Newpark Resources Reports 2012 Fourth Quarter And Full Year Results
Feb 14, 2013 4:05:00 PM
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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