HOUSTON, Oct. 31, 2013 /PRNewswire/ -- CARBO Ceramics
Inc. (NYSE: CRR) today reported net income of $30.1 million, or $1.31 per share, on revenues of $201.5 million for the quarter ended September 30, 2013.
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President and CEO Gary Kolstad
commented, "We are very pleased with the performance of our
Production Enhancement businesses for the third quarter of
2013.
"Third quarter revenue set a new high for the Company, driven by
strong demand for CARBO's high quality, high conductivity ceramic
proppant, combined with market share gains. A quarterly
record in ceramic sales volumes was also achieved, with ceramic
proppant volumes up 41 percent sequentially while ceramic proppant
pricing was relatively stable.
"To meet this demand for our products in the major U.S. shale
plays, such as the Bakken, Eagle Ford and Permian, as well as in
Canada, we drew down finished
goods inventory levels.
"Being a leader in production enhancement technology remains
CARBO's focus. To that end, we expanded our Production
Enhancement solutions during the quarter and unveiled a new
proppant technology. KRYPTOSPHERE is an ultra-conductive,
ultra-high strength proppant technology engineered to maximize and
sustain hydrocarbon flow at high closure stresses for the life of
the well.
"During the quarter, we also expanded upon our technical
marketing campaign incorporating our full suite of Production
Enhancement solutions that allow clients to Design, Build and
Optimize the Frac. This includes an emphasis on synergistic
value that resides in Fracpro®, the industry's most
widely utilized fracture simulation software, and
StrataGen®, our highly specialized completion and
reservoir consultants. In taking this holistic approach, our
clients are provided a complete service that is designed to
increase their recoverable reserves and enhance their return on
investment.
"We also continue to educate the industry on the negative
aspects of lower-quality Chinese ceramic proppant. Through
imagery, the campaign highlights the irregular size and shape, the
rough surfaces and the internal defects of the pellets.
Long-term conductivity data confirms the damaging effects these
characteristics have on well production and EUR.
"Falcon Technologies®, our Environmental Solutions
business, expanded its Engineered to Protect® product
suite during the quarter by installing its first Surface Mounted
Impoundment solution. These impoundments provide clients an
easy method to handle water throughout the completion process," Mr.
Kolstad said.
Third Quarter Results
Revenues for the third quarter of 2013 increased 33 percent, or
$50.3 million, compared to the third
quarter of 2012. The increase is mainly attributed to a 48 percent
increase in proppant sales volumes offset by a 6 percent decrease
in the average proppant selling price for all proppants. North
American (defined as Canada and
the U.S.) proppant sales volumes increased 63 percent, while
international proppant sales volumes decreased 17 percent, compared
to the same period last year.
Operating profit for the third quarter of 2013 increased 26
percent, or $9.2 million, compared to
the third quarter of 2012. The increase in operating profit was
primarily the result of higher proppant sales volumes, offset by a
change in product sales mix with more sand-based products and an
increase in SG&A expense.
Net income for the third quarter of 2013 increased 26 percent,
or $6.3 million, compared to the
third quarter of 2012.
Proppant Sales
Volumes
(in million
lbs)
|
Three Months
Ended
September 30,
2013
|
Three Months
Ended
September 30,
2012
|
|
|
|
Ceramic
|
534
|
401
|
RCS
|
59
|
11
|
Other*
|
16
|
-
|
Total
|
609
|
412
|
|
|
|
* Includes raw sand
sold in the course of producing substrate for
resin-coating.
|
Technology and Business Highlights
- CARBO introduced KRYPTOSPHERE, the new ultra-conductive,
ultra-high strength proppant technology on September 30th at the 2013 SPE Annual Technical
Conference & Exhibition (ATCE) in New
Orleans, LA. The proppant is well suited for high-stress
wells including deepwater Miocene and Lower Tertiary wells. The
technology unveiling was enthusiastically received by both
operators and the major pumping companies.
- Endurance Resources LLC utilized a combination of
CARBOECONOPROP® and CARBOLITE® ceramic
proppant to frac its first two wells in the Second Bone Spring
formation located in Lea County, New
Mexico. The company switched from the traditional white sand
and resin-coated sand to increase conductivity, resulting in a 50
percent higher load recovery under natural flowing conditions.
Early indications are that the initial EUR estimate will be
exceeded by 30 percent.
- On a Bakken well, CARBO successfully designed a
SCALEGUARDTM program to treat co-mingled completion and
formation water that continuously met the minimum inhibitor
concentration threshold for 40,000 barrels of produced water.
SCALEGUARD proppant-delivered scale inhibition was evenly
distributed in each stage, providing protection from the tip of
fracture through surface equipment. The technology eliminates the
need for liquid scale inhibitor while maintaining conductivity and
assuring production.
- In Western Siberia, a major
Russian operator utilized CARBOROSLITE, the new lightweight ceramic
proppant manufactured in CARBO's Russian ceramic proppant plant.
The product is specifically developed for lower stress reservoirs
in Russia, where its lower density
and superior shape improves proppant transport and creates large
volume, higher conductivity fractures for enhanced production.
- EF Energy LLC employed the StrataGen Data and Neural
Analysis® modeling process and EFWORX® model
to identify well production potential in their Frio County, Texas, Eagle Ford shale wells.
StrataGen conducted field data analyses, identified completion and
fracture optimization opportunities, and provided onsite fracture
execution quality control. Results of recent completions have been
exceptional, with an average production improvement of nearly 50
percent.
- In the Permian basin, Falcon Technologies constructed four
Surface Mounted Impoundments for a large E&P operator to
supplement its water processing plant. These impoundments hold
approximately 45,000 barrels of fluid and will be employed to store
both fresh and produced water.
Outlook
CEO Gary Kolstad commented on the
longer-term outlook for CARBO stating, "We commented in January
that the second half of 2013 could be stronger than the first half
of 2013. This is proving to be the case, and it reinforces
our confidence in continuing growth in our core ceramic proppant
business. We are therefore accelerating the planning stages
of Millen Line 2, which will have a 250 million pound per year
capacity. In an effort to shorten the timeline from formal
approval to plant startup, a number of long-lead time items have
already been purchased for Millen Line 2.
"Construction at Millen Line 1 remains on schedule with
anticipated completion by the end of the second quarter of
2014. Once completed, Millen Line 1 will take our annual
ceramic proppant capacity from 1.75 billion pounds to 2.0 billion
pounds.
"We anticipate industry activity during the fourth quarter of
2013 will experience typical reductions due to the holidays and
seasonality. In addition, we will see a sequential decline in
sales volume due to the large drawdown of our ceramic proppant
inventory, caused by high demand in the third quarter. Given
the exceptional third quarter results and that we were able to
reduce inventory significantly, we are aggressively focused on
building capacity at Millen. While the general pricing
environment appears to have stabilized, we believe the continued
oversupply of pressure pumping equipment in the industry will
likely keep price increases from being realized in the near
term.
"Commercialization of KRYPTOSPHERE, CARBO's new ultra-high
conductivity, ultra-high strength proppant technology, is
progressing well. We continue to complete the formal
qualification milestones with our clients and anticipate initial
sales of KRYPTOSPHERE during the first half of 2014. The next
phase for KRYPTOSPHERE will be to apply this technology to our
existing manufacturing footprint. Applying
KRYPTOSPHERE technology to our existing ceramic proppant products
should help us to expand our technology lead in the industry, and
most importantly, further increase the production and EUR of our
clients' oil and gas wells.
"The resin-coated sand product line continued to see market
expansion during the third quarter of 2013. We also
experienced improvement in resin-coated sand manufacturing
costs. However, we expect RCS margins to remain challenging
until the oversupply of RCS in the market dissipates.
"CARBO's R&D efforts are centered on listening to our
clients and delivering technologies that focus on value
creation. We are excited about the opportunities that lie
ahead for CARBO. It is our belief that capitalizing on these
opportunities will strengthen CARBO's position as a leader in
production enhancement and environmental solutions, and continue to
build an enduring company," Mr. Kolstad concluded.
Conference Call
As previously announced, a conference call to discuss the
CARBO's third quarter results is scheduled for today at
10:30 a.m. Central Time (11:30 a.m. Eastern). Due to historical high
call volume, CARBO is offering participants the opportunity to
register in advance for the conference through the following
link:
http://dpregister.com/10034270
Registered participants will immediately receive an email with a
calendar reminder and a dial-in number and PIN that will allow them
immediate access to the call.
Participants who do not wish to pre-register for the call may
dial in using (866) 652-5200 (for U.S. and Canadian callers) or
(412) 317-6060 (for locations outside North America) and ask for the "CARBO
Ceramics" call. The conference call also can be accessed through
CARBO's website, www.carboceramics.com.
A telephonic replay of the earnings conference call will be
available through November 7, 2013,
at 9:00 a.m. Eastern Time. To access
the replay from the U.S. and Canada, please dial 1-877-344-7529;
international callers outside North
America should dial 1-412-317-0088. Please reference
conference number 10034270. Interested parties may also access the
archived webcast of the earnings teleconference through CARBO's
website approximately two hours after the end of the call.
About CARBO
CARBO is an oilfield services technology company providing
industry-leading products and services for:
- Production Enhancement – increasing oil and gas well production
and reserves (EUR), by integrating technologies and intellectual
capital to Design, Build and Optimize the frac
- Environmental Spill Prevention and Containment
CARBO enhances oil and natural gas well production and recovery
by providing technology products and services to design, build, and
optimize fracs. CARBO has the industry-leading fracture simulation
software, is the world's largest producer of ceramic proppant, has
proprietary technology it applies to proppant to aid in fracture
diagnostics and production assurance, and provides consulting
services for fracture and completion optimization. CARBO also
provides a range of technology solutions for spill prevention and
containment.
Forward-Looking Statements
The statements in this news release that are not historical
statements, including statements regarding our future financial and
operating performance, are forward-looking statements within the
meaning of the federal securities laws, including the Private
Securities Litigation Reform Act of 1995. All forward-looking
statements are based on management's current expectations and
estimates, which involve risks and uncertainties that could cause
actual results to differ materially from those expressed in
forward-looking statements. Among these factors are changes
in overall economic conditions, changes in the cost of raw
materials and natural gas used in manufacturing our products,
ability to manage distribution costs effectively, changes in demand
and prices charged for our products, changes in the demand for, or
price of, oil and natural gas, risks of increased competition,
technological, manufacturing, distribution and product development
risks, loss of key customers, changes in government regulations,
foreign and domestic political and legislative risks, the risks of
war and international and domestic terrorism, risks associated with
foreign operations and foreign currency exchange rates and
controls, weather-related risks and other risks and uncertainties
described in our publicly available filings with the Securities and
Exchange Commission. We assume no obligation to update
forward-looking statements, except as required by law.
- tables follow -
|
Three Months Ended
September
30
|
Nine Months Ended
September
30
|
|
____2013____
|
____2012____
|
____2013____
|
____2012____
|
|
(In thousands except
per share data)
|
(In thousands except
per share data)
|
Revenues
|
$
201,477
|
$
151,134
|
$
502,879
|
$
491,914
|
Cost of
sales
|
138,718
|
100,984
|
358,402
|
314,047
|
Gross
profit
|
62,759
|
50,150
|
144,477
|
177,867
|
SG&A
and other operating expenses
|
18,562
|
15,135
|
51,013
|
48,857
|
Operating
profit
|
44,197
|
35,015
|
93,464
|
129,010
|
Interest income
(expense), net
|
189
|
17
|
616
|
(18)
|
Foreign currency
exchange gain (loss), net
|
29
|
(175)
|
(2)
|
(31)
|
Other expense,
net
|
(16)
|
(2)
|
(87)
|
(214)
|
Income before income
taxes
|
44,399
|
34,855
|
93,991
|
128,747
|
Income
taxes
|
14,251
|
10,957
|
29,960
|
42,641
|
Net income
|
$
30,148
|
$
23,898
|
$
64,031
|
$
86,106
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
$
1.31
|
$
1.04
|
$
2.77
|
$
3.73
|
Diluted
|
$
1.31
|
$
1.04
|
$
2.77
|
$
3.73
|
|
|
|
|
|
Average shares
outstanding:
|
|
|
|
|
Basic
|
22,941
|
22,963
|
22,961
|
22,966
|
Diluted
|
22,941
|
22,963
|
22,961
|
22,967
|
|
|
|
|
|
Depreciation and
amortization
|
$
11,752
|
$
11,532
|
$
35,146
|
$
33,333
|
Selected Balance
Sheet Information
|
|
|
|
|
|
September 30,
2013
|
|
December 31,
2012
|
|
(In
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
73,757
|
|
$
90,635
|
Other current
assets
|
304,505
|
|
259,282
|
Property,
plant and equipment, net
|
452,052
|
|
426,232
|
Intangible and
other assets, net
|
18,076
|
|
20,565
|
Total
assets
|
860,554
|
|
808,878
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Accrued income
taxes
|
$
2,185
|
|
$
727
|
Other current
liabilities
|
63,625
|
|
50,103
|
Deferred
income taxes
|
47,918
|
|
44,970
|
Shareholders'
equity
|
746,826
|
|
713,078
|
Total liabilities and
shareholders' equity
|
$
860,554
|
|
$
808,878
|
|
|
|
|
SOURCE CARBO Ceramics Inc.