HOUSTON, July 31, 2014 /PRNewswire/ -- CARBO Ceramics Inc. (NYSE: CRR) today reported
net income of $23.0 million, or
$1.00 per share, on revenues of
$176.6 million for the quarter ended
June 30, 2014.
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President and CEO Gary Kolstad
commented, "The CARBO production
enhancement business, based upon our Design, Build, and Optimize
the Frac™
technologies, strengthened in the second quarter of 2014. We
were pleased to achieve 19 percent sequential revenue growth.
"We gained new clients in several oil and gas basins, where
operators utilized the integrated technologies of the Design,
Build, and Optimize the Frac
platform and achieved exceptional well production results.
STRATAGEN® engineers using FRACPRO® to design
and optimize fracs, coupled with our high quality, high
conductivity ceramic proppant has led to higher production, EUR and
ROI for the operators.
"Ceramic proppant sales volumes increased sequentially, as
fracturing activity rebounded from first quarter's harsh weather
conditions and rail-related logistical challenges. Ceramic
proppant demand exceeded our second quarter capacity which
necessitated our dipping into finished goods inventory. We
have also continued to see growth from clients that have become
more aware of the negative impact that low quality, Chinese ceramic
proppant can have on their well production. Pricing for
CARBO ceramic proppant was
relatively stable during the quarter.
"We are excited to announce that Millen Line 1 is now
operational. Once it reaches its stated capacity, our total
annual ceramic capacity will be two billion pounds.
Construction also continues on Millen Line 2 and the retrofit of an
existing plant to our new proppant technology,
KRYPTOSPHERE™.
"We are continuing to build out our distribution network as we
grow and should start seeing benefits in the second half of the
year. We believe these investments should help address the
distribution challenges resulting from quarterly fluctuations in
industry activity, and the increased amount of proppant being used
per well.
"Developing production enhancement technologies that improve
well production and EUR remains the core element of our strategy.
The latest CARBO production
assurance technology, SCALEGUARD®, was pumped during the
quarter in a number of wells, with very positive initial
results. SCALEGUARD is a ceramic proppant, infused with
scale-inhibiting chemical that is placed throughout the fracture as
part of the standard fracturing process. This
proppant-delivered technology affords our clients long-term
protection against scaling, compared to alternative products
available today which provide a much shorter-term benefit.
"The Board of Directors recently approved a 10 percent increase
in our quarterly dividend. This marks the fourteenth
consecutive year of increases and reflects the Board's continued
confidence in the long-term prospects for CARBO, and a commitment to increase value for
our shareholders as we execute on our long-term growth strategies,"
Mr. Kolstad said.
Second Quarter Results
Revenues for the second quarter of 2014 increased 15 percent, or
$22.8 million, compared to the second
quarter of 2013. The increase is mainly attributable to an increase
in proppant sales volumes, as specified in the table below.
Operating profit for the second quarter of 2014 increased 43
percent, or $10.2 million, compared
to the second quarter of 2013. The increase is primarily the result
of higher ceramic sales volumes and a favorable ceramic product
mix, net of higher SG&A expenses.
Net income for the second quarter of 2014 increased 41 percent,
or $6.7 million, compared to the
second quarter of 2013.
Proppant Sales
Volumes
(in million
lbs)
|
Three Months
Ended
June 30,
2014
|
Three Months
Ended
June 30,
2013
|
|
|
|
Ceramic
|
454
|
378
|
Resin-Coated Sand
(RCS)
|
43
|
68
|
Northern White
Sand
|
271
|
11
|
Total
|
768
|
457
|
|
|
|
Technology and Business Highlights
- A Permian Basin operator has significantly enhanced well
production by utilizing the integrated technologies of the
Design, Build, and Optimize the Frac platform to maximize
production. When the operator began working with CARBO, the focus was on improving ultimate
recovery by optimizing the fracture design. Today, the
company is also utilizing STRATAGEN consulting services and
CARBOLITE®, a high-performance, low-density ceramic
proppant, to increase their ROI.
- In the Bone Springs play of the Permian basin, an independent
operator was using resin-coated sand in their well stimulation
program. Recently, the operator replaced the resin-coated
sand with CARBOECONOPROP®, a low-density ceramic
proppant, and significantly enhanced production due to improved
conductivity.
- CARBONRT® momentum continues with its use in unique
applications and expansion into new markets. This
non-radioactive detectable technology was employed in a North
American well to verify that the well casing remained isolated from
a nearby water treatment facility, ensuring regulatory
compliance. Also, CARBONRT was used in Argentina to measure the propped fracture
height and confirm confinement of the hydraulic fracturing
treatments within target boundaries. CARBONRT has now been
employed for fracture diagnostics in 16 countries.
- In the Rockies, SCALEGUARD was successfully pumped as part of
the standard fracturing process in several wells during the
quarter. SCALEGUARD provides long-term protection against scale
formation while maintaining maximum fracture conductivity.
The operator was pleased with the very positive initial results and
is planning additional wells utilizing SCALEGUARD services.
- FRACPRO released the iPhone version of their FRACPRO REMOTE
app. This application, now for all iOS devices, allows users
to connect remotely to a frac job and receive data in real
time.
Outlook
CEO Gary Kolstad commented on the
outlook for CARBO stating, "The
third quarter has recently been the most active quarter in the year
for the industry in North America.
We believe our ceramic proppant sales volumes will
approximate our quarterly productive capacity with the possibility
of drawing down some finished goods inventories, which are at a
lower level than last year. We anticipate pricing for ceramic
proppant to remain relatively stable during the third quarter of
2014.
"Millen Line 1 production is ramping up, and we expect to be at
full rate by the end of the third quarter of 2014.
Construction on Millen Line 2 and the retrofit of an existing plant
to produce KRYPTOSPHERE LD are proceeding well, and both are
expected to be completed by the end of the second quarter of
2015. The completion of Millen Line 2 will take our total
annual ceramic proppant capacity to 2.25 billion pounds and, in
combination with Millen Line 1, will result in an increase to our
ceramic proppant capacity of 29 percent in approximately one
year. We continue to believe there is increasing demand for
high quality, high conductivity ceramic proppant, which provides us
with confidence in bringing on additional ceramic proppant
capacity.
"Distribution of proppant to the well site remains an important
part of the CARBO service offering
to our clients. A recent challenge the industry is facing is a
tight supply of trucking services in certain areas to transport
proppant to the well site. Given this industry issue, we may
likely face increased transportation costs and delivery
issues.
"We continue to build inventories of KRYPTOSPHERE HD, our new
ultra-conductive, high density ceramic proppant for deep well
applications. Completion activity in our target market for
KRYPTOSPHERE HD, the Gulf of
Mexico, continues to be delayed. While ultimately this
timing is out of our control, we are optimistic that opportunities
for lower tertiary completions will increase in 2015.
"Going forward, we remain excited not only about the
advancements we are making in proppant technology with KRYPTOSPHERE
but also in the production enhancement technologies we are
developing in our three platforms: Production Assurance, Flow
Enhancement and Fracture Evaluation. Using proppant as the
delivery mechanism for these technologies is unique, as it is the
one thing that stays in the reservoir for the life of the
well. We see significant opportunities to leverage our
proppant-delivered technologies to solve production-related
problems, maximize production, increase EUR, and provide valuable
information about the reservoir," Mr. Kolstad concluded.
Conference Call
As previously announced, a conference call to discuss the
CARBO second 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/10047976
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 August 4, 2014, 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 10047976.
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
Our Production Enhancement businesses increase E&P
Operators' Production and EUR…by providing industry leading
technology to Design, Build, and Optimize the Frac™.
Environmental Services
Our Environmental Services business protects E&P Operators'
assets, minimizes environmental risk, and lowers operating costs
(LOE).
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, our
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
June 30
|
|
Six Months
Ended
June 30
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
(In thousands except
per share data)
|
|
(In thousands except
per share data)
|
Revenues
|
$ 176,561
|
|
$ 153,744
|
|
$ 325,125
|
|
$ 301,402
|
Cost of
sales
|
122,913
|
|
114,411
|
|
227,113
|
|
219,684
|
Gross
profit
|
53,648
|
|
39,333
|
|
98,012
|
|
81,718
|
SG&A and other
operating expenses
|
18,728
|
|
15,457
|
|
35,681
|
|
32,451
|
Start-up
costs
|
811
|
|
-
|
|
811
|
|
-
|
Operating
profit
|
34,109
|
|
23,876
|
|
61,520
|
|
49,267
|
Other income,
net
|
200
|
|
212
|
|
292
|
|
325
|
Income before income
taxes
|
34,309
|
|
24,088
|
|
61,812
|
|
49,592
|
Income
taxes
|
11,292
|
|
7,781
|
|
20,368
|
|
15,709
|
Net income
|
$ 23,017
|
|
$ 16,307
|
|
$ 41,444
|
|
$ 33,883
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
1.00
|
|
$
0.71
|
|
$ 1.79
|
|
$ 1.47
|
Diluted
|
$
1.00
|
|
$
0.71
|
|
$ 1.79
|
|
$ 1.47
|
|
|
|
|
|
|
|
|
Average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
22,948
|
|
22,953
|
|
22,948
|
|
22,972
|
Diluted
|
22,948
|
|
22,953
|
|
22,948
|
|
22,972
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$ 11,903
|
|
$ 11,486
|
|
$ 23,706
|
|
$ 23,394
|
Balance Sheet
Information
|
|
June 30,
2014
|
|
December 31,
2013
|
|
(In
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
46,379
|
|
$
94,250
|
Other current
assets
|
284,972
|
|
277,132
|
Property,
plant and equipment, net
|
544,743
|
|
478,535
|
Goodwill
|
12,164
|
|
12,164
|
Intangible and
other assets, net
|
17,103
|
|
16,870
|
Total
assets
|
$ 905,361
|
|
$ 878,951
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities
|
$
57,275
|
|
$
56,688
|
Deferred
income taxes
|
54,473
|
|
53,676
|
Shareholders'
equity
|
793,613
|
|
768,587
|
Total liabilities and
shareholders' equity
|
$ 905,361
|
|
$ 878,951
|
|
|
|
|
SOURCE CARBO Ceramics Inc.