HOUSTON, Oct. 27, 2016 /PRNewswire/ -- CARBO Ceramics
Inc. (NYSE: CRR) today reported a GAAP net loss of $20.0 million, or a loss of $0.81 per share, on revenues of $20.2 million for the quarter ended
September 30, 2016. The GAAP net loss includes
$8.0 million, or $0.32 per share, of after-tax costs associated
with slowing and idling production.
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CEO Gary Kolstad commented, "We
raised approximately $46 million
through our ATM equity offering program during the quarter,
significantly strengthening our balance sheet with an ending
quarterly cash balance of $108
million.
"As we continue to work toward our interim goal of achieving
cash neutral operations, we are pushing forward on two
fronts. The first is continuing to drive costs out of the
business, including operational costs, supplier costs and
cancellation and deferrals on rail car leases. The second is
looking broadly at how we can grow our businesses in both the
oilfield and industrial markets. This includes pursuing other
manufacturing opportunities for our excess ceramic plant capacity,
generating new product sales for Falcon outside of the oilfield,
growing our industrial business and recently restarting our sand
plant. We are utilizing the great technology, people, and
manufacturing strengths of the Company to identify and capture new
growth opportunities, which, if achieved, will generate cash flow
and help offset the severe cyclicality of the oilfield.
"The oilfield operating environment remains challenging as
E&P operators continue to focus on low-cost completions while
limiting spend on production enhancement technologies. Third
quarter ceramic pricing and sales volumes were lower than
expected. Average sales price for ceramic proppant was
impacted by product mix and continued fire sales of low quality
Chinese ceramic proppant priced at a level where we chose not to
participate. Volumes and price were also negatively impacted
by a couple of clients experiencing operational delays.
Delays such as these currently have a disproportionately large
impact given our current low level of ceramic sales
volumes.
"KRYPTOSPHERE HD is seeing continued success in the lower
tertiary formation of the Gulf of
Mexico with a new client during the quarter. We
believe that the incredible strength and conductivity of
KRYPTOSPHERE HD make it the leading choice to address the toughest
well conditions in the world. We also continue to gain new
clients using SCALEGUARD, given its great track record of
preventing scale and lowering lease operating expense," Mr. Kolstad
said.
Third Quarter 2016 Results
Revenues for the third quarter of 2016 decreased 73%, or
$55.6 million, compared to the same
period in 2015. The decrease was primarily attributable to a
lower overall industry activity level, a 71% decrease in ceramic
proppant sales volumes (as specified in the Proppant Sales Volumes
table below) caused by continued movement to lowest-cost
completions, and associated reductions in the average proppant
selling prices.
Operating loss for the third quarter of 2016 was $30.5 million as compared to $19.2 million in the same period in 2015,
primarily due to the revenue decline explained above, and was
partially offset by cost cutting measures implemented beginning in
early 2015.
Net loss for the third quarter of 2016 was $20.0 million, compared to $13.9 million in the same period in 2015.
Proppant Sales
Volumes
(in million
lbs)
|
|
Three Months
Ended
|
|
|
|
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
Ceramic
|
|
|
68
|
|
|
|
236
|
|
Northern White
Sand
|
|
|
46
|
|
|
|
172
|
|
Total
|
|
|
114
|
|
|
|
408
|
|
Technology and Business Highlights
- SCALEGUARD®, a proppant-delivered scale-inhibiting technology,
continues to experience an expanding client base across North
America. Some SCALEGUARD wells have been on production for
approximately two years without a workover or well intervention due
to scaling. A single scale inhibition treatment with
SCALEGUARD can significantly increase production for the life of
the well and dramatically reduce lease operating expense.
- The Fracture Evaluation platform continues to successfully
deliver direct measurements of fracture height through CARBONRT®
technology. CARBONRT allowed two Middle East Asia clients to
optimize their completion designs by maximizing proppant placement
without growing into water bearing zones in their respective
formations.
- According to newly released data from the Ohio Department of
Natural Resources, the top producing well in the Utica shale play
produced 1.62 billion cubic feet of natural gas during the second
quarter of 2016. This well was completed with HYDROPROP® and
ECONOPROP® ceramic proppant.
- CARBO Industrial Technologies
continues to gain new clients with the ACCUCAST® products
specifically designed for the foundry industry. Working in
collaboration with a client, ACCUCAST was qualified for an
intricate core mold used in the production of a military component
with extremely tight tolerances. This foundry client now
intends to use the ACCUCAST beads for a broader range of casting
applications based on the success of this project.
- During the quarter, the Company sold 3,405,709 shares of its
common stock at an average price of $13.69 per share under its at-the-market equity
offering program. Net proceeds to the Company totaled
$45.6 million.
Outlook
CEO Gary Kolstad commented on the
outlook for CARBO stating, "We
believe the industry will see a gradual recovery in activity, and
while we believe there will be a return to value added oilfield
technology products such as ceramic proppants by E&P operators,
it may be slow to materialize and ultimately depend upon a number
of industry factors. Current commodity prices are driving
many E&P operators to seek out low cost completions.
However, we expect fourth quarter 2016 ceramic sales volumes to
increase sequentially, as we expect delayed sales from the third
quarter to materialize in the fourth quarter.
"On the oilfield technology front, we were pleased to gain a new
client for KRYPTOSPHERE HD during the third quarter and we
anticipate additional growth for technology sales over the coming
quarters. We were also pleased to have gained new clients
with our SCALEGUARD technology. We remain committed to
expanding our oilfield technologies during this downturn.
"As previously mentioned, we are exploring a number of
opportunities to help return the business to positive cash
generation, provide future growth and help mitigate future
cyclicality in the oilfield business. These include, but are
not limited to, pursing other manufacturing opportunities for our
plants, generating new product sales for Falcon outside of the
oilfield, growing our industrial business, and recently restarting
our sand plant.
"We have a long history of selling to the industrial
market. Historically, industrial sales have been a small
percentage of our overall business. However, we believe we
can grow this business at double digit rates through the additional
resources we are deploying and by leveraging our technology to
develop new industrial product offerings.
"Our industrial products target performance enhancement for the
end user by increasing process efficiency, improving end-product
quality and reducing operating costs. The overall industrial
product market for ceramic media is substantial; however, capturing
a larger portion of this market will take time. While the
initial sales cycle is typically longer than the oilfield sales
cycle, the resulting commercial relationship is typically long-term
in nature. We believe the efficiencies of our plants and the
quality of our products will allow us to grow our industrial
technologies revenue over the coming quarters and contribute to
generating positive cash flow.
"By focusing on these operational initiatives, we are targeting
achieving a cash neutral exit rate by year end 2017. We also
continue to explore certain asset and technology monetization to
further bolster our cash reserves," Mr. Kolstad
concluded.
Conference Call
As previously announced, a conference call to discuss
CARBO's third quarter 2016 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/10093356
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 3, 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 10093356. 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 (NYSE: CRR) is a
global technology company that provides products and services to
the oil and gas and industrial markets to enhance value for its
clients.
CARBO Oilfield
Technologies - is a global leader that provides 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. Oilfield Technologies is
the world's largest producer of high quality ceramic proppant,
provides one of the industry's most widely used fracture simulation
software, has proprietary technology that provides fracture
diagnostics and production assurance, and offers consulting
services for fracture design and completion optimization. The
Company also provides a range of technology solutions for spill
prevention and containment.
Its products and services are sold to operators of oil and
natural gas wells and to oilfield service companies for use in the
hydraulic fracturing of natural gas and oil wells.
CARBO Industrial
Technologies - is a leading provider of high-performance
industrial ceramic media products that are engineered to increase
process efficiency, improve end-product quality and reduce
operating costs.
Its products and services are primarily sold to industrial
companies that work in manufacturing and mineral processing.
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 and liquidity and capital resources, are
forward-looking statements within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995. Forward-looking
statements describe future expectations, plans, results or
strategies and can often be identified by the use of terminology
such as "may", "will", "estimate", "intend", "continue", "believe",
"expect", "anticipate", "should", "could", "potential",
"opportunity", or other similar terminology. 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
of 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. Additional factors that could
affect our future results or events are described from time to time
in our reports filed with the Securities and Exchange Commission
(the "SEC"). Please see the discussion set forth under the
caption "Risk Factors" in our annual report on Form 10-K for the
fiscal year ended December 31, 2015, our Form 10-Q for the
fiscal quarter ended September 30,
2016, and similar disclosures in subsequently filed reports
with the SEC. We assume no obligation to update
forward-looking statements, except as required by law.
-tables follow -
|
|
Three Months
Ended
|
|
|
Nine months
ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
|
(In thousands except
per
share)
|
|
|
(In thousands except
per
share)
|
|
Revenues
|
|
$
|
20,241
|
|
|
$
|
75,807
|
|
|
$
|
73,993
|
|
|
$
|
222,806
|
|
Cost of
sales
|
|
|
41,106
|
|
|
|
80,404
|
|
|
|
138,512
|
|
|
|
263,703
|
|
Gross loss
|
|
|
(20,865)
|
|
|
|
(4,597)
|
|
|
|
(64,519)
|
|
|
|
(40,897)
|
|
SG&A
expenses
|
|
|
9,640
|
|
|
|
14,609
|
|
|
|
31,148
|
|
|
|
45,902
|
|
(Gain) loss on
disposal or impairment of assets
|
|
|
(15)
|
|
|
|
15
|
|
|
|
910
|
|
|
|
(148)
|
|
Operating
loss
|
|
|
(30,490)
|
|
|
|
(19,221)
|
|
|
|
(96,577)
|
|
|
|
(86,651)
|
|
Other expense,
net
|
|
|
(1,390)
|
|
|
|
(64)
|
|
|
|
(3,726)
|
|
|
|
(199)
|
|
Loss before income
taxes
|
|
|
(31,880)
|
|
|
|
(19,285)
|
|
|
|
(100,303)
|
|
|
|
(86,850)
|
|
Income tax
benefit
|
|
|
(11,930)
|
|
|
|
(5,387)
|
|
|
|
(35,373)
|
|
|
|
(27,346)
|
|
Net loss
|
|
$
|
(19,950)
|
|
|
$
|
(13,898)
|
|
|
$
|
(64,930)
|
|
|
$
|
(59,504)
|
|
Loss per
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.81)
|
|
|
$
|
(0.60)
|
|
|
$
|
(2.75)
|
|
|
$
|
(2.59)
|
|
Diluted
|
|
$
|
(0.81)
|
|
|
$
|
(0.60)
|
|
|
$
|
(2.75)
|
|
|
$
|
(2.59)
|
|
Average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
24,770
|
|
|
|
23,009
|
|
|
|
23,651
|
|
|
|
22,994
|
|
Diluted
|
|
|
24,770
|
|
|
|
23,009
|
|
|
|
23,651
|
|
|
|
22,994
|
|
Depreciation and
amortization
|
|
$
|
12,051
|
|
|
$
|
13,887
|
|
|
$
|
36,499
|
|
|
$
|
40,893
|
|
Supplemental
Income Statement
|
(Break-out of other
production costs and miscellaneous charges)
|
|
|
|
Three Months
Ended
|
|
|
Nine months
ended
|
|
|
September 30,
|
|
|
September 30,
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
|
(In
thousands)
|
|
|
(In
thousands)
|
Revenues
|
|
$
|
20,241
|
|
|
$
|
75,807
|
|
|
$
|
73,993
|
|
|
$
|
222,806
|
Cost of
sales
|
|
|
27,636
|
|
|
|
72,192
|
|
|
|
96,246
|
|
|
|
214,092
|
Slowing and idling
production
|
|
|
12,845
|
|
|
|
5,528
|
|
|
|
36,067
|
|
|
|
25,157
|
Loss (gain) on
derivative instruments
|
|
|
510
|
|
|
|
1,654
|
|
|
|
(87)
|
|
|
|
14,259
|
Other
charges
|
|
|
115
|
|
|
|
1,030
|
|
|
|
6,286
|
|
|
|
10,195
|
Gross loss
|
|
|
(20,865)
|
|
|
|
(4,597)
|
|
|
|
(64,519)
|
|
|
|
(40,897)
|
SG&A
expenses
|
|
|
9,640
|
|
|
|
13,975
|
|
|
|
30,909
|
|
|
|
43,788
|
(Gain) loss on
disposal or impairment of assets
|
|
|
(15)
|
|
|
|
15
|
|
|
|
910
|
|
|
|
(148)
|
Other
charges
|
|
|
-
|
|
|
|
634
|
|
|
|
239
|
|
|
|
2,114
|
Operating
loss
|
|
|
(30,490)
|
|
|
|
(19,221)
|
|
|
|
(96,577)
|
|
|
|
(86,651)
|
Other expense,
net
|
|
|
(1,390)
|
|
|
|
(64)
|
|
|
|
(3,726)
|
|
|
|
(199)
|
Loss before income
taxes
|
|
|
(31,880)
|
|
|
|
(19,285)
|
|
|
|
(100,303)
|
|
|
|
(86,850)
|
Income tax
benefit
|
|
|
(11,930)
|
|
|
|
(5,387)
|
|
|
|
(35,373)
|
|
|
|
(27,346)
|
Net loss
|
|
$
|
(19,950)
|
|
|
$
|
(13,898)
|
|
|
$
|
(64,930)
|
|
|
$
|
(59,504)
|
Summary of Other
Production Costs and Miscellaneous (Gains) Charges
|
|
Other Production
Costs
|
|
Three Months
Ended
|
(In
thousands)
|
|
September 30,
|
|
|
2016
|
|
|
2015
|
Slowing and idling
production
|
|
$
|
12,845
|
|
|
$
|
5,528
|
Tax effect
|
|
|
(4,804)
|
|
|
|
(1,935)
|
After-tax
Total
|
|
$
|
8,041
|
|
|
$
|
3,593
|
|
|
|
Miscellaneous Charges
- Cost of Sales
|
|
Three Months
Ended
|
(In
thousands)
|
|
September 30,
|
|
|
2016
|
|
|
2015
|
Loss on derivative
instruments
|
|
$
|
510
|
|
|
$
|
1,654
|
Other
charges
|
|
|
115
|
|
|
|
1,030
|
Tax effect
|
|
|
(234)
|
|
|
|
(850)
|
After-tax
Total
|
|
$
|
391
|
|
|
$
|
1,834
|
Balance Sheet
Information
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
2016
|
|
|
2015
|
|
|
(in
thousands)
|
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
107,999
|
|
|
$
|
78,866
|
Deferred income
taxes
|
|
|
—
|
|
|
|
49,495
|
Other current
assets
|
|
|
127,389
|
|
|
|
156,916
|
Property, plant and
equipment, net
|
|
|
505,456
|
|
|
|
537,731
|
Goodwill
|
|
|
3,500
|
|
|
|
3,500
|
Intangible and other
assets, net
|
|
|
8,630
|
|
|
|
9,861
|
Total
assets
|
|
$
|
752,974
|
|
|
$
|
836,369
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
Long-term debt,
current
|
|
$
|
12,783
|
|
|
$
|
33,000
|
Derivative instruments
(current)
|
|
|
3,559
|
|
|
|
6,240
|
Other current
liabilities
|
|
|
15,618
|
|
|
|
31,050
|
Deferred income
taxes
|
|
|
16,494
|
|
|
|
63,858
|
Long-term debt and
related parties notes payable
|
|
|
70,592
|
|
|
|
55,000
|
Other long-term
liabilities
|
|
|
3,815
|
|
|
|
4,915
|
Shareholders'
equity
|
|
|
630,113
|
|
|
|
642,306
|
Total liabilities and
shareholders' equity
|
|
$
|
752,974
|
|
|
$
|
836,369
|
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-2016-results-300352251.html
SOURCE CARBO Ceramics Inc.