Newpark Resources (NR)
Q4 2012 Earnings Call
February 15, 2013 10:00 am ET
Ken Dennard - Co-Founder and Managing Partner
Paul L. Howes - Chief Executive Officer, President and Executive Director
Bruce C. Smith - Executive Vice President and President of Fluids Systems & Engineering
Gregg S. Piontek - Chief Financial Officer, Chief Accounting Officer and Vice President
James M. Rollyson - Raymond James & Associates, Inc., Research Division
Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division
Michael J. Harrison - First Analysis Securities Corporation, Research Division
Jeffrey Spittel - Global Hunter Securities, LLC, Research Division
Stephen D. Gengaro - Sterne Agee & Leach Inc., Research Division
John D. Ellison - BB&T Capital Markets, Research Division
Trey Cowan - Clarkson Capital Markets, Research Division
William J. Dezellem - Tieton Capital Management, LLC
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Thank you, Alicia. Good morning, everyone. We appreciate you joining us for the Newpark Resources conference call today to review 2012 fourth quarter and full year results. We'd also like to welcome our Internet participants listening to the call as it's being simulcast over the web.
Before turning the call over to management, I have the normal housekeeping details to run through. For those of you who did not receive an email of the release yesterday and would like to be added to the distribution list, please call the Dennard-Lascar offices at (713) 529-6600 and provide us your contact information, or you can email me at the contact information on -- from the press release.
There will be a replay of today's call. It will be available as a webcast for 90 days at www.newpark.com. There's also a telephonic recorded replay, which will be available through March 1, 2013, and that information for access is in yesterday's release.
Please note that the information reported on this call speaks only as of today, February 15, 2013. Therefore, you are advised that time-sensitive information may no longer be accurate as of the time of any replay listening.
In addition, the comments made by management today of Newpark during this call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of management of Newpark. However, various risks, uncertainties and contingencies could cause Newpark's actual results, performance or achievements to differ materially from those expressed in the statements made by management. The listener's encouraged to read the company's annual report on Form 10-K, its quarterly reports on Form 10-Q and current reports on Form 8-K to understand certain of those risks, uncertainties and contingencies.
And now with that said, I'd like to turn the call over to Newpark's President and CEO, Mr. Paul Howes. Paul?
Paul L. Howes
Thank you, Ken, and good morning to everyone. We'd like to thank you for joining us today for our fourth quarter 2012 conference call. With me today are Bruce Smith, President of our Drilling Fluids business; and Gregg Piontek, our Chief Financial Officer. Following my opening remarks, Bruce will provide an update on our Fluids business, and Gregg will discuss the Mats and Environmental Services businesses, as well as the consolidated financial results of the quarter. I will then conclude with a discussion on market outlook before opening the call for Q&A.
Let me begin by stating how pleased I am that Newpark was able to achieve an all-time high in total revenues for the full year of 2012, surpassing the $1 billion mark for the first time in our company's history. This important milestone was achieved through contributions from all segments, including record revenue levels from our Fluids and Mat businesses, along with solid revenue growth from Environmental Services. We're very proud to have reached this important milestone. This achievement is the result of our strategic efforts to expand the company's presence in domestic and international growth markets, as well as our emphasis on new technology.
Our acquisition of Alliance Drilling Fluids in December represents the most recent example of our expansion strategy. Alliance immediately increases our presence in the Permian Basin and Eagle Ford Shale, and their focus on water-based technology makes them a natural fit with our own Fluids business. We're excited to have the Alliance team join the Newpark family.
Internationally, the continued expansion of our global reach has long been a pillar of Newpark's growth strategy and has served us extremely well over the years. When I first joined Newpark in 2006, revenues from outside North America were about $62 million and made up 9% of our total sales. In 2012, our international revenues reached $251 million, a 300% increase from 2006, representing a 26% compounded annual growth rate. Our international business units now contribute 24% of our total consolidated revenues. Our initiatives to grow the business outside of the North American continent has been of tremendous benefit to Newpark, both as a means for us to access growth opportunities and as a way to diversify our revenue stream.
On a technology front, Newpark is known industry-wide for its innovation and developing more effective high performance drilling fluid solutions. This innovation is embodied in Evolution, our flagship fluids system that provides performance that equal or exceeds traditional oil-based muds, while also delivering the environmental and safety benefits of a water-based system. Evolution revenues have grown from $27 million in 2010 to $110 million in 2012 as we've continued to roll out the system into new markets. In the fourth quarter, we've continued to achieve new milestones with this technology, now approaching 7 million feet drilled, mostly in unconventional formations. We also successfully completed our first Evolution well in the EMEA region and a second well is now underway.