HOUSTON, Oct. 29, 2015 /PRNewswire/ -- CARBO Ceramics
Inc. (NYSE: CRR) today reported a GAAP net loss of $13.9 million, or a loss of $0.60 per share, on revenues of $75.8 million for the quarter ended September 30, 2015. This net loss includes
$3.6 million, or $0.15 per share, of after-tax costs associated
with slowing and idling production and $2.3
million, or $0.10 per share in
miscellaneous after-tax charges.
Logo -
http://photos.prnewswire.com/prnh/20120503/MM00528LOGO
CEO Gary Kolstad commented, "The
industry environment remains extremely challenging, but we
continued to grow the number of clients using our production
enhancement technologies, despite being in an environment where
E&P operators are focused on a reduction of cash spend.
KRYPTOSPHERE® HD and SCALEGUARD® technologies were again
successfully employed in the ultra-deep Lower Tertiary formation in
the Gulf of Mexico during the
quarter. In addition, our total ceramic proppant sales
volumes increased 24% sequentially, while imports of low quality
Chinese ceramic proppant remained very low. Clients using our
Design, Build, and Optimize the
Frac® platform continue to experience success in
their production results. This platform allows our clients to
configure a customized solution for their reservoir, increase well
production and estimated ultimate recovery (EUR), and lower finding
and development costs.
"In addition to increased production, E&P operators are
benefiting from significant cost reductions in lease operating
expense (LOE) when they use SCALEGUARD. This technology is
designed to eliminate costly workovers that are normally needed to
remove production damage caused by scale and avoid costly remedial
chemical injections. We are not aware of any workovers on
wells that have used SCALEGUARD, and some of them have been on
production for over 500 days.
"We continued to navigate through a challenging operating
environment marked by depressed industry activity. Our cash
preservation and cost reduction efforts remain a top priority in
managing through this downturn. Measures taken during the
quarter to better match the organizational structure to expected
activity levels included the idling of additional ceramic proppant
production capacity, delaying future capital expenditures and
reducing operational and overhead costs across the company," Mr.
Kolstad said.
Third Quarter Results
Revenues for the third quarter of 2015 decreased 51%, or
$79.6 million, compared to the third
quarter of 2014. The decrease was mainly attributable to a
decrease in proppant sales volumes (as specified in the Proppant
Sales Volumes table below) and market-driven reductions in the
average selling prices.
Operating loss for the third quarter of 2015 was $19.2 million compared to an operating profit of
$19.0 million in the third quarter of
2014. The decrease was mainly attributable to the decrease in
ceramic proppant sales volumes and a decrease in average ceramic
proppant selling price. In addition, the Company expensed
$5.5 million in unabsorbed production
costs as a result of low production levels and idled
facilities. Operating loss was further impacted by
$1.7 million in severance costs and a
$1.7 million loss on derivative
instruments. These other production costs and miscellaneous
charges are presented in the tables below. The impact of
these items was partially offset by SG&A cost cutting measures
implemented in early 2015 and throughout the year. In
addition, the Company recorded a $5.0
million impairment of long-lived assets and a $2.8 million inventory adjustment during the
third quarter of 2014, which did not reoccur during the third
quarter of 2015.
Net loss for the third quarter of 2015 was $13.9 million, compared to net income of
$13.7 million in the third quarter of
2014.
Proppant Sales
Volumes
(in million
lbs)
|
Three Months
Ended
September 30,
2015
|
Three Months
Ended
September 30,
2014
|
|
|
|
Ceramic
|
236
|
382
|
Resin Coated
Sand
|
-
|
36
|
Northern White
Sand
|
172
|
289
|
Total
|
408
|
707
|
|
|
Summary of Other
Production Costs and Miscellaneous Charges
|
Other Production
Costs
(In
thousands)
|
Three Months
Ended
September 30,
2015
|
Three Months
Ended
September 30,
2014
|
|
|
|
Slowing and idling
production
|
$
5,528
|
$ -
|
Tax effect of other
production costs
|
(1,935)
|
-
|
Total
|
$
3,593
|
$ -
|
Miscellaneous
Charges
(In
thousands)
|
Three Months
Ended
September 30,
2015
|
Three Months
Ended
September 30,
2014
|
Severance
|
$
1,664
|
$ -
|
Loss on derivative
instruments
|
1,654
|
-
|
Inventory
Adjustment
|
-
|
2,798
|
Impairment of
Assets
|
-
|
4,955
|
Tax effect of
miscellaneous charges
|
(1,051)
|
(2,504)
|
Total
|
$
2,267
|
$ 5,249
|
Technology and Business Highlights
- KRYPTOSPHERE and SCALEGUARD technologies were successfully used
in another Lower Tertiary well in the Gulf of Mexico. In
response to the operator's request for additional scale control,
CARBO combined KRYPTOSPHERE and
the highest concentration of SCALEGUARD used thus far to enable
maximum scale inhibition while maintaining high conductivity and
enhancing long-term production and recovery. Additional wells
are expected in the Gulf of Mexico
and internationally.
- CARBONRT® ULTRA was commercialized in September 2015 and has been utilized in three
U.S. basins. A detectable inert tracer technology for
sand stimulated completions in vertical and horizontal wells,
CARBONRT ULTRA enables the detection and evaluation of
near-wellbore proppant location and quantity. It accurately
measures perforation cluster efficiency and near-wellbore
connectivity to maximize ultimate recovery. Information
gathered from these diagnostics enables operators to reduce costs
and ultimately improve their completion efficiency.
- SCALEGUARD and SALTGUARDTM Production Assurance
technologies were employed on a five-well pad in the Bakken.
This technology combination is engineered to eliminate the
deposition of scale and salt within the proppant pack, perforations
and wellbore, enabling long-term production assurance. This
solution is expected to greatly reduce freshwater consumption and
its associated procurement, transportation and disposal
costs.
- In the Eagle Ford, a large E&P operator employed STRATAGEN®
to provide onsite fracture supervision and advisory services.
STRATAGEN monitored treatments in real-time, often revising the
stimulation treatment, resulting in improved proppant
placement. With its basin expertise, STRATAGEN has reduced
chemical and water consumption by 10% without jeopardizing well
productivity, resulting in a savings of over $0.5 million to the operator. Based on
these results, STRATAGEN has displaced the incumbent consulting
company and has been awarded 100% of the operator's onsite
consulting in this basin.
- During the quarter, an independent E&P operator used the
new Multi-Well feature of FRACPRO® software to model the completion
program used in offset wells. The operator built an earth
model using the FRACPRO log analysis tools, analyzed Diagnostic
Fluid Injection Test (DFIT) injections for multiple wells, and
imported the offset well pumping data. A pressure and
geometry match on those wells was then completed. FRACPRO
enabled the operator to identify several completion design
improvements, most notably increasing fracture conductivity as well
as optimizing perforation spacing and scheme.
Outlook
CEO Gary Kolstad commented on the
outlook for CARBO stating, "The
oil and gas industry remains severely depressed. Recent
evidence points to E&P operators substantially reducing
completion activity in the fourth quarter of 2015. As a
result, our proppant sales volumes in the fourth quarter of 2015
will likely decline significantly when compared to the third
quarter of 2015. In addition, we expect to see continued
pricing pressure in the fourth quarter of 2015.
"Despite current industry activity, client discussions regarding
our proppant-delivered production enhancement technologies are
positive. SCALEGUARD, part of our Production Assurance
platform, continues to see its client base grow as a result of its
cost effective scale-inhibitor solution and quick payback period
compared to other products on the market. Further field
trials for SALTGUARD and other production enhancement technologies
will continue this year.
"Construction and commissioning of the first phase of our
KRYPTOSPHERE retrofit are now in the final stages. We expect
first production volumes and sales of KRYPTOSPHERE LD during the
fourth quarter of 2015. Given the state of oil and gas
activity today, we have decided to defer completing the second
phase of the retrofit until market conditions warrant moving
forward with the project.
"It appears the industry is headed for a longer downturn than
previously expected. As a result of this, we initiated
another round of cost reduction efforts across the organization.
We continue to address the over-supply situation in the
proppant industry by taking capacity offline when necessary.
As we rationalize our capacity to market demand, we will evaluate
the need to analyze our assets for potential impairment.
"We believe focusing on areas that are within our control, while
continuing to develop industry-needed technologies, will allow us
to weather this downturn and emerge a stronger company," Mr.
Kolstad concluded.
Conference Call
As previously announced, a conference call to discuss
CARBO's third 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 by accessing the
following website:
http://dpregister.com/10072575
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 (877) 232-2832 (for U.S. callers), (855) 669-9657
(for Canadian callers) or (412) 542-4138 (for international
callers) 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 November 5, 2015 at
9:00 a.m. Eastern Time. To access the
replay, please dial (877)-344-7529 (for U.S. callers), (855)
669-9658 (for Canadian callers) or (412) 317-0088 (for
international callers). Please reference conference number
10072575. 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® focuses on integrating technologies to produce engineered
solutions in its Design, Build, and Optimize the Frac technology businesses, delivering
important value to E&P operators by increasing well production
and EUR.
For more information, please visit
www.carboceramics.com.
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 demand for, or price
of, oil and natural gas, changes in the cost of raw materials and
natural gas used in manufacturing our products, risks related to
our ability to access needed cash and capital, our ability to meet
our current and future debt service obligations, including our
ability to maintain compliance with our debt covenants, our ability
to manage distribution costs effectively, changes in demand and
prices charged for our products, risks of increased competition,
technological, manufacturing, and product development risks, our
dependence on and loss of key customers and end users, changes in
foreign and domestic government regulations, including
environmental restrictions on operations and regulation on
hydraulic fracturing, changes in foreign and domestic political and
legislative risks, 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
September
30
|
Nine Months
Ended
September
30
|
|
____2015____
|
____2014____
|
____2015____
|
__2014____
|
|
(In thousands except
per share) data)
|
(In thousands except
per share) data)
|
Revenues
|
$
75,807
|
$ 155,402
|
$
222,806
|
$ 480,527
|
Cost of
sales
|
80,404
|
113,252
|
263,703
|
340,365
|
Gross (loss)
profit
|
(4,597)
|
42,150
|
(40,897)
|
140,162
|
SG&A
expenses
|
14,609
|
18,087
|
45,902
|
53,960
|
Start-up
costs
|
-
|
-
|
-
|
811
|
Loss (gain) on
disposal or impairment of assets
|
15
|
5,055
|
(148)
|
4,864
|
Operating (loss)
profit
|
(19,221)
|
19,008
|
(86,651)
|
80,527
|
Other (expense)
income, net
|
(64)
|
48
|
(199)
|
342
|
(Loss) income before
income taxes
|
(19,285)
|
19,056
|
(86,850)
|
80,869
|
Income tax (benefit)
expense
|
(5,387)
|
5,312
|
(27,346)
|
25,680
|
Net (loss)
income
|
$
(13,898)
|
$
13,744
|
$
(59,504)
|
$
55,189
|
|
|
|
|
|
(Loss) earnings per
share:
|
|
|
|
|
Basic
|
$
(0.60)
|
$
0.60
|
$
(2.59)
|
$
2.39
|
Diluted
|
$
(0.60)
|
$
0.60
|
$
(2.59)
|
$
2.39
|
|
|
|
|
|
Average shares
outstanding:
|
|
|
|
|
Basic
|
23,009
|
22,945
|
22,944
|
22,947
|
Diluted
|
23,009
|
22,945
|
22,944
|
22,947
|
|
|
|
|
|
Depreciation and
amortization
|
$
13,887
|
$
13,353
|
$
40,893
|
$
37,059
|
Supplemental
Income Statement
|
(Break-out of other
production costs and miscellaneous charges)
|
|
|
Three Months
Ended
September
30
|
Nine Months
Ended
September
30
|
|
____2015____
|
____2014____
|
____2015____
|
____2014____
|
|
(In
thousands)
|
(In
thousands)
|
Revenues
|
$
75,807
|
$ 155,402
|
$
222,806
|
$ 480,527
|
Cost of
sales
|
72,192
|
110,454
|
214,092
|
337,567
|
Slowing and idling
production
|
5,528
|
-
|
25,157
|
-
|
Loss on derivative
instruments
|
1,654
|
-
|
14,259
|
-
|
Lower of cost or
market and other
inventory
adjustments
|
-
|
2,798
|
4,372
|
2,798
|
Severance
|
1,030
|
-
|
5,823
|
-
|
Gross (loss)
profit
|
(4,597)
|
42,150
|
(40,897)
|
140,162
|
SG&A
expenses
|
13,975
|
18,087
|
43,788
|
53,960
|
Start-up
costs
|
-
|
-
|
-
|
811
|
Loss (gain) on
disposal or impairment of assets
|
15
|
5,055
|
(148)
|
4,864
|
Severance
|
634
|
-
|
2,114
|
-
|
Operating (loss)
profit
|
(19,221)
|
19,008
|
(86,651)
|
80,527
|
Other (expense)
income, net
|
(64)
|
48
|
(199)
|
342
|
(Loss) income before
income taxes
|
(19,285)
|
19,056
|
(86,850)
|
80,869
|
Income tax (benefit)
expense
|
(5,387)
|
5,312
|
(27,346)
|
25,680
|
Net (loss)
income
|
$
(13,898)
|
$
13,744
|
$
(59,504)
|
$
55,189
|
Balance Sheet
Information
|
|
|
September 30,
2015
|
|
December 31,
2014
|
|
(In
thousands)
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
90,694
|
|
$
24,298
|
Deferred
income taxes
|
38,668
|
|
11,348
|
Other current
assets
|
180,302
|
|
301,965
|
Property,
plant and equipment, net
|
573,761
|
|
568,716
|
Goodwill
|
12,164
|
|
12,164
|
Intangible and
other assets, net
|
17,759
|
|
15,735
|
Total
assets
|
$
913,348
|
|
$
934,226
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Bank
borrowings
|
$
88,000
|
|
$ 25,000
|
Derivative
instruments (current)
|
6,232
|
|
-
|
Other current
liabilities
|
33,853
|
|
52,415
|
Deferred
income taxes
|
77,723
|
|
80,754
|
Derivative
instruments (noncurrent)
|
5,498
|
|
-
|
Shareholders'
equity
|
702,042
|
|
776,057
|
Total liabilities and
shareholders' equity
|
$
913,348
|
|
$
934,226
|
Contact:
Mark Thomas,
Director, Investor Relations
(281) 921-6458
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/carbo-announces-third-quarter-2015-results-300168439.html
SOURCE CARBO Ceramics Inc.