Conference Call Scheduled for Today, 10:00 a.m. Central Time
IRVING, Texas, Oct. 30 /PRNewswire-FirstCall/ -- CARBO Ceramics
Inc. (NYSE:CRR) today reported third quarter net income of $18.4
million, or $0.75 per diluted share, for the quarter ended
September 30, 2008. The Company previously reported that it had
agreed to sell its fracture and reservoir diagnostics business to
Halliburton Energy Services Inc. As a result of that transaction,
which closed on October 10, 2008, the results of this business have
been accounted for as discontinued operations. Continuing
operations include the Company's ceramic proppant, software,
consulting services and geotechnical monitoring businesses. Net
income from continuing operations for the third quarter of 2008 was
$15.3 million, or $0.62 per diluted share, on revenues of $102.6
million. President and CEO Gary Kolstad commented, "Our proppant
business growth can be attributed to an increased awareness and
acceptance by the E&P industry of the economic benefits of
employing our ceramic proppant in an increasing number of
reservoirs. CARBO's products continued to penetrate the resource
plays in North America, while our newest product,
CARBOHYDROPROP(TM), experienced overwhelming demand. The proppant
business generated record revenue as the result of sales volume
that increased 35 percent compared to last year's third quarter and
a 6 percent improvement in pricing over the second quarter of 2008.
North American sales volume increased by 47 percent compared to
last year's third quarter despite an increase of only 6 percent in
the U.S. natural gas rig count and a 24 percent increase in the rig
count in Canada. "Looking forward, the lack of credit availability
and the slowing global economy raise some concerns about the level
of drilling activity in 2009. However, we are entering this period
with a very strong market where demand for our proppant in North
America presently exceeds our domestic production capacity. We
believe that any downturn in drilling will be relatively short in
duration primarily due to the steep decline curves in reservoirs
currently producing the bulk of U.S. natural gas. We remain
committed to adding manufacturing capacity and developing new
technologies to support the long term needs of our customers. In
addition, our strong financial position allows us the flexibility
to explore opportunities to grow our business through acquisition."
Third Quarter Results Revenues for the third quarter increased 38
percent compared to last year's third quarter due primarily to a 35
percent increase in proppant sales volume. Worldwide proppant sales
totaled a record 306 million pounds for the quarter. Sales volume
in North America increased 47 percent compared to the third quarter
of 2007 due to the increasing acceptance of the Company's ceramic
proppant in reservoirs that had previously used sand-based
proppants. Overseas sales volume decreased 6 percent compared to
the same period last year. Sequentially, the average selling price
for the Company's ceramic proppants increased approximately 6
percent. Pricing on CARBOHYDROPROP(TM) has improved considerably
since its introduction in the first quarter of this year. Operating
profit from continuing operations for the third quarter of 2008
increased $3.1 million, or 18 percent, compared to the third
quarter of 2007 due primarily to the significant increase in
proppant sales volume and revenues. Operating margins declined
compared to the previous year due to an increase in depreciation,
and higher costs for natural gas and increased raw material costs
for the Company's high-strength products. Selling, general and
administrative expenses declined as a percentage of revenue for the
third quarter of 2008 compared to the same period last year but
increased in total due to higher spending for sales and marketing
activities associated with higher proppant sales, engineering
expenses related to improved global plant design and information
technology expenses associated with the Company's new enterprise
resource planning system. The following items impacted operating
profit and/or net income from continuing operations during the
third quarter of 2008 and resulted in changes in financial
performance compared to the third quarter of 2007. -- The Company
recorded a loss of $1.4 million for the write-off of prepaid
purchases of ceramic proppant from a third party Chinese-based
proppant manufacturer that was recently forced to liquidate its
assets due to the inflationary pressure in China in recent years.
The write-off, net of tax effects, resulted in a reduction in
earnings per share of approximately $0.04 on a diluted basis for
the quarter. -- The recent strength of the U.S. dollar resulted in
a non-cash loss of $0.5 million on foreign currency exchange
fluctuations associated with a loan outstanding to the Company's
Russian subsidiary. This loss, net of tax effects, resulted in a
reduction in earnings per share of approximately $0.01 per share on
a diluted basis for the quarter. In comparison, in the third
quarter of 2007, the Company recorded a gain on foreign currency
fluctuations of $1.6 million or an increase in earnings per share
of approximately $0.04 on a diluted basis. -- The Company reduced
income tax expense in the quarter by approximately $2.1 million.
The reduction was comprised of adjustments to recognize depletion
deductions from mining of the Company's kaolin reserves which
supply its lightweight ceramic proppant operations and to adjust
its accrued tax liability to reflect the actual tax liability
incurred upon filing prior year federal and state tax returns. The
favorable tax adjustments resulted in an increase in earnings per
share of approximately $0.08 on a diluted basis for the quarter.
The Company had a favorable adjustment in the third quarter of 2007
to adjust its accrued tax liability to reflect the actual tax
liability incurred upon filing prior year federal and state tax
returns totaling $0.5 million or $0.02 per share on a diluted
basis. Net income from continuing operations for the third quarter
of 2008 increased $2.5 million compared to the third quarter of
2007. Technology and Business Highlights Highlights for the third
quarter included: -- The Company's products continued to penetrate
the North American resource plays with CARBO's high-quality ceramic
proppant employed in the Bakken, Haynesville, Woodford, Deep
Barnett and Marcellus shale formations. -- The Company successfully
introduced its new Economic Conductivity campaign at the Society of
Petroleum Engineer's Annual Technical Conference and Exhibition.
The E&P industry has traditionally used simplified models to
predict a well's production capacity. Economic Conductivity
analysis draws upon significant advances in technology which, when
combined with the results of detailed case studies, enable a more
precise determination of which proppant will generate the optimal
financial return. As previously announced, a conference call to
discuss the Company's third quarter and year-to-date results has
been scheduled for today at 10:00 a.m. central time (11:00 a.m.
eastern). To participate in the call, please dial 877-261-8992 and
refer to the "CARBO Ceramics Conference Call" or conference ID
#22936341. International callers should dial 847-619-6548. The call
can also be accessed live or on a delayed basis via the Company's
Web site, http://www.carboceramics.com/. CARBO Ceramics Inc., based
in Irving, Texas, is the world's largest supplier of ceramic
proppant, the provider of the world's most popular fracture
simulation software, and a leading provider of fracture design,
engineering and consulting services. The Company also provides a
broad range of technologies for geotechnical monitoring. 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 demand for our products, changes in the
demand for, or price of, oil and natural gas, risks of increased
competition, technological, manufacturing 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 SEC. We assume
no obligation to update forward-looking statements, except as
required by law. - tables follow - Three Months Ended Nine Months
Ended September 30 September 30 2008 2007 2008 2007 (In thousands
except (In thousands except per share data) per share data)
Revenues $102,587 $74,313 $282,247 $219,004 Cost of sales 70,449
49,189 196,645 142,557 Gross profit 32,138 25,124 85,602 76,447
Selling, general & administrative expenses 10,183 7,555 27,502
21,544 Start-up costs - 204 231 1,171 Loss on disposal or write-off
of assets 1,449 - 1,559 - Operating profit 20,506 17,365 56,310
53,732 Interest income, net 21 72 77 424 Foreign currency exchange
gain (loss), net (511) 1,581 916 2,377 Other income (expense), net
75 (36) 262 (95) Income before income taxes 20,091 18,982 57,565
56,438 Income taxes 4,779 6,128 17,649 18,743 Net income from
continuing operations 15,312 12,854 39,916 37,695 Discontinued
operations (1): Operating results, net of income taxes 3,108 1,209
6,265 2,548 Net income $18,420 $14,063 $46,181 $40,243 (1)
Discontinued operations include the Company's fracture mapping and
reservoir monitoring assets which were sold to Halliburton Energy
Services Inc. on October 10, 2008 for $143.7 million. Basic
earnings per share: Continuing operations $0.62 $0.53 $1.63 $1.55
Discontinued operations 0.13 0.05 0.26 0.10 Basic earnings per
share $0.75 $0.58 $1.89 $1.65 Diluted earnings per share:
Continuing operations $0.62 $0.52 $1.62 $1.54 Discontinued
operations 0.13 0.05 0.26 0.10 Diluted earnings per share $0.75
$0.57 $1.88 $1.64 Average shares outstanding: Basic 24,482 24,377
24,466 24,357 Diluted 24,567 24,504 24,560 24,474 Depreciation and
amortization: Continuing operations $6,219 $5,061 $18,473 $14,006
Discontinued operations 1,039 1,234 3,994 3,556 $7,258 $6,295
$22,467 $17,562 Selected Balance Sheet Information Sept. 30, 2008
Dec. 31, 2007 (In thousands) Assets Assets of continuing
operations: Cash and cash equivalents $31,931 $12,296 Other current
assets 140,351 114,037 Property, plant and equipment, net 247,101
253,261 Intangible and other assets, net 2,360 2,465 Assets of
discontinued operations 70,983 66,191 Total assets 497,585 453,123
Liabilities and Shareholders' Equity Liabilities of continuing
operations: Current liabilities 33,194 29,240 Deferred income taxes
36,618 30,420 Liabilities of discontinued operations 2,217 4,024
Shareholders' equity 425,556 389,439 Total liabilities and
shareholders' equity 497,585 453,123 DATASOURCE: CARBO Ceramics
Inc. CONTACT: Paul Vitek, CFO of CARBO Ceramics Inc.,
+1-972-401-0090 Web site: http://www.carboceramics.com/
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