UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) July 31, 2014
CARBO Ceramics Inc.
(Exact Name of Registrant as Specified in Its Charter)
|
|
|
|
|
Delaware |
|
001-15903 |
|
72-1100013 |
(State or Other Jurisdiction
of Incorporation) |
|
(Commission
File Number) |
|
(IRS Employer
Identification No.) |
|
|
|
575 North Dairy Ashford, Suite 300 |
|
|
Houston, Texas |
|
77079 |
(Address of Principal Executive Offices) |
|
(Zip Code) |
(281) 921-6400
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
¨ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
¨ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
¨ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
The following information, including the Exhibit to this Form 8-K, is being furnished pursuant to Item 2.02 Results of Operations
and Financial Condition of Form 8-K. This information is not deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934 and is not incorporated by reference into any Securities Act of 1933 registration
statements.
On July 31, 2014, CARBO Ceramics Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1,
announcing second quarter 2014 earnings.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Pursuant to
General Instruction B.2 of Form 8-K, the following exhibit is furnished with this Form 8-K.
|
|
|
|
|
99.1 |
|
Press Release, dated July 31, 2014. |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
|
|
|
|
|
|
CARBO CERAMICS INC. |
Date: July 31, 2014 |
|
|
|
|
|
|
|
|
|
By: |
|
/s/ Ernesto Bautista III |
|
|
|
|
Ernesto Bautista III |
|
|
|
|
Vice President and |
|
|
|
|
Chief Financial Officer |
3
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Description |
|
|
99.1 |
|
Press Release, dated July 31, 2014. |
4
Exhibit 99.1
NEWS RELEASE
|
|
|
|
|
|
|
CONTACT: |
|
MARK THOMAS |
|
|
|
|
MANAGER OF INVESTOR RELATIONS |
|
|
|
|
(281) 921-6400 |
Release #14-11
CARBO ANNOUNCES SECOND QUARTER 2014 EARNINGS
Conference Call Scheduled for Today, 10:30 a.m. Central Time
|
|
|
Quarterly revenues of $176.6 million compared to $153.7 million in the second quarter of the prior year |
|
|
|
Net income of $23.0 million, or $1.00 per share, for the quarter |
|
|
|
First production commenced at Millen Line 1, currently ramping up to capacity levels |
|
|
|
Quarterly dividend was raised 10 percent and marks the 14th consecutive year of a dividend increase |
HOUSTON, TX (July 31, 2014) 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.
President and CEO Gary Kolstad commented, The CARBO production enhancement business, based
upon our Design, Build, and Optimize the FracTM 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 quarters 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,
KRYPTOSPHERETM.
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.
CARBO Ceramics Second Quarter 2014 Earnings Release
July 31, 2014
Page 2
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 Boards 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. |
CARBO Ceramics Second Quarter 2014 Earnings Release
July 31, 2014
Page 3
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 CARBOs 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 CARBOs website approximately two hours after the end of the call.
CARBO Ceramics Second Quarter 2014 Earnings Release
July 31, 2014
Page 4
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 managements 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 |
|
|
|
|
|
|
|
|
|
|
CARBO Ceramics (NYSE:CRR)
Historical Stock Chart
From Aug 2024 to Sep 2024
CARBO Ceramics (NYSE:CRR)
Historical Stock Chart
From Sep 2023 to Sep 2024