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NEWPARK RESOURCES INC
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Newpark Resources Reports 2012 Fourth Quarter And Full Year Results

2013-02-14 16:05 ET - News Release

THE WOODLANDS, Texas, Feb. 14, 2013 /PRNewswire/ -- Newpark Resources, Inc. (NYSE: NR) today announced results for its fourth quarter ended December 31, 2012.  Total revenues for the fourth quarter of 2012 were $270 million compared to $260 million for the third quarter of 2012 and $264 million for the fourth quarter of 2011.  Net income for the fourth quarter of 2012 was $11.2 million, or $0.12 per diluted share, compared to net income of $18.7 million, or $0.20 per diluted share, for the third quarter of 2012, and $21.9 million, or $0.22 per diluted share, for the fourth quarter of 2011.  As set forth in the attached Non-GAAP Earnings Reconciliation, excluding the items discussed below, adjusted net income for the fourth quarter of 2012 was $15.9 million, or $0.17 per diluted share.  

The fourth quarter 2012 provision for income taxes included a $3.9 million charge associated with a tax audit assessment and related tax rate increase for the period of 2006 through 2012 in a North African subsidiary.  In addition, the fourth quarter of 2012 included $0.9 million of charges ($0.6 million after-tax) associated with asset impairments and employee termination costs in our mid-continent completion services and equipment rental business, along with $0.4 million of transaction expenses ($0.2 million after-tax) associated with the Company's December 2012 acquisition of Alliance Drilling Fluids. 

For the full year 2012, total revenues were $1.038 billion compared to $958 million for 2011.  Net income for 2012 was $60.0 million, or $0.62 per diluted share, compared to net income of $80.0 million, or $0.80 per diluted share, in 2011.

Paul Howes, Newpark's President and Chief Executive Officer, stated, "We produced solid operating results in the fourth quarter and are extremely pleased to have reached a significant milestone in 2012, passing the $1 billion annual revenue mark for the first time in the company's history.  For the fourth quarter, our worldwide Fluids revenues increased 8% sequentially and 4% year over year, also posting a quarterly record.  Our international operations continued to strengthen, with all regions showing sequential and year-over-year increases in revenues.  In North America, our Canadian operations improved seasonally, outpacing that region's sequential rig count increase.  While the U.S. land market continued to be challenging in the fourth quarter, our Fluids revenues benefitted from work on a deepwater well in the Gulf of Mexico and therefore were relatively flat, despite a 5% sequential decline in U.S. rig count. 

"Our Mats and Integrated Services segment again posted solid performance, despite the expected sequential decline in mat sales following a large sale into the utility industry during the third quarter," added Howes.  "Meanwhile, our Environmental Service business continued to deliver consistent results, benefitting from the strengthening activity levels in the Gulf region."

SEGMENT RESULTS
The Fluids Systems and Engineering segment generated revenues of $229.3 million in the fourth quarter of 2012 compared to $211.5 million in the third quarter of 2012 and $221.1 million in the fourth quarter of 2011.  Segment operating income was $17.7 million (7.7% operating margin) in the fourth quarter of 2012 compared to $14.8 million in the third quarter of 2012 (7.0% operating margin) and $25.0 million (11.3% operating margin) in the fourth quarter of 2011. 

The Mats and Integrated Services segment generated revenues of $26.6 million in the fourth quarter of 2012 compared to $35.1 million in the third quarter of 2012 and $29.4 million in the fourth quarter of 2011.  Segment operating income was $10.8 million (40.8% operating margin) in the fourth quarter of 2012 compared to $16.0 million (45.6% operating margin) in the third quarter of 2012 and $11.7 million (39.7% operating margin) in the fourth quarter of 2011. 

The Environmental Services segment generated revenues of $14.4 million in the fourth quarter of 2012 compared to $13.1 million in the third quarter of 2012 and $13.0 million in the fourth quarter of 2011.  Segment operating income was $3.4 million (23.9% operating margin) in the fourth quarter of 2012 compared to $3.1 million in the third quarter of 2012 (23.6% operating margin) and $2.4 million (18.1% operating margin) in the fourth quarter of 2011.

SHARE REPURCHASE PROGRAM
In the fourth quarter, the Company completed its previously-announced $50 million share repurchase program, which was executed in accordance with a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934.  During the fourth quarter, the Company repurchased a total of 2.1 million outstanding shares of Newpark common stock at an average cost of $7.24 per share.  Combined with purchases completed earlier in the year, the Company repurchased a total of 7.2 million outstanding shares at an average cost of $6.92 through the end of 2012.

CONFERENCE CALL
Newpark has scheduled a conference call to discuss fourth quarter 2012 results, which will be broadcast live over the Internet, on Friday, February 15, 2013 at 10:00 a.m. Eastern Time / 9:00 a.m. Central Time.  To participate in the call, dial 480-629-9835 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 March 1, 2013 and may be accessed by dialing (303) 590-3030 and using pass code 4587015#.  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, 2011, as well as others, could cause results to differ materially from those stated. These risk factors include, but are not limited to, our ability to successfully integrate the acquisition of Alliance Drilling Fluids and to realize the anticipated benefits of the acquisition, the availability of raw materials and skilled personnel, the impact of restrictions on offshore drilling activity in the Gulf of Mexico, our customer concentration and cyclical nature of our industry, our market competition, the cost and continued availability of borrowed funds, our international operations, legal and regulatory matters, including environmental regulations, inherent limitations in insurance coverage, potential impairments of long-lived intangible assets, technological developments in our industry, the impact of severe weather, particularly in the U.S. Gulf Coast, and our ability to execute our business strategy and make successful capital investments and business acquisitions.  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.

Contacts:

Gregg Piontek, VP & CFO


Newpark Resources, Inc.


281-362-6800




Ken Dennard, Managing Partner


Karen Roan, SVP


Dennard-Lascar Associates


713-529-6600

 

Newpark Resources, Inc.

Consolidated Statements of Operations












(Unaudited)


Three Months Ended


Twelve Months Ended



December 31,


September 30,


December 31,


December 31,


December 31,

(In thousands, except per share data)


2012


2012


2011


2012


2011












Revenues


$ 270,328


$ 259,599


$ 263,514


$ 1,038,019


$ 958,180












Cost of revenues


219,817


210,276


204,991


846,529


744,176












Selling, general and administrative expenses


24,217


20,878


23,902


86,352


81,672

Other operating income, net


43


(311)


580


(759)


(432)












Operating income 


26,251


28,756


34,041


105,897


132,764












Foreign currency exchange loss 


333


185


182


749


522

Interest expense, net


2,403


2,416


2,405


9,740


9,226












Income from operations before income taxes


23,515


26,155


31,454


95,408


123,016

Provision for income taxes


12,322


7,413


9,568


35,376


42,999












Net income 


$   11,193


$   18,742


$   21,886


$      60,032


$   80,017























Income per common share -basic:


$       0.13


$       0.22


$       0.24


$          0.69


$       0.89

Income per common share -diluted:


$       0.12


$       0.20


$       0.22


$          0.62


$       0.80












Calculation of Diluted EPS:











Net income 


$   11,193


$   18,742


$   21,886


$      60,032


$   80,017

Assumed conversion of Senior Notes 


927


1,396


1,356


4,868


4,969

Adjusted net income 


$   12,120


$   20,138


$   23,242


$      64,900


$   84,986












Weighted average number of common shares outstanding-basic


84,602


86,423


90,454


87,522


90,022

Add:  Dilutive effect of  stock options and restricted stock awards












903


695


1,026


876


965

          Dilutive effect of Senior Notes 


15,682


15,682


15,682


15,682


15,682












Diluted weighted average number of common shares outstanding


101,187


102,800


107,162


104,080


106,669












Income per common share - diluted


$       0.12


$       0.20


$       0.22


$          0.62


$       0.80

 

Newpark Resources, Inc.

Operating Segment Results

















(Unaudited)


Three Months Ended




December 31,


September 30,


December 31,

(In thousands)


2012


2012


2011









Revenues








Fluids systems and engineering


$ 229,329


$ 211,457


$ 221,125


Mats and integrated services


26,612


35,067


29,376


Environmental services


14,387


13,075


13,013


Total revenues


$ 270,328


$ 259,599


$ 263,514









Operating income (loss) 








Fluids systems and engineering


$  17,714


$  14,798


$  25,044


Mats and integrated services


10,845


15,992


11,655


Environmental services


3,444


3,089


2,351


Corporate office


(5,752)


(5,123)


(5,009)


Total operating income 


$  26,251


$  28,756


$  34,041









Segment operating margin








Fluids systems and engineering


7.7%


7.0%


11.3%


Mats and integrated services


40.8%


45.6%


39.7%


Environmental services


23.9%


23.6%


18.1%

 

 

Newpark Resources, Inc.

Consolidated Balance Sheets







(Unaudited)







December 31,


December 31,

(In thousands, except share data)

2012


2011







ASSETS





Cash and cash equivalents

$              46,846


$              25,247


Receivables, net

323,439


328,590


Inventories

209,734


175,929


Deferred tax asset

11,596


13,224


Prepaid expenses and other current assets

12,441


10,828



Total current assets

604,056


553,818








Property, plant and equipment, net 

253,990


231,055


Goodwill

87,388


71,970


Other intangible assets, net 

41,018


20,850


Other assets

8,089


9,144



Total assets

$            994,541


$            886,837







LIABILITIES AND STOCKHOLDERS' EQUITY





Short-term debt

$                2,599


$                2,232


Accounts payable

114,377


97,168


Accrued liabilities

42,620


47,443



Total current liabilities

159,596


146,843








Long-term debt, less current portion

256,832


189,876


Deferred tax liability

46,348


46,844


Other noncurrent liabilities

18,187


5,428



Total liabilities

480,963


388,991








Commitments and contingencies











Common stock, $0.01 par value, 200,000,000 shares authorized and 95,733,677 and 94,497,526 shares issued, respectively





957


945


Paid-in capital

484,962


477,204


Accumulated other comprehensive (loss) income

(734)


789


Retained earnings 

95,015


34,983


Treasury stock, at cost; 10,115,951 and 2,803,987 shares, respectively 

(66,622)


(16,075)




Total stockholders' equity

513,578


497,846


Total liabilities and stockholders' equity

$            994,541


$            886,837

 

Newpark Resources, Inc.

Consolidated Statements of Cash Flows


(Unaudited)

Year Ended December 31,

(In thousands)

2012


2011

Cash flows from operating activities:




Net income

$  60,032


$  80,017

Adjustments to reconcile net income to net cash provided by operations:





Impairment charges

443


-

Depreciation and amortization

32,821


28,971

Stock-based compensation expense

7,103


4,535

Provision for deferred income taxes

1,358


26,623

Net provision for doubtful accounts

1,709


2,400

 Loss on sale of assets

724


630

Change in assets and liabilities:




Decrease (increase)  in receivables

23,565


(135,303)

Increase in inventories

(28,758)


(48,129)

Increase in other assets

(641)


(434)

Increase in accounts payable

13,702


30,425

Decrease in accrued liabilities and other

(1,813)


(3,293)

Net cash provided by (used in) operating activities

110,245


(13,558)





Cash flows from investing activities:




Capital expenditures

(43,955)


(36,897)

Proceeds from sale of property, plant and equipment

863


522

Business acquisitions, net of cash acquired

(53,075)


(26,775)

Net cash used in investing activities

(96,167)


(63,150)





Cash flows from financing activities:




Borrowings on lines of credit

364,426


27,619

Payments on lines of credit

(296,944)


(9,951)

Principal payments on notes payable and long-term debt

(40)


(219)

Proceeds from employee stock plans

1,059


3,588

Post-closing payment for business acquisition

(11,892)


(2,055)

Purchase of treasury stock

(50,756)


(644)

Net cash provided by financing activities

5,853


18,338





Effect of exchange rate changes on cash

1,668


607





Net increase (decrease) in cash and cash equivalents

21,599


(57,763)

Cash and cash equivalents at beginning of year

25,247


83,010





Cash and cash equivalents at end of year

$  46,846


$  25,247

 

Newpark Resources, Inc.

Non-GAAP Earnings Reconciliation

Three Months Ending December 31, 2012








To supplement our financial results presented in accordance with generally accepted accounting pricnciples in the United States ("GAAP"), this press release contains, and the related earnings conference call will refer to, our adjusted non-GAAP net income and earnings per share for the fourth quarter of 2012.    The table below presents a reconciliation of these non-GAAP measure to the most directly comparable GAAP financial measures.  Non-GAAP measures of financial performance reference in this press release exclude items that the Company believes are infequent or not indicative 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)

Three months ended December 31, 2012

(In thousands, except per share data)

Operating Income


Net Income


Income per common share - Diluted








Reported results - GAAP

$ 26,251


$ 11,193


$ 0.12








Adjustments:







Tax audit assessment and related tax rate increase for the period of 2006 to 2012 in a North African subsidiary

-


3,902


0.04


Asset impairments and employee termination costs - Fluids Systems and Engineering segment

858


558


0.01


Transaction expenses associated with acquisition of Alliance Drilling Fluids - Corporate office

364


237


0.00








Total adjustments

1,222


4,697


0.05















Adjusted results - Non-GAAP

$ 27,473


$ 15,890


$ 0.17

 

SOURCE Newpark Resources, Inc.

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