HOUSTON, April 26, 2012 /PRNewswire/ -- CARBO
Ceramics Inc. (NYSE: CRR) today reported net income of $30.3 million, or $1.31 per diluted share, on revenues of
$163.2 million for the quarter ended
March 31, 2012.
President and CEO Gary Kolstad
commented, "Compared to the fourth quarter of 2011, sales volumes
rebounded, up 4% to 404 million pounds while our average proppant
price remained relatively flat. We were very pleased with the
trend in the first quarter sales volumes as we continued to place
increased amounts of ceramic proppant into the liquids-rich
basins. Additionally, our client base continued to expand as
E&P operators achieve increased production results by utilizing
our high conductivity, high quality ceramic proppant.
"The industry transition in North
America from gas-directed activity to oil-directed activity
continues. For CARBO, this transition is largely complete as
the vast majority of our U.S. ceramic proppant sales volume is now
being sold into liquids-rich basins.
"This increased amount of activity in the
infrastructure-limited, liquids-rich basins introduced supply chain
challenges to the industry. These challenges resulted in
higher supply chain costs for CARBO this quarter. CARBO is
investing in strategic projects to strengthen its distribution in
order to meet the present and future demands of our clients.
We are pleased with the progress made thus far and anticipate
these investments should be completed before the end of the
year.
"In late January, the start-up of our second resin-coating line
in New Iberia was initiated. This line produced minimal
quantities during the quarter due to the limited availability of
third-party supplied northern white sand.
"Our environmental risk reduction business, Falcon
Technologies®, continues to see growth in both client base and
geographical operations. Product line growth also continues in its
suite of Engineered to Protect™ solutions for E&P
operators with the introduction of their first reusable Location
Liner during the first quarter," Mr. Kolstad said.
First Quarter Results
Revenues for the first quarter of 2012 increased 8 percent, or
$12.3 million, when compared to the
first quarter of 2011. North American (defined as
Canada and the U.S.) proppant
sales volume decreased 2 percent while International proppant sales
volume increased 21 percent, compared to the same period last
year.
Compared to the fourth quarter of 2011, the Company experienced
increases in both North American and International proppant sales
volumes.
Operating profit for the first quarter of 2012 remained
relatively flat compared to the first quarter of 2011. Higher
gross profit from an increase in the average proppant selling price
and a greater contribution from some of the Company's other
business units were relatively offset by increases in freight,
logistics, and selling, general, administrative and other operating
expenses.
Net income for the first quarter of 2012 remained relatively
flat compared to the first quarter of 2011.
The Company repurchased 60,000 shares of its common stock at an
average price of $95.44 per share
during the first quarter of 2012 pursuant to its previously
announced stock repurchase program. Since September 2008, 1.9 million shares have been
repurchased at an average price of $41.70 per share.
Proppant
Sales Volumes
(in
millions lbs)
|
Three
Months Ended
March 31,
2012
|
Three
Months Ended
March 31,
2011
|
|
|
|
Ceramic
Proppant Volumes
|
362
|
376
|
Other
Proppant Volumes*
|
42
|
23
|
Total
|
404
|
399
|
|
|
|
* Includes
CARBOBOND® RCS (resin-coated sand) and API / ISO certified
ceramic proppant manufactured on an outsourced basis.
|
Technology and Business Highlights
- CARBO technical personnel successfully completed several
fracturing design and evaluation projects demonstrating the
benefits of Economic Conductivity® and Data and Neural
Analysis(SM) (DANA) studies in various unconventional
reservoirs.
- CARBO has successfully demonstrated the value of
CARBONRT®, a non-radioactive detectable proppant, on five
continents around the globe. The backlog of CARBONRT
jobs continues to grow as E&P operators choose to measure
fracture height without the environmental concerns associated with
radioactive material.
- Falcon Technologies broadened its product suite of
solutions that are Engineered to Protect by delivering its
first Location Liner during the quarter. The Location Liner
serves as an impermeable and efficient protector of the ground soil
during completion and fracturing operations, and has the ability to
be transported and re-used on multiple locations.
Outlook
CEO Gary Kolstad commented on the
outlook for the Company stating, "We believe 2012 will be a
challenging year, primarily due to the continued transition
underway by the industry to relocate equipment, services, and
supplies into the liquids-rich basins in North America. As a
result, pricing pressures will likely become more evident in the
industry over the remainder of the year. With respect to our
pricing strategy, it is important to note that during past cycles
we have been prudent about increasing price during the upturns and
disciplined during the downturns. At this point, second
quarter proppant sales volumes are expected to be similar, or
better than, the volumes sold in the first quarter of 2012, despite
the lower activity in Canada as a
result of spring break-up. We continue to pursue new
opportunities by demonstrating the benefits of Economic
Conductivity and the resulting increase in production rates and
estimated ultimate recovery that can be achieved by using the
Company's high quality, high conductivity proppants.
"With respect to our future ceramic production capacity
additions, we are pleased to announce the receipt of the Air
Quality Permit for our plant in Millen,
Georgia and are moving forward with construction of the
first 250 million pound line. Operations at our Millen plant could commence near the end of
2013.
"As previously mentioned, we initiated the start-up of our 300
million pound resin-coated line in New Iberia in late January
2012. Production output, however, continues to be limited by
the availability of third-party supplied northern white sand that
meets the Company's specifications. The completion of our
sand processing facility in Marshfield,
Wisconsin is a priority, and we expect to be utilizing our
own sand reserves in the third quarter of 2012. Regarding our
Marshfield, Wisconsin
resin-coating operation, capital spending on this project has been
slowed by approximately six months and this operation could
commence near the end of the first half of 2013.
"We continue to expect solid growth from Falcon Technologies as
it builds out a suite of Engineered to Protect solutions
that protect our clients' assets and reputations. Falcon
continues to expand geographically, with a new operations
center in Colorado.
"In summary, 2012 will have its challenges as supply and demand
dynamics of the industry are rebalanced. However, as we
have done for over 30 years, we will continue to focus on managing
the business through these swings in activity and positioning the
Company for long-term success," Mr. Kolstad concluded.
As previously announced, a conference call to discuss the
Company's first quarter results is scheduled for today at
10:00 a.m. Central Time (11:00 a.m. Eastern). To participate in the
teleconference, investors in the U.S. should dial
1-877-883-0383 at least 10 minutes before the start time and
reference conference number 10012072. Canada-based callers should dial
1-877-885-0477, and international callers outside of
North America should dial
1-412-902-6506. The conference call also can be accessed by
visiting the Company's website, www.carboceramics.com.
CARBO is the world's largest supplier of ceramic proppant for
fracturing oil and gas wells, and a major supplier of resin coated
sand proppant; the provider of the industry's most widely used
fracture simulation software; and a provider of fracture design and
consulting services. The Company also provides a broad range of
technologies for spill prevention, containment and countermeasures,
along with 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 the cost of raw
materials and natural gas used in manufacturing our products,
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
March
31
|
|
2012
|
2011
|
|
(In
thousands except per share data)
|
Revenues
|
$
163,166
|
$
150,830
|
Cost of
sales
|
99,702
|
88,774
|
Gross
profit
|
63,464
|
62,056
|
Selling, general & administrative expenses
|
16,652
|
14,287
|
Start-up costs
|
62
|
-
|
Loss on disposal or impairment of assets
|
5
|
1,679
|
Operating
profit
|
46,745
|
46,090
|
Interest
(expense) income, net
|
(44)
|
44
|
Foreign
currency exchange loss, net
|
(435)
|
(188)
|
Other
expense, net
|
(259)
|
(77)
|
Income
before income taxes
|
46,007
|
45,869
|
Income
taxes
|
15,716
|
15,705
|
Net
income
|
$ 30,291
|
$ 30,164
|
|
|
|
Earnings
per share:
|
|
|
Basic
|
$ 1.31
|
$ 1.30
|
Diluted
|
$ 1.31
|
$ 1.30
|
|
|
|
Average
shares outstanding:
|
|
|
Basic
|
22,974
|
23,015
|
Diluted
|
22,975
|
23,016
|
|
|
|
Depreciation and amortization
|
$ 10,604
|
$ 8,180
|
Selected
Balance Sheet Information
|
|
|
|
|
|
March 31,
2012
|
|
December
31, 2011
|
|
(In
thousands)
|
Assets
|
|
|
|
Cash and cash equivalents
|
$
32,033
|
|
$
41,270
|
Other current assets
|
263,129
|
|
261,295
|
Property, plant and equipment, net
|
411,169
|
|
392,659
|
Intangible and other assets, net
|
32,889
|
|
33,477
|
Total
assets
|
751,384
|
|
740,865
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
Accrued income taxes
|
$
8,167
|
|
$
-
|
Other current liabilities
|
59,678
|
|
79,066
|
Deferred income taxes
|
35,848
|
|
31,641
|
Shareholders' equity
|
647,691
|
|
630,158
|
Total
liabilities and shareholders' equity
|
$ 751,384
|
|
$ 740,865
|
|
|
|
|
SOURCE CARBO Ceramics Inc.