Newpark Earnings Increase 550% On 80% Revenue Growth
For the six months ended June 30, Newpark reported net income of $16.2 million, or $.23 per share, on revenue of $207.7 million, compared to net income of $1.8 million or $.03 per share, (before the effect of a non-cash charge of $3.5 million or $.05 per share) on $117.5 million of revenue in the first half of fiscal 2000.
Newpark's net income amounted to 9.4% of revenue in the recent quarter, compared to 2.9% in the second quarter of 2000. James D. Cole, Newpark's Chairman and CEO, attributed the earnings gain to improved operating results in the company's Mat and Integrated Services and Drilling Fluids businesses.
Mat and Integrated Services revenue of $38.3 million in the quarter rose 12% sequentially and 139% compared to the year-ago quarter. "During the recent quarter, we sold over 6,300 Dura-Base(TM) composite mats, generating revenue of $10.1 million. The remaining revenue growth resulted from higher mat rental pricing in the Gulf Coast market; improved mat utilization as customers extended rentals beyond the initial installation period -- which is the result of deeper drilling and increased site construction activity in the Transition Zone; and increased rig activity in western Canada," Cole said. Average pricing in the Gulf Coast market was $1.69 per square foot in the recent quarter, compared to $1.39 in the first quarter of the year and $.71 in the year-ago quarter.
Drilling Fluids revenue increased 77% to $53.9 million from $30.4 million in the year-ago period and 7% from first quarter levels, aided by the sustained high level of drilling activity in the Gulf Coast market and increased penetration of the U.S. market. During the recent quarter, Newpark serviced an average of 193 rigs in North America and 168 rigs in the U.S. market, up 49.6% and 51.4%, respectively, from the same quarter a year ago. Annualized average revenue per rig rose 19% to $1.116 million from $940,000, and drilling fluids operating margins increased to 13% from 7% last year and 12% in the first quarter of this year. "The improvement in profitability," Cole emphasized, "was attributable to the broadening acceptance of DeepDrill(TM) and its related specialty products, which continue to positively affect product mix and market penetration."
Total waste disposal revenue in the quarter of $16.2 million increased 17.5% from $13.8 million in the second quarter a year ago. E&P waste volume increased 7.7% to 1.144 million barrels compared to 1.062 million in the 2000 quarter while average revenue per barrel rose 6.3% in the period, resulting in a 14.1% year-over-year increase in E&P waste revenue. Second quarter E&P waste volume was up 6.2% sequentially, while average revenue per barrel gained 4.2% from the first quarter level. Operating profit contribution from Waste Disposal in the second quarter totaled $4.3 million compared to $4.4 million in the year-ago period. "Major regulatory changes that lie ahead are making the industry undergo an important structural change. For its part, Newpark has implemented a plan to respond to the new market opportunity while reducing its operating costs by $1.2 million per quarter, and looks for improved financial performance in this business over the balance of this year as these new regulations begin to take effect," Cole stated.
During the first six months, Newpark's earnings before interest, taxes, depreciation and amortization totaled $50.1 million or 24% of revenue. Since December, aggregate borrowings have been reduced by $23 million and the company's debt ratio has improved from 44% to 39%.
Cole concluded: "Over the past year, we have made substantial progress in a strong market. Given what we see in the marketplace today, we anticipate a mild correction later this year or early in 2002. We view this as positive and will position Newpark to take full advantage of any correction and the industry growth cycle that we believe will follow."
Newpark Resources, Inc. provides integrated fluids management, environmental and oilfield services to the exploration and production industry.
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 dated March 27, 2001, included in Newpark's Registration Statement on Form S-3 (File No. 333-53824), 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 any delays in implementing the new discharge regulations, 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 http://www.sec.gov, as well as through our Website, http://www.newpark.com.
Newpark Resources, Inc.
Quarterly Comparison
(Unaudited, dollars in thousands, except per share amounts)
2Q00 2Q01
Revenue
E&P waste disposal $13,775 $16,185
Drilling fluids 30,386 53,870
Mat & integrated services 16,041 38,276
$60,202 $108,331
Operating Income
E&P waste disposal $4,426 $4,268
Drilling fluids 2,178 7,098
Mat & integrated services 2,792 10,728
9,396 22,094
Corporate G&A 696 1,197
Goodwill amortization 1,242 1,233
Foreign currency exchange (gain) loss -- (246)
Interest income (236) (215)
Interest expense 4,757 4,190
Pre-tax 2,937 15,935
Income tax 1,175 5,737
Net income 1,762 10,198
Preferred dividends and accretion 3,942 975
Net income (loss) to common $(2,180) $9,223
Equivalent diluted common shares 69,127 72,620
EPS $(0.03) $0.13
Supplementary Statistical Data
(Unaudited, dollars in thousands,
except per barrel and per square
foot amounts)
EBITDA
Pre-tax $2,937 $15,935
Interest 4,757 4,190
Depreciation & amortization 5,568 6,831
Total $13,262 $26,956
% of revenue 22.0% 24.9%
Waste Data
E&P waste volume (000 barrels) 1,062 1,144
Average revenue per barrel $11.47 $12.19
E&P revenue $12,721 $14,514
NORM 797 1,188
Industrial 257 483
$13,775 $16,185
Mat Rental Data
Installation $3,273 $5,906
Re-rental 1,404 3,810
Total $4,677 $9,716
Average price per square foot $0.71 $1.69
Square feet installed (MM) 4.6 3.5
Drilling Fluids Data
Average rigs serviced 129 193
Annualized revenue per rig $940 $1,116
NM - Not meaningful
Newpark Resources, Inc.
Six Month Comparison
(Unaudited, dollars in thousands, except per share amounts)
6MOS 00 6MOS 01
Revenue
E&P waste disposal $26,237 $30,857
Drilling fluids 59,732 104,271
Mat & integrated services 31,509 72,600
$117,478 $207,728
Operating Income
E&P waste disposal $8,111 $8,496
Drilling fluids 3,929 13,123
Mat & integrated services 5,239 19,736
17,279 41,355
Corporate G&A 1,651 2,267
Goodwill amortization 2,490 2,467
Foreign currency exchange (gain) loss -- 244
Interest income (458) (448)
Interest expense 9,350 8,405
Pre-tax 4,246 28,420
Income tax 1,710 10,232
Net income 2,536 18,188
Preferred dividends and accretion 4,242 1,950
Net income (loss) to common $(1,706) $16,238
Equivalent diluted common shares 68,883 71,242
EPS $(0.02) $0.23
Supplementary Statistical Data
(Unaudited, dollars in thousands,
except per barrel and per square
foot amounts)
EBITDA
Pre-tax $4,246 $28,420
Interest 9,350 8,405
Depreciation & amortization 11,158 13,244
Total $24,754 $50,069
% of revenue 21.1% 24.1%
Waste Data
E&P waste volume (000 barrels) 2,003 2,221
Average revenue per barrel $11.50 $11.95
E&P revenue $24,113 $27,859
NORM $1,468 $2,070
Industrial $656 $928
$26,237 $30,857
Mat Rental Data
Installation $6,500 $12,751
Re-rental $2,205 $7,475
Total $8,705 $20,226
Average price per square foot $0.74 $1.52
Square feet installed (MM) 8.7 8.4
Drilling Fluids Data
Average rigs serviced 132 195
Annualized revenue per rig $907 $1,072
NM -- Not meaningful
Newpark Resources, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
June 30, December 31,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $3,842 $31,245
Accounts and notes receivable,
less allowance
of $2,382 in 2001 and $2,482 in
2000 104,364 75,776
Inventories 27,945 24,998
Deferred tax asset 18,008 15,715
Other current assets 9,419 4,530
Total current assets 163,578 152,264
Property, plant and equipment, at
cost, net of
accumulated depreciation 188,981 184,755
Cost in excess of net assets of
purchased businesses,
net of accumulated amortization 108,724 111,487
Deferred tax asset 10,316 22,965
Other assets 35,514 35,972
$507,113 $507,443
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $294 $329
Accounts payable 24,421 25,816
Accrued liabilities 21,041 13,621
Arbitration settlement payable - 2,448
Total current liabilities 45,756 42,214
Long-term debt 180,232 203,520
Other non-current liabilities 950 1,654
Commitments and contingencies -- --
Stockholders' equity:
Preferred Stock, $.01 par value,
1,000,000 shares authorized, 390,000 shares
outstanding 73,745 73,521
Common Stock, $.01 par value,
100,000,000 shares
authorized, 70,108,343 shares
outstanding in 2001
and 69,587,725 in 2000 701 696
Paid-in capital 332,951 329,650
Unearned restricted stock
compensation (1,633) (2,339)
Accumulated other comprehensive
income (953) (607)
Retained deficit (124,636) (140,866)
Total stockholders' equity 280,175 260,055
$507,113 $507,443
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SOURCE Newpark Resources, Inc.
CONTACT: Matthew W. Hardey, Vice President of Finance of Newpark
Resources, Inc., +1-504-838-8222; or Ron Hengen of R. F. Hengen, Inc.,
+1-908-508-9000