Carbo Ceramics (CRR) Misses Q3 EPS by 24c, Revenues Miss

Carbo Ceramics (NYSE: CRR) reported Q3 EPS of ($0.62), $0.24 worse than the analyst estimate of ($0.38). Revenue for the quarter came in at $53.8 million versus the consensus estimate of $67.28 million.

CEO Gary Kolstad commented, "We were pleased with the growth rates of both our industrial and environmental business sectors as a result of our long term growth strategy to diversify our revenue streams. I am confident we have the right strategy, technology and assets to execute our transformation plan. Although our oilfield sector revenue was down year-on-year, we are very pleased to see our oilfield technology revenue grow in what remains a tough environment. In addition, we were able to improve our cash position from the second quarter of 2018.

"A decline in oil and gas completion activity, along with increases in sand supplies from new regional sand mines, impacted our oilfield business during the third quarter. Adjusting to this market decline, we incurred approximately $400 thousand of severance during the third quarter of 2018.

Outlook

CEO Gary Kolstad commented on the outlook for CARBO stating, "Year-to-date, we have experienced a very strong 65% Adjusted EBITDA incremental margin. Although reduced completion activity, along with seasonality, will impact fourth quarter revenue, we expect to see improved year-on-year margins in the fourth quarter of 2018 as well.

"In North America, the combination of lower completion activity, customers\' budget exhaustion, and additional regional sand capacity coming online, leads us to estimate our full year 2018 consolidated revenue will approximate $210 million. The main driver for the reduced revenue forecast for the full year 2018, is softening industry demand for both our base ceramic and frac sand proppants. In addition, this decline in industry activity has shifted our path to positive EBITDA into next year.

"We continue to be very encouraged by customer interest in our three sectors' technology products, increasing international activity, and the expected recovery in the North American oilfield in 2019. This, combined with continued reduction in structural costs gives us confidence in reaching positive EBITDA. We expect our efforts to reduce working capital levels and the sale of the Millen plant to strengthen cash levels and maintain a strong balance sheet.

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

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