  
 
                                
Foreign currency exchange loss (gain)
     1,136       (804 )     1,269       (1,083 )
Interest expense, net
     2,506       8,069       10,881       20,251  
 
                        
 
                                
Income from continuing operations before income taxes
     10,984       9,162       59,346       47,235  
Provision for income taxes
     3,755       2,386       20,046       15,472  
 
                        
 
                                
Income from continuing operations
     7,229       6,776       39,300       31,763  
Loss from discontinued operations, net of tax
     (542 )     (590 )     (842 )     (3,488 )
Income (loss) from disposal of discontinued operations, net of tax
     —       560       —       (1,613 )
 
                        
Net income
   $ 6,687     $ 6,746     $ 38,458     $ 26,662  
 
                        
 
                                
Basic weighted average common shares outstanding
     88,199       90,162       88,987       90,015  
Diluted weighted average common shares outstanding
     88,239       90,540       89,219       90,527  
 
                                
Income per common share (basic):
                                
Income from continuing operations
   $ 0.08     $ 0.08     $ 0.44     $ 0.35  
Loss from discontinued operations
     —       (0.01 )     (0.01 )     (0.05 )
 
                        
Net income per common share
   $ 0.08     $ 0.07     $ 0.43     $ 0.30  
 
                        
 
                                
Income per common share (diluted):
                                
Income from continuing operations
   $ 0.08     $ 0.07     $ 0.44     $ 0.35  
Loss from discontinued operations
     —       —       (0.01 )     (0.06 )
 
                        
Net income per common share
   $ 0.08     $ 0.07     $ 0.43     $ 0.29  
 
                        

 

 4 

 

Newpark Resources, Inc.
Operating Segment Results
                         
(Unaudited)   Three Months Ended  
(In thousands)   December 31, 2008     September 30, 2008     December 31, 2007  
 
                        
Segment revenues
                        
Fluids systems and engineering
   $ 190,968     $ 188,975     $ 136,267  
Mats and integrated services
     20,906       22,593       23,473  
Environmental services
     15,059       14,616       13,221  
 
                  
Total segment revenues
   $ 226,933     $ 226,184     $ 172,961  
 
                  
 
                        
Segment operating income (loss)
                        
Fluids systems and engineering
   $ 22,437     $ 25,601     $ 17,645  
Mats and integrated services
     (1,752 )     1,131       1,342  
Environmental services
     427       1,874       2,530  
 
                  
Total segment operating income
   $ 21,112     $ 28,606     $ 21,517  
 
                  
 
                        
Segment operating margin
                        
Fluids systems and engineering
     11.7 %     13.5 %     12.9 %
Mats and integrated services
     (8.4 %)     5.0 %     5.7 %
Environmental services
     2.8 %     12.8 %     19.1 %
 
                  
Total segment operating margin
     9.3 %     12.6 %     12.4 %
 
                  

 

5

 

Newpark Resources, Inc.
Consolidated Balance Sheets
                 
(Unaudited)   December 31,     December 31,  
(In thousands, except share data)   2008     2007  
 
                
ASSETS
                
Cash and cash equivalents
   $ 8,252     $ 5,741  
Receivables, net
     211,366       151,176  
Inventories
     149,304       120,326  
Deferred tax asset
     22,809       28,484  
Prepaid expenses and other current assets
     11,062       12,612  
Assets of discontinued operations
     —       6,026  
 
            
Total current assets
     402,793       324,365  
 
                
Property, plant and equipment, net
     226,627       227,763  
Goodwill
     60,268       62,616  
Deferred tax asset, net
     707       408  
Other intangible assets, net
     18,940       21,898  
Other assets
     4,344       6,443  
 
            
Total assets
   $ 713,679     $ 643,493  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Foreign bank lines of credit
   $ 11,302     $ 7,297  
Current maturities of long-term debt
     10,391       11,565  
Accounts payable
     89,018       68,109  
Accrued liabilities
     38,946       21,560  
Liabilities of discontinued operations
     —       944  
 
            
Total current liabilities
     149,657       109,475  
 
                
Long-term debt, less current portion
     166,461       158,616  
Deferred tax liability
     15,979       10,340  
Other noncurrent liabilities
     3,700       4,398  
 
            
Total liabilities
     335,797       282,829  
 
                
Common Stock, $0.01 par value, 100,000,000 shares authorized 91,139,966 and 90,215,715 shares issued, respectively
     911       902  
Paid-in capital
     457,012       450,319  
Accumulated other comprehensive income
     1,296       13,988  
Retained deficit
     (66,087 )     (104,545 )
Less treasury stock, at cost; 2,646,409 shares
     (15,250 )     —  
 
            
Total stockholders’ equity
     377,882       360,664  
 
            
Total Liabilities and Stockholders’ Equity
   $ 713,679     $ 643,493  
 
            

 

6

 

Newpark Resources, Inc.
Consolidated Statements of Cash Flows
                 
    Year Ended  
(Unaudited)   December 31,  
(In thousands)   2008     2007  
 
                
Cash flows from operating activities:
                
 
                
Net income
   $ 38,458     $ 26,662  
 
                
Adjustments to reconcile net income to net cash provided by operations:
                
 
                
Net loss from discontinued operations
     842       3,488  
Net loss on disposal of discontinued operations
     —       1,613  
Impairment losses
     3,840       —  
Depreciation and amortization
     27,343       23,601  
Stock-based compensation expense
     5,128       3,434  
Provision for deferred income taxes
     12,773       9,951  
Provision for doubtful accounts
     2,664       1,315  
(Gain) loss on sale of assets
     (245 )     30  
Change in assets and liabilities:
                
(Increase) decrease in receivables
     (67,741 )     5,146  
Increase in inventories
     (37,002 )     (12,764 )
Decrease in other assets
     4,651       1,926  
Increase in accounts payable
     21,340       2,462  
Increase (decrease) in accrued liabilities and other
     16,090       (4,869 )
 
            
Net operating activities of continuing operations
     28,141       61,995  
Net operating activities of discontinued operations
     546       6,210  
 
            
Net cash provided by operating activities
     28,687       68,205  
 
                
Cash flows from investing activities:
                
Capital expenditures
     (22,494 )     (22,176 )
Proceeds from sale of property, plant and equipment
     510       986  
Business acquisitions
     (1,184 )     (23,203 )
 
            
Net investing activities of continuing operations
     (23,168 )     (44,393 )
Net investing activities of discontinued operations
     —       4,101  
 
            
Net cash used in investing activities
     (23,168 )     (40,292 )
 
                
Cash flows from financing activities:
                
Net payments on lines of credit
     23,593       67,369  
Principal payments on notes payable and long-term debt
     (12,252 )     (155,026 )
Long-term borrowings
     —       50,000  
Proceeds from exercise of stock options and ESPP
     1,910       2,243  
Purchase of treasury stock
     (15,250 )     —  
 
            
Net financing activities of continuing operations
     (1,999 )     (35,414 )
Net financing activities of discontinued operations
     (63 )     (235 )
 
            
Net cash used in financing activities
     (2,062 )     (35,649 )
 
                
Effect of exchange rate changes
     (946 )     758  
 
            
 
                
Net increase (decrease) in cash and cash equivalents
     2,511       (6,978 )
 
                
Cash and cash equivalents at beginning of year
     5,741       12,719  
 
            
 
                
Cash and cash equivalents at end of year
   $ 8,252     $ 5,741  
 
            

 

7

 

Newpark Resources, Inc.
Non-GAAP Earnings Reconciliation
Continuing Operations
The table below presents measures not derived in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Non-GAAP measures of financial performance exclude items that the Company believes are infequent or not inidicative of operating performance. Non-GAAP financials measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The Company believes these non-GAAP financial measures are helpful for an understanding of the Company’s operations, and management uses them in comparing the historical results to current results and measuring operating earnings trends.
                                 
(Unaudited)   Quarter Ended December 31,     Year Ended December 31,  
(In thousands, except per share data)   2008     2007     2008     2007  
 
                                
Income from continuing operations before income taxes - GAAP
   $ 10,984     $ 9,162     $ 59,346     $ 47,235  
 
                        
 
                                
Adjustments:
                                
Legal and related transaction costs associated with abandoned sale of U.S. Environmental Services business
     796       —       4,347       —  
 
                                
Asset write-offs following abandoned sale of U.S. Environmental Services business
     2,612       —       2,612       —  
 
                                
Legal costs associated with anticipated resolution of lawsuit with former Chief Executive Officer
     1,172       —       1,172       —  
 
                                
Capitalized financing cost write-off associated with debt re-financing
     —       3,955       —       3,955  
 
                                
Legal and accounting expenses related to 2005 restatement and related litigation
     —       —       —       2,441  
 
                        
 
                                
Total adjustments
     4,580       3,955       8,131       6,396  
 
                        
 
                                
Income from continuing operations before income taxes - Non-GAAP
     15,564       13,117       67,477       53,631  
 
                                
Provision for income taxes on adjusted income
     5,321       3,416       22,793       17,567  
 
                        
 
                                
Income from continuing operations - Non-GAAP
   $ 10,243     $ 9,701     $ 44,684     $ 36,064  
 
                        
 
                                
Basic shares outstanding
     88,199       90,162       88,987       90,015  
Diluted shares outstanding
     88,239       90,540       89,219       90,527  
 
                                
Income from continuing operations per common share (basic):
                                
Income from continuing operations per common share - GAAP
   $ 0.08     $ 0.08     $ 0.44     $ 0.35  
Impact of adjustments
     0.04       0.03       0.06       0.05  
 
                        
Income from continuing operations per common share - Non-GAAP
   $ 0.12     $ 0.11     $ 0.50     $ 0.40  
 
                        
 
                                
Income from continuing operations per common share (diluted):
                                
Income from continuing operations per common share - GAAP
   $ 0.08     $ 0.07     $ 0.44     $ 0.35  
Impact of adjustments
     0.04       0.04       0.06       0.05  
 
                        
Income from continuing operations per common share - Non-GAAP
   $ 0.12     $ 0.11     $ 0.50     $ 0.40  
 
                        

 

8