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Newpark Resources, Inc. (NR)
Q3 2012 Earnings Call
October 26, 2012 10:00 AM ET
Ken Dennard – IR
Paul Howes – President and CEO
Bruce Smith – EVP and President, Fluids Systems & Engineering
Gregg Piontek – VP and CFO
Marshall Adkins – Raymond James & Associates
Jeff Spittel – Global Hunter Securities
Neal Dingman – SunTrust Robinson Humphrey
Michael Marino – Stephen’s, Inc.
Joe Gibney – Capital One Southcoast
Mike Harrison – First Analysis Securities
Stephen Gengaro – Stern Agee
Rob Norfleet – BB&T Capital Markets
Bill Dezellem – Tieton Capital Management
Previous Statements by NR
» Newpark Resources Management Discusses Q2 2012 Results - Earnings Call Transcript
» Newpark Resources Inc. Q4 2009 Earnings Call Transcript
» Newpark Resources Inc. Q4 2008 Earnings Call Transcript
Thanks and good morning, everyone. We appreciate you joining us for the Newpark Resources conference call today to review 2012 third quarter results. We’d also like to welcome our Internet participants listening to the call being simulcast over the Web.
Before I turn 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 afternoon and would like be added to our distribution list, please call our offices at DRG&L, at number 713 529-6600, and provide us that contact information, or you can email me on my email address, which is on the press release. There will be a replay of today’s call. It will be available via webcast on the Company’s website at www.newpark.com. There’ll also be a recorded replay that will be available through November 9th, and that information is in the press release.
Please note that information reported on this call speaks only as of today, October 26th, 2012, and therefore, you are advised that any time-sensitive information may no longer accurate as of the time of any replay listening. In addition, the comments made by management today of Newpark during the 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 the 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. Listeners are 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 behind me, let me turn the call over to Newpark’s President and CEO, Mr. Paul Howes. Paul?
Thank you, Ken, and good morning to everyone. We’d like to thank you for joining us today for our third 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 Service segments, as well as the consolidated financial results of the quarter. I will then conclude with a discussion of our market outlook before opening the call for Q&A.
Now turning our attention to the third quarter. Despite a challenging North America drilling market, we are pleased to report sequential improvements in both our Fluids and Mats segments, with total revenues for the third quarter of 2012 up 6% sequentially to $260 million and down less than 1% from the third quarter last year. Operating income was up more than 16% sequentially to $29 million, but down 27% from the same period a year ago. Our net income per diluted share for the quarter was $0.20 compared to $0.15 in the second quarter of 2012 and $0.23 a year ago.
Our worldwide Fluids business posted revenues of $211 million for the third quarter of 2012, a 5% sequential increase. This increase is driven by the strong performance of our international regions, which contributed $61 million of revenues in the third quarter, up 15% from the prior quarter. Specifically, we saw strong growth in Brazil and Asia-Pacific, as revenues from both regions were up in excess of 20% from the second quarter.
Our work in Brazil is benefitting from our relationship with Petrobras, while our Asia-Pacific unit benefitted from the startup of two-year offshore contract that began late in the second quarter. Revenues from the Europe, Middle East and Africa region also improved sequentially as the ramp-up continues on our contract in Algeria. In North America, revenues were up slightly on a sequential basis to $151 million as the seasonal recovery in Canada offset declines in the US business resulting from lower rig count.
Our Mats and Integrated Services business posted another strong quarter, achieving a record level above revenue and operating income. As the gas drilling rig count continues to decline, we’re seeing our competitors respond with more aggressive pricing, leading to an overall weakening in the US rental market. For the quarter, however, this is offset by strong mat sales, including a large sale for an infrastructure project in the utility industry, along with an improvement in our international rental business in the United Kingdom which benefitted from the Summer Olympics.