HOUSTON, Jan. 28, 2016 /PRNewswire/ -- CARBO Ceramics
Inc. (NYSE: CRR) today reported a GAAP net loss of $50.0 million, or a loss of $2.17 per share, on revenues of $56.8 million for the quarter ended December 31, 2015. The GAAP net loss
includes $30.5 million, or
$1.32 per share, of after-tax charges
and $5.7 million, or $0.25 per share, of after-tax costs associated
with slowing and idling production.
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CEO Gary Kolstad commented, "We
continued to navigate through the severe oil and gas industry
downturn during the fourth quarter of 2015. Our ceramic
proppant sales volumes finished better than expected, declining
only 9% sequentially compared to a 13% decline in the average North
American rig count. U.S. imports of low quality Chinese
ceramic proppant have been virtually non-existent for the last
three quarters.
"Our cash preservation and cost reduction strategy continues to
yield positive results. We evaluate market activity and
adjust our plant utilization on a regular basis to maximize cost
efficiencies, in order to maintain our position as North America's highest quality, lowest cost
ceramic proppant producer.
"We remain focused on advancing our production enhancement
technologies. These technologies, which increase hydrocarbon
recovery and lower finding and development costs for E&P
operators, continued to result in new client gains across most of
the major oil and gas basins in North America. We have
completed the first line of the plant retrofit to enable production
of KRYPTOSPHERE, which is another important step in driving our
production enhancement technologies forward. With this
retrofit, we can now produce up to 100 million pounds of
KRYPTOSPHERE annually. In addition, we completed our first
KRYPTOSPHERE LD job in a high profile well during the fourth
quarter of 2015.
"We believe new production enhancement technologies will be key
in CARBO's future success.
Although 2015 was a difficult year from an industry activity
perspective, our new technology revenues nearly tripled in 2015 as
compared to 2014. This is a testament to E&P operators'
focus on better well economics," Mr. Kolstad said.
Fourth Quarter Results
Revenues for the fourth quarter of 2015 decreased 66%, or
$111.0 million, compared to the
fourth quarter of 2014. The decrease was primarily
attributable to a 60% reduction in the average North American rig
count which resulted in a decrease in proppant sales volumes (as
specified in the Proppant Sales Volumes table below) and associated
reductions in the average selling prices.
Operating loss for the fourth quarter of 2015 was $76.6 million compared to an operating profit of
$12.3 million in the fourth quarter
of 2014. In addition to the decline in revenue, the Company
expensed $8.6 million in unabsorbed
production costs as a result of low production levels and idled
facilities. Operating loss was further impacted by
$49.0 million in charges detailed in
the table below. The impact of these items was partially
offset by SG&A cost cutting measures implemented in early 2015
and throughout the year.
Net loss for the fourth quarter of 2015 was $50.0 million, compared to net income of
$0.4 million in the fourth quarter of
2014.
Proppant Sales
Volumes
(in million
lbs)
|
Three Months
Ended
December
31,
|
|
2015
|
2014
|
|
|
|
Ceramic
|
214
|
409
|
Northern White
Sand
|
47
|
413
|
Total
|
261
|
822
|
Summary of
Miscellaneous Charges and Other Production Costs
|
Miscellaneous Charges
(Gains)
(In
thousands)
|
Three Months
Ended
December
31,
|
|
2015
|
2014
|
|
|
|
Impairment of
Long-Lived and Other Assets
|
$ 43,697
|
$ 10,164
|
Impairment of
Goodwill and Intangible Assets
|
9,497
|
-
|
Severance, Inventory
and Other Charges
|
4,610
|
2,565
|
China CTA
gain
|
(8,853)
|
-
|
Tax effect &
Bonus Depreciation Election
|
(18,474)
|
2,939
|
After-tax
Total
|
$ 30,477
|
$ 15,668
|
Other Production
Costs
(In
thousands)
|
Three Months
Ended
December
31,
|
|
2015
|
2014
|
|
|
|
Slowing and idling
production
|
$ 8,566
|
$ -
|
Tax effect
|
(2,835)
|
-
|
After-tax
Total
|
$ 5,731
|
$ -
|
Full Year Results
For the year ended December 31,
2015, revenues decreased 57%, or $368.8 million, compared to 2014. The
decrease was primarily attributable to a 48% reduction in the
average North American rig count which resulted in a decrease in
proppant sales volumes (as specified in the table below) and
associated reductions in the average selling prices.
CARBO's worldwide ceramic and
sand proppant sales volumes totaled 1.64 billion pounds for the
full year 2015, a decrease of 40% compared to 2014.
Full year reported net loss for 2015 was $109.5 million, compared to reported net income
of $55.6 million in 2014.
Proppant Sales
Volumes
(in million
lbs)
|
Twelve Months
Ended
December
31,
|
|
2015
|
2014
|
|
|
|
Ceramic
|
818
|
1,618
|
Northern White
Sand
|
819
|
1,131
|
Total
|
1,637
|
2,749
|
Technology and Business Highlights
- First production and application of KRYPTOSPHERE LD occurred in
the fourth quarter. It joins KRYPTOSPHERE HD as another
proppant in the KRYPTOSPHERE ultra-conductive proppant technology
platform to maximize hydrocarbon flow for the life of the
well. KRYPTOSPHERE LD is a low density, high strength, and
highly conductive proppant that can be used in a wide range of
depths, including deeper well applications. This first use of
KRYPTOSPHERE LD proppant was in a 13,000 foot, high profile
well. Because of the unique features of KRYPTOSPHERE LD, the
need for gel and cross-linked fluids was eliminated in this job.
This led to a reduction in overall completion cost and additional
client interest in the region. KRYPTOSPHERE LD is engineered
to provide ease of placement, durability, strength, and a volume
advantage in the fracture.
- Our recently commercialized FUSION proppant pack consolidation
technology was used on a deep-water Gulf
of Mexico water injection well. In this Frac and Pack stimulation treatment, FUSION
was employed to create a high-integrity, high-permeability pack in
both the formation and annulus. This pack can be established with
minimal closure stress, is designed to retain its integrity under
high water-injection rates and can be monitored for stability over
the life of the well. FUSION's chemistry is designed to provide
predictable and reliable control during placement, relieving the
operator of concerns with reversing out after any premature
screenouts.
- SCALEGUARD® proppant-delivered, scale-inhibiting technology
sales continue to gain momentum due to positive performance results
in multiple basins across North America. SCALEGUARD has now
been used in hundreds of frac stages, and the success has been
outstanding. We are not aware of any workovers on wells that
have used SCALEGUARD, and some of them have been on production for
over 600 days. A single scale inhibition treatment with
SCALEGUARD can significantly increase production for the life of
the well and dramatically reduce lease operating expense.
- Given the growing market acceptance of the GUARDTM
family of technologies, CARBO
augmented its technology center with diagnostic equipment to
provide client feedback on the effectiveness of their
treatments. In addition, a field service organization was
created to focus solely on GUARD technology sampling and
reporting.
- CARBONRT® continues to see international interest, with
placement in two Australian wells. This inert detection
technology was used to confirm that the fractures were contained
within the targeted pay zone and did not extend into surrounding
water-bearing zones. These wells are in one of the largest
tight-gas fields on the continent.
Outlook
CEO Gary Kolstad commented on the
outlook for CARBO stating, "The
continued decline in commodity prices creates an increasingly
challenging operating environment as completion activity by E&P
operators remains very depressed. Various industry sources
have estimated that the North American rig count will likely
decline by double digits in the first quarter of 2016 compared to
the fourth quarter of 2015. With a lower rig count, we expect
continued pressure on our proppant sales in the first half of
2016.
"As we move into 2016, managing cash and our cost structure will
be important to navigate what looks like another very challenging
year. We expect to spend less than $10
million in capital expenditures in 2016, a significant
decrease when compared to 2015. In addition, as previously
announced, the Board of Directors decided to suspend the
dividend. Going forward, we will continue to assess our
liquidity needs and make adjustments to manage cash flows.
"In today's lower commodity price environment, it's vital that
E&P operators reduce their cost to produce oil and gas.
We remain excited about CARBO's
technology platforms and our ability to deliver solutions that
lower E&P operators' total finding and development costs while
maximizing production. KRYPTOSPHERE continues to be adopted
in the industry, with the first KRYPTOSPHERE LD well pumped in the
fourth quarter of 2015. Initial results from the completion
of this high profile well are expected in the near future. In
addition to engineering a superior proppant in KRYPTOSPHERE, we
continue to differentiate CARBO
via our proppant-delivered production enhancement
technologies. SCALEGUARD, a cost-effective scale-inhibitor
solution, continues to see client gains. Field trials for
other Guard products, such as SALTGUARDTM, are ongoing,
and we expect additional field trials of our other technologies in
2016. Advancing our industry-leading technologies should provide a
solid foundation and source of differentiation once we emerge from
this downturn," Mr. Kolstad concluded.
Conference Call
As previously announced, a conference call to discuss
CARBO's fourth 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/10078283
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 February 4, 2016 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
10078283. 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
December
31,
|
Twelve Months
Ended
December
31,
|
|
____2015____
|
____2014____
|
____2015____
|
__2014____
|
|
(In thousands except
per share) data)
|
(In thousands except
per share) data)
|
Revenues
|
$
56,768
|
$ 167,798
|
$
279,574
|
$ 648,325
|
Cost of
sales
|
71,996
|
126,680
|
335,699
|
467,045
|
Gross (loss)
profit
|
(15,228)
|
41,118
|
(56,125)
|
181,280
|
SG&A
expenses
|
16,297
|
18,575
|
62,199
|
72,535
|
Start-up
costs
|
797
|
-
|
797
|
811
|
Loss on
disposal or impairment of assets
|
44,259
|
10,215
|
44,111
|
15,079
|
Operating (loss)
profit
|
(76,581)
|
12,328
|
(163,232)
|
92,855
|
Other (expense)
income, net
|
(317)
|
(326)
|
(517)
|
16
|
(Loss) income before
income taxes
|
(76,898)
|
12,002
|
(163,749)
|
92,871
|
Income tax (benefit)
expense
|
(26,858)
|
11,603
|
(54,205)
|
37,283
|
Net (loss)
income
|
$
(50,040)
|
$
399
|
$
(109,544)
|
$
55,588
|
|
|
|
|
|
(Loss) earnings per
share:
|
|
|
|
|
Basic
|
$
(2.17)
|
$
0.02
|
$
(4.76)
|
$
2.41
|
Diluted
|
$
(2.17)
|
$
0.02
|
$
(4.76)
|
$
2.41
|
|
|
|
|
|
Average shares
outstanding:
|
|
|
|
|
Basic
|
23,014
|
22,945
|
22,999
|
22,946
|
Diluted
|
23,014
|
22,945
|
22,999
|
22,946
|
|
|
|
|
|
Depreciation and
amortization
|
$
13,564
|
$
13,801
|
$
54,457
|
$
50,860
|
Supplemental
Income Statement
|
(Break-out of
miscellaneous charges and other production costs)
|
|
|
Three Months
Ended
December
31,
|
Twelve Months
Ended
December
31,
|
|
____2015____
|
____2014____
|
____2015____
|
____2014____
|
|
(In
thousands)
|
(In
thousands)
|
Revenues
|
$
56,768
|
$ 167,798
|
$ 279,574
|
$ 648,325
|
Cost of
sales
|
60,464
|
124,115
|
274,554
|
461,682
|
Slowing and idling
production
|
8,566
|
-
|
33,724
|
-
|
Other
charges
|
2,966
|
2,565
|
27,421
|
5,363
|
Gross (loss)
profit
|
(15,228)
|
41,118
|
(56,125)
|
181,280
|
SG&A
expenses
|
14,653
|
18,575
|
58,441
|
72,535
|
Start-up
costs
|
797
|
-
|
797
|
811
|
Loss on
disposal or impairment of assets
|
44,259
|
10,215
|
44,111
|
15,079
|
Other
charges
|
1,644
|
-
|
3,758
|
-
|
Operating (loss)
profit
|
(76,581)
|
12,328
|
(163,232)
|
92,855
|
Other (expense)
income, net
|
(317)
|
(326)
|
(517)
|
16
|
(Loss) income before
income taxes
|
(76,898)
|
12,002
|
(163,749)
|
92,871
|
Income tax (benefit)
expense
|
(26,858)
|
11,603
|
(54,205)
|
37,283
|
Net (loss)
income
|
$
(50,040)
|
$
399
|
$
(109,544)
|
$
55,588
|
Balance Sheet
Information
|
|
|
December 31,
2015
|
December 31,
2014
|
|
(in
thousands)
|
Assets
|
|
|
Cash and cash
equivalents
|
$
78,866
|
$
24,298
|
Deferred
income taxes
|
53,627
|
11,348
|
Other current
assets
|
156,916
|
301,965
|
Property,
plant and equipment, net
|
537,731
|
568,716
|
Goodwill
|
3,500
|
12,164
|
Intangible and
other assets, net
|
9,861
|
15,735
|
Total
assets
|
$
840,501
|
$
934,226
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
Bank
borrowings
|
$
88,000
|
$
25,000
|
Derivative
instruments (current)
|
6,240
|
-
|
Other current
liabilities
|
31,050
|
52,415
|
Deferred
income taxes
|
67,990
|
80,754
|
Derivative
instruments (noncurrent)
|
4,915
|
-
|
Shareholders'
equity
|
642,306
|
776,057
|
Total liabilities and
shareholders' equity
|
$
840,501
|
$
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-fourth-quarter-and-fiscal-year-2015-results-300211221.html
SOURCE CARBO Ceramics Inc.