CARBO Announces Third Quarter 2009 Earnings
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HOUSTON, Oct. 29 /PRNewswire-FirstCall/ -- CARBO Ceramics Inc. (NYSE: CRR) today reported net income of $14.4 million, or $0.62 per diluted share, on revenues of $91.8 million for the quarter ended September 30, 2009. The Company previously reported that it had sold its fracture and reservoir diagnostics business. Because of the transaction, which closed on October 10, 2008, the 2008 operating results of this business have been accounted for as discontinued operations. Continuing operations include the Company's ceramic proppant, software, consulting services and geotechnical monitoring businesses.
President and CEO Gary Kolstad commented, "We are pleased with our third quarter results. Looking forward, we remain cautious about the demand in North America where depressed and volatile industry conditions still exist. In the near term, pricing remains competitive. Despite this climate, we continue to experience growing acceptance of our products by E&P companies that understand the benefits associated with Economic Conductivity(TM) resulting from the use of our high quality ceramic proppants such as CARBOHYDROPROP®."
Third Quarter Results
Revenues for the third quarter of 2009 decreased 11 percent compared to the third quarter of 2008 and increased 32 percent sequentially. Worldwide proppant sales volume totaled 296 million pounds for the third quarter of 2009, representing a year-over-year decrease of 3 percent and a sequential increase of 37 percent. Proppant sales volume for the third quarter grew in the U.S. both year-over-year and sequentially.
Operating profit for the third quarter of 2009 increased $0.9 million compared to the third quarter of 2008. Revenue decreases, resulting from decreases in volume and average selling price experienced during the third quarter of 2009, were offset by decreases in cost of sales, which was positively affected by a favorable product mix, lower freight costs and lower natural gas prices. Selling, general, administrative and other operating expenses for the third quarter of 2009 decreased $0.8 million on a year-over-year basis.
Income from continuing operations for the third quarter of 2009 decreased $0.9 million compared to the third quarter of 2008, mainly due to tax-related benefits realized during the third quarter of 2008.
Technology and Business Highlights
-- On October 2, 2009, a wholly-owned subsidiary of CARBO purchased
substantially all of the assets of BBL Falcon Industries, Ltd.
("Falcon"), a supplier of spill prevention and containment systems for
the oil and gas industry. The acquisition expands CARBO's product and
service offerings to its existing client base of E&P and oilfield
service companies. Falcon uses proprietary technology to provide
value-added solutions that are designed to enable its clients to extend
the life of their storage assets, reduce the potential for hydrocarbon
spills and provide secure containment of stored materials.
-- Three technical papers, co-authored by CARBO engineers, were presented
at the 2009 SPE Annual Technical Conference and Exhibition in New
Orleans. The papers covered fracture efficiency and economic gains when
employing ceramics in the Bakken and Haynesville shale reservoirs.
-- Using a full suite of surface and subsurface instrumentation, Applied
Geomechanics is monitoring the second largest active landslide in
Colorado. The system comprises 3DTracker GPS, Little Dipper borehole
tiltmeters and vibrating wire piezometers. Data is monitored
continuously using Web monitoring software.
Outlook
CEO Gary Kolstad commented on the outlook for the Company stating, "While we experienced a positive trend this quarter in the North American rig count, which achieved 13 percent sequential growth, opinions vary as to whether this is the start of a recovery or simply a short-term correction. From our perspective, we believe that a sustainable recovery in the oil and gas industry is inevitable; however, the exact timing of the recovery is difficult to pinpoint."
Mr. Kolstad continued, "We remain committed to expanding our client base and product and service offerings. The acquisition of the Falcon assets in early October is an example of our commitment to invest our cash reserves in high-growth, cash-generating businesses. Newly incorporated as Falcon Technologies and Services, Inc., its existing management team will build on its leading technology position and already successful strategy by taking advantage of CARBO's well-established geographic footprint, a common client base and our ability to fund product innovation. We expect that the transaction will be accretive to our financial results in 2010."
As previously announced, a conference call to discuss the Company's third quarter results is scheduled for today at 10:00 a.m. central time (11:00 a.m. eastern). To participate in the teleconference, investors should dial 1-800-860-2442 about 10 minutes before the start time and reference the CARBO conference call. International callers should dial 1-412-858-4600. The conference call can also be accessed by visiting the company's Web site, www.carboceramics.com.
CARBO is the world's largest supplier of ceramic proppant, the provider of the world's most popular fracture simulation software, and provides leading fracture design and consulting services. The Company also provides a broad range of technologies for spill prevention, containment and geotechnical monitoring.
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 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 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 Nine Months Ended
September 30 September 30
----------------- ----------------
2009 2008 2009 2008
----- ---- ---- ----
(In thousands except (In thousands except
per share data) per share data)
Revenues $91,783 $102,587 $251,747 $282,247
Cost of sales 59,512 70,449 160,300 196,645
------ ------ ------- -------
Gross profit 32,271 32,138 91,447 85,602
Selling, general &
administrative expenses 10,819 10,183 31,082 27,502
Start-up costs - - - 231
Loss on disposal or
impairment of assets 37 1,449 128 1,559
------ ------ ------ ------
Operating profit 21,415 20,506 60,237 56,310
Interest income, net 78 21 398 77
Foreign currency exchange
gain (loss), net 30 (511) (216) 916
Other income, net (50) 75 128 262
------ ------ ------ ------
Income before income taxes 21,473 20,091 60,547 57,565
Income taxes 7,071 4,779 20,330 17,649
------------ ------ ------ ------ ------
Income from continuing
operations 14,402 15,312 40,217 39,916
----------- ------ ------ ------ ------
Discontinued operations (1):
Operating results,
net of income taxes - 3,108 - 6,265
------- ------- ------- -------
Net income $14,402 $18,420 $40,217 $46,181
======= ======= ======= =======
(1) Discontinued operations include the Company's fracture mapping and
reservoir monitoring assets, which were sold on October 10, 2008.
Basic earnings per share:
Continuing operations $0.62 $0.62 $1.73 $1.62
Discontinued operations - 0.13 - 0.26
----- ----- ----- -----
Basic earnings per share $0.62 $0.75 $1.73 $1.88
===== ===== ===== =====
Diluted earnings per share:
Continuing operations $0.62 $0.62 $1.73 $1.62
Discontinued operations - 0.13 - 0.26
----- ----- ----- -----
Diluted earnings per share $0.62 $0.75 $1.73 $1.88
===== ===== ===== =====
Average shares outstanding:
Basic 22,919 24,482 23,153 24,466
====== ====== ====== ======
Diluted 22,933 24,512 23,170 24,518
====== ====== ====== ======
Depreciation and amortization:
Continuing operations $5,970 $6,220 $18,294 $18,473
Discontinued operations - 1,038 - 3,994
------ ------ ------- -------
$5,970 $7,258 $18,294 $22,467
====== ====== ======= =======
Selected Balance Sheet Information
September 30, 2009 December 31, 2008
------------------ -----------------
(In thousands)
Assets
------
Cash and cash equivalents $90,911 (a) $154,817
Other current assets 144,340 140,895
Property, plant and equipment, net 261,509 244,902
Intangible and other assets, net 2,953 3,806
Total assets 504,572 549,279
Liabilities and Shareholders'
Equity
-----------------------------
Accrued income taxes $1,231 $47,929
Other current liabilities 32,246 35,919
Deferred income taxes 25,482 22,897
Shareholders' equity 445,613 442,534
-------- --------
Total liabilities and
shareholders' equity $504,572 $549,279
======== ========
(a) On October 2, 2009, CARBO acquired the assets of BBL Falcon
Industries, Ltd. for cash consideration of $23.0 million.
SOURCE CARBO Ceramics Inc.
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