Carbo Ceramics (CRR) Misses Q1 EPS by 17c, Offers Outlook

Carbo Ceramics (NYSE: CRR) reported Q1 EPS of ($1.22), $0.17 worse than the analyst estimate of ($1.05). Revenue for the quarter came in at $34.7 million versus the consensus estimate of $32.19 million.

Outlook

CEO Gary Kolstad commented on the outlook for CARBO stating, "We have set out a strategy for both revenue growth and profitability improvement. Our people are excited about our growth opportunities and are executing on them. We expect to see continued expansion of our technology products, industrial ceramic media, frac sand, and environmental businesses. Given the first quarter revenue and our outlook for the next couple of quarters, we believe our 2017 revenue will show strong double-digit growth of at least a 40 percent increase over 2016.

"Clients are adopting technologies that we have developed over the past several years to enhance their oil and gas production. KRYPTOSPHERE HD continues its adoption in the industry as the technology of choice for the toughest well conditions in the world. KRYPTOSPHERE LD sales have increased in recent quarters as certain clients are implementing technology into their completions to make better wells. We believe sales of these technologies will continue to grow in 2017 and currently expect another KRYPTOSPHERE HD job in the second quarter of 2017.

"We continue to grow our industrial footprint with our long-standing product offerings. We also believe there will be opportunities in the future to expand our product offerings to add additional revenue streams. We anticipate increased levels of industrial sales throughout 2017.

"Growing the frac sand business is another part of our strategy to return our overall operations to generating positive EBITDA. We are in the process of bringing our Marshfield, Wisconsin sand facility to full utilization in the next one to two quarters to further increase our cash production and generate revenue from idle rail cars under lease.

"We continue to see growth in our environmental business with the increase in industry activity and market penetration of our products. Similar to our oilfield business, we are executing on a strategy to expand product sales into industrial markets.

"Our strategy is to reduce our reliance on base ceramic proppant yet remain the industry leader. We believe the worst of this industry down cycle is behind us. While imports of low quality Chinese ceramic have been virtually zero over the last eight quarters, it appears some competitors are still pricing below cost; however, this is not a sustainable strategy over the long term.

"Given the successful industrial product trials we completed at our plants in the first quarter of 2017, we expect to generate revenue from our underutilized plants. Our dual approach of producing products for other companies and developing technology products for ourselves, should bring opportunities to produce positive cash flow from assets that currently consume cash.

"We are pleased with the progress we have made on our strategy to diversify and grow our revenue streams. While this is not an overnight process, we believe the resulting business composition will make CARBO a stronger company," Mr. Kolstad concluded.

For earnings history and earnings-related data on Carbo Ceramics (CRR) click here.

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