Carbo Ceramics (CRR) Misses Q1 EPS by 18c

Carbo Ceramics (NYSE: CRR) reported Q1 EPS of ($0.73), $0.18 worse than the analyst estimate of ($0.55). Revenue for the quarter came in at $47.5 million versus the consensus estimate of $50.12 million.

Outlook

CEO Gary Kolstad commented on the outlook for CARBO stating, "We continue to execute our transformation strategy to diversify our revenue streams to the more profitable oilfield ceramic technology products, and industrial and environmental markets. Developing and commercializing new products for all three of our market sectors supports this diversification effort. Despite E&P operators starting the year cautiously with respect to discretionary spending, we still expect our 2019 revenues will be similar to 2018 levels as growth in our ceramic technology, industrial, and environmental sectors will likely offset declines in our base ceramic and sand revenues. Through year-on-year growth in these more profitable areas, we expect to see strong year-on-year EBITDA incremental margins for 2019.

Oilfield Sector:

"We expect stronger ceramic technology sales during the second quarter of 2019. One KRYPTOSPHERE HD well is scheduled for late in the second quarter, and our current project list for KRYPTOSPHERE LD is expected to result in a significant uptick in sales during the second quarter. Although we expect 2019 deepwater activity to be down year-on-year, our initial outlook for 2020 is robust with high double-digit growth given the current projects that are known.

"Demand for our StrataGen consulting business is expected to increase in the second quarter of 2019 as our clients complete more projects than in the first quarter of 2019. In addition, with improving domestic activity software sales should benefit in the second quarter.

"As we look out over the balance of 2019, we expect continued contribution from the international oilfield sector for both technology and base ceramic products.

Industrial Sector:

"We remain excited about our industrial ceramic opportunities. In order to continue our growth, we are pursuing product trials with potential clients around the world. Our new industrial product METAKAO, a premium metakaolin product, is seeing early success with an initial sale during the first quarter of 2019 for a large infrastructure concrete project in the Caribbean.

"Contract manufacturing is expected to continue its growth throughout 2019. While some clients have postponed decisions on project awards, we are making progress in other areas by expanding the products we produce. These contract manufacturing opportunities that increase our plant utilization and generate cash are important in our path to profitability.

Environmental Sector:

"In addition to the contract award in the Northeast that started in the second quarter of 2019, we are adding resources to further develop industrial sales. ASSETGUARD products are seeing success in industrial applications, including evaporation mitigation, pond liners, mobile office flooring and retail applications. We expect these additions to drive increased industrial revenue throughout 2019. Other primary areas of focus will include energy generation and petrochemical facilities.

"We are currently pursuing oilfield ceramic technology product, and industrial and environmental market opportunities at an accelerated pace which should improve our overall profitability as these revenues grow over time. In addition, given our minimal capital expenditure requirements we expect to maintain a healthy cash balance," Mr. Kolstad concluded.

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

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