HOUSTON, April 24, 2014 /PRNewswire/ -- CARBO
Ceramics Inc. (NYSE: CRR) today reported net income of $18.4 million, or $0.80 per share, on revenues of $148.6 million for the quarter ended March 31, 2014.
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President and CEO Gary Kolstad
commented, "Sales volumes for the first quarter were impacted by
weather disruptions in the northern regions in North America, including the Bakken. In
addition to the reduced fracturing activity at the well site caused
by the cold weather, the railroads' distribution issues and
congestion caused delays at the main rail terminals in the north
and negatively impacted proppant deliveries throughout those
northern regions. However, we saw improvement in March and we
believe that the potential for higher industry activity levels
exists for the remainder of the year, driven by a continuing trend
of more fracs per well and modest drilling and completion
efficiency gains.
"Given these challenges, we were pleased that overall profit
margins improved, and North
America (Canada and the
U.S.) ceramic proppant sales volumes were slightly higher compared
to the first quarter of last year. Ceramic proppant pricing
was relatively flat. We also had year-over-year growth in our
resin-coated products and StrataGen® consulting
business. StrataGen continues to grow in the key resource
plays, and we continue to add experienced technical personnel to
meet our clients' demands.
"CARBO's Production Enhancement
technologies, delivered through our Design, Build, and Optimize
the FracTM
platform, continue to improve well performance by increasing our
clients' production and Estimated Ultimate Recovery (EUR). As
a result, our client list grew, even though quarterly sales volumes
were challenged due to weather.
"Construction on Millen Line 1 is on schedule and should be
completed by the end of the second quarter. This will add 250
million pounds of annual ceramic proppant capacity.
"Falcon Technologies®, our Environmental Services
business, was also impacted by weather disruptions in the northern
regions," Mr. Kolstad said.
First Quarter Results
Revenues for the first quarter of 2014 increased one percent, or
$0.9 million, compared to the first
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 first quarter of 2014 increased eight
percent, or $2.0 million, compared to
the first quarter of 2013. The increase is primarily the result of
a favorable ceramic product mix.
Net income for the first quarter of 2014 increased five percent,
or $0.9 million, compared to the
first quarter of 2013.
The Company repurchased 36,969 shares of its common stock at an
average price of $109.88 per share
during the first quarter of 2014 pursuant to its previously
announced stock repurchase program. Since September 2008, over 1.9 million shares have been
repurchased at an average price of $44.33 per share.
Proppant Sales
Volumes
(in million
lbs)
|
Three Months
Ended
March 31,
2014
|
Three Months
Ended
March 31,
2013
|
|
|
|
Ceramic
|
373
|
398
|
Resin-Coated Sand
(RCS)
|
48
|
25
|
Northern White
Sand
|
157
|
22
|
Total
|
578
|
445
|
|
|
|
Technology and Business Highlights
- In the Antelope field of the Bakken shale, an independent
operator employed CARBOECONOPROP®, a low
density ceramic proppant, in two recent wells. Initial
production rates for both wells significantly exceeded
expectations, and the operator plans to continue to use
high-quality CARBO ceramic
proppants in its Bakken drilling and completion programs.
- In the Eagle Ford shale, a large operator used CARBOECONOPROP in its well and
realized a 20% increase in cumulative production over the previous
sand/resin-coated sand well. The increased production yielded
approximately $800,000 of net
incremental value in the first year.
- In the Bone Springs play of the Delaware Basin, StrataGen has been enlisted by
two operators to design, build, and optimize its hydraulic
fracturing programs. These frac programs utilized
CARBOLITE® and
CARBOECONOPROPwhich
resulted in a 65% conductivity improvement and doubled the
production rates as compared to nearby offset wells. The
resulting lower finding and developments costs, as well as
accelerated payback, are critical to these
operators.
- In the Clear Fork play of the Permian basin, a large operator
enlisted StrataGen to provide field consulting services on
fracturing operations for a 75 well campaign.
- During the quarter, FRACPRO® released a new version
of STIMPRO stimulation software. Features of the new version
include modelling of multiple stimulation treatments, calculating
coiled tubing reel friction, computing optimal pumping rate for
wormhole formation in carbonates, and enables the real-time
monitoring of down-hole events.
Outlook
CEO Gary Kolstad commented on the
outlook for CARBO stating, "As
we've previously mentioned, we remain positive on industry activity
and ceramic sales volumes for the balance of 2014. We believe
the majority of the completion activity that was delayed in the
first quarter due to weather has shifted to the second and third
quarters of 2014. We believe our ceramic volumes could
increase for the second quarter of 2014 when compared to the first
quarter of 2014, subject to the typical second quarter spring break
up and lingering weather effects. We believe pricing for our
product lines will remain relatively flat during the second quarter
of 2014.
"Construction on Millen Line 1 and Millen Line 2 remains on
schedule with anticipated completion dates by the end of the second
quarter of 2014 and 2015, respectively. When completed, these
two lines will bring our total ceramic proppant capacity to 2.25
billion pounds annually. The retrofit of an existing
manufacturing line continues with our KRYPTOSPHERETM
proppant technology. Initial sales of KRYPTOSPHERE LD from
this retrofit are presently expected by the end of the second
quarter of 2015.
"We continue to build inventories of KRYPTOSPHERE HD, our new
ultra-conductive, ultra-high strength proppant for deep well
applications. The Gulf of
Mexico is the primary target market; but some Gulf of Mexico deep water completion activity
has been delayed at least until the second half of 2014.
"Our RCS sales continue to evolve while we develop long-term
strategic relationships and establish CARBO as a leading provider of high-quality,
high-conductivity RCS.
"Work continues on our proppant-delivered technology platforms:
Production Assurance, Production Intelligence and Production Flow
Enhancement. Through collaboration with our clients, we
strive to deliver solutions that solve practical issues in the
reservoir. One resulting product of this collaboration is a
new version of SCALEGUARD®. We anticipate
deploying SCALEGUARD to several new clients over the coming
quarters.
"Falcon Technologies has products in development that have the
potential to launch in the second half of 2014. We believe
these Engineered to Protect® solutions for the
environment and our clients' assets will drive future growth for
Falcon.
"Over the longer term, we believe a continued focus on
technology development will drive growth for both the Production
Enhancement and Environmental Services businesses. We are
excited about the technologies we have to execute on in 2014 and
will continue to listen to our clients' needs in order to provide
value-added solutions in the future," Mr. Kolstad concluded.
Conference Call
As previously announced, a conference call to discuss the
CARBO's first 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/10043906
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 May 2, 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 10043906.
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 FracTM.
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.
|
Three Months Ended
March
31
|
|
____2014____
|
____2013____
|
|
(In thousands except
per share data)
|
Revenues
|
$
148,564
|
$
147,657
|
Cost of
sales
|
104,200
|
105,273
|
Gross
profit
|
44,364
|
42,384
|
SG&A and
other operating expenses
|
16,953
|
16,993
|
Operating
profit
|
27,411
|
25,391
|
Interest income,
net
|
171
|
185
|
Foreign currency
exchange loss, net
|
(23)
|
(12)
|
Other expense,
net
|
(56)
|
(61)
|
Income before income
taxes
|
27,503
|
25,503
|
Income
taxes
|
9,076
|
7,926
|
Net income
|
$
18,427
|
$
17,577
|
Earnings per
share:
|
|
|
Basic
|
$
0.80
|
$
0.76
|
Diluted
|
$
0.80
|
$
0.76
|
|
|
|
Average shares
outstanding:
|
|
|
Basic
|
22,948
|
22,990
|
Diluted
|
22,948
|
22,990
|
|
|
|
Depreciation and
amortization
|
$
11,803
|
$
11,908
|
Selected Balance
Sheet Information
|
|
March 31,
2014
|
|
December 31,
2013
|
|
(In
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
86,098
|
|
$
94,250
|
Other current
assets
|
262,213
|
|
277,132
|
Property,
plant and equipment, net
|
503,619
|
|
478,535
|
Intangible and
other assets, net
|
18,633
|
|
16,870
|
Total
assets
|
882,727
|
|
878,951
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Accrued income
taxes
|
$
6,367
|
|
$
-
|
Other current
liabilities
|
56,846
|
|
56,688
|
Deferred
income taxes
|
52,901
|
|
53,676
|
Shareholders'
equity
|
766,613
|
|
768,587
|
Total liabilities and
shareholders' equity
|
$
882,727
|
|
$
878,951
|
|
|
|
|
SOURCE CARBO Ceramics Inc.