Last updated on April 20, 2014 at 13:20 EDT

CARBO Announces Fourth Quarter Earnings Of $0.86 Per Share, Including A Charge Of $0.03 Per Share For The Wind-Down Of Applied Geomechanics

January 31, 2013

HOUSTON, Jan. 31, 2013 /PRNewswire/ — CARBO Ceramics Inc. (NYSE: CRR) today reported net income of $19.8 million, or $0.86 per share, on revenues of $153.6 million for the quarter ended December 31, 2012.

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President and CEO Gary Kolstad commented, “We are pleased to report record revenue in 2012. Despite a difficult industry environment, we also achieved total proppant sales volume of over 1.71 billion pounds for the year. In particular, we are pleased to have achieved a new record in our Ceramic Proppant Volumes with growth of 5 percent year-over-year to over 1.54 billion pounds.

“This growth in Ceramic Proppant Volumes was accomplished despite low natural gas drilling activity and an over-supply of lower quality Chinese ceramic proppant. In 2012, we engaged in a technical marketing campaign focused on educating the industry of the risks to well production and recovery, when using a lower quality Chinese ceramic proppant. Marketing the benefits of increased well production through Economic Conductivity(®) analysis remains a key focus at CARBO.

“Our Consulting and Software businesses both had record performances in 2012. Consulting revenues grew by 33 percent compared to 2011 as we expanded field operations to support additional client activity. Software revenue grew by 46 percent compared to 2011 while continuing to capitalize on its industry leading Fracpro(®) platform. These businesses complement our proppant business and help us achieve our main mission of improving production and recovery in oil and gas wells.

“Falcon Technologies, a business focused on reducing our clients’ environmental risks, also had a record year achieving 21 percent revenue growth in 2012 compared to 2011. A primary driver of this growth is Falcon’s expanding client base, which grew by 25 percent in 2012 compared to 2011.

“We continued to return cash to our shareholders, increasing the quarterly dividend by 13 percent in 2012. This marked the 12(th) consecutive year the Company has increased its dividend.

“For the fourth quarter 2012, total proppant sales volumes increased 14 percent, and importantly, our Ceramic Proppant Volumes increased 16 percent, compared to the fourth quarter of 2011. Notwithstanding this solid performance, the fourth quarter had its challenges as E&P companies reduced capital spending in the latter part of the quarter.

“We remain confident in the long-term demand for our industry-leading, highest conductivity ceramic proppant and accordingly continue our investments in manufacturing capacity and distribution. Initial site preparation and construction began at the location of our next ceramic proppant plant in Millen, Georgia. Separately, we completed the expansion of our distribution center in South Texas late in the fourth quarter of 2012. The expansion of this facility will further position CARBO to meet the needs of our clients,” Mr. Kolstad said.

Fourth Quarter Results

Revenues for the fourth quarter of 2012 decreased 3 percent, or $4.5 million, compared to the fourth quarter of 2011. North American (defined as Canada and the U.S.) proppant sales volumes increased 12 percent while international proppant sales volumes increased 27 percent, compared to the same period last year.

Operating profit for the fourth quarter of 2012 decreased 39 percent, or $19.3 million, compared to the fourth quarter of 2011. The decrease in operating profit was primarily the result of a decrease in average selling price and a change in the product sales mix, partially offset by an increase in proppant sales volume.

Net income for the fourth quarter of 2012 decreased 40 percent, or $13.3 million, compared to the fourth quarter of 2011.

    Proppant Sales Volumes   Three Months Ended     Three Months Ended
    (in millions lbs)         December 31, 2012      December 31, 2011
                              -----------------      -----------------

    Ceramic Proppant Volumes                    394                    339
    Other Proppant Volumes*                      49                     48
                                                ---                    ---
    Total                                       443                    387
                                                ---                    ---
    * Includes CARBOBOND(R) RCS (resin-
     coated sand) and API /ISO certified
     ceramic proppant manufactured on an
     outsourced basis. Also includes raw
     sand sold in the course of producing
     substrate for the resin-coated sand

Full Year Results

For the year ended December 31, 2012, revenues increased 3 percent, or $19.8 million, compared to 2011. The increase is mainly attributed to the increase in proppant sales volume and an increase in the revenues of the Company’s other business units, partially offset by a decrease in the average proppant selling price.

CARBO’s worldwide proppant sales volume totaled 1.71 billion pounds for the full year 2012, an increase of 7 percent compared to 2011. Sales volume in North America increased 3 percent primarily due to increases in U.S. sales volume. International sales volume increased 25 percent primarily due to increases in China, Russia, and Mexico, partially offset by a decrease in Europe.

Full year net income for 2012 decreased 19 percent, or $24.2 million, compared to 2011.

    Proppant Sales Volumes   Twelve Months Ended    Twelve Months Ended
    (in millions lbs)         December 31, 2012      December 31, 2011
                              -----------------      -----------------

    Ceramic Proppant Volumes                  1,543                  1,476
    Other Proppant Volumes*                     169                    129
                                                ---                    ---
    Total                                     1,712                  1,605
                                              -----                  -----
    * Includes CARBOBOND(R) RCS (resin-
     coated sand) and API /ISO certified
     ceramic proppant manufactured on an
     outsourced basis. Also includes raw
     sand sold in the course of producing
     substrate for the resin-coated sand

Technology and Business Highlights

  • CARBO engineers finished a study of Granite Wash wells completed with CARBOHYDROPROP(®) which demonstrated approximately 20 percent more production after nearly two and a half years when compared to offset wells containing resin-coated sand.
  • CARBO has developed a low-temperature activator, CARBOBOND(®) LTCA, for its curable resin-coated products. This new technology expands the application of the CARBOBOND suite of products for low temperature reservoirs.
  • CARBONRT(®), a non-radioactive detectable proppant, continues to gain increased acceptance in international markets, especially Argentina. At the same time, CARBONRT is witnessing greater interest from operators in the United States as regulatory bodies encourage stringent environmental practices.
  • In Colombia, Gran Tierra used CARBONRT LITE(®), a lightweight, non-radioactive detectable proppant, to stimulate a well in the T sand and the Caballos formations in the Putumayo basin. The operator obtained an improved understanding of the formation’s geomechanical characteristics and the achieved fracture dimensions. CARBONRT LITE well results enabled Gran Tierra to modify future simulation criteria and better design subsequent fracture treatments. Gran Tierra eliminated unnecessary environmental impact and political risks associated with using radioactive tracers.
  • Rice Energy has installed Falcon Secondary Containments at multiple Marcellus locations to support their corporate environmental protection initiative. The seamless, spray-on liner and engineered walls provide spill protection in Southwestern Pennsylvania.


CEO Gary Kolstad commented on the outlook for CARBO stating, “For 2013, we anticipate industry activity will be similar to that in 2012. In North America, we expect liquids-rich drilling activity to remain high, offset by low natural gas drilling activity.

“As stated by other oil service companies, E&P activity spending slowed as the fourth quarter progressed and has been slow to recover. This makes it hard to predict the pace at which industry activity will increase and we expect continued quarterly industry fluctuations.

“However, we are cautiously optimistic that completion activity will increase as the year unfolds, due to drilling efficiencies. In the proppant market, we believe the supply-demand balance will continue to improve. We also believe the long-term positive trend in our sales volume remains intact. CARBO is differentiating its products through the technical and quality marketing campaign launched in 2012, which highlights important differences between a CARBO ceramic proppant and a lower quality Chinese ceramic proppant.

“Product development is progressing well. Before the end of the year, we plan to introduce a new ceramic proppant. This proppant will dramatically increase the production and ultimate recovery in ultra-deep reservoir completions by increasing the conductivity of the fracture. Applications for this product include the lower tertiary formations in the Gulf of Mexico where depths can reach greater than 30,000 feet, as well as other ultra-high stress completions. Currently, the Company is in the process of scaling up production for this product at its R&D pilot plant. Accordingly, quantities of this product will be limited in 2013. CARBO continues to identify additional product opportunities, which should build upon our successful and long history of leading the industry with innovative, value-added products.

“Investments continue to be made to enhance our distribution and manufacturing capabilities. We are targeting completion of an additional distribution center in the Bakken region in the second half of 2013, and the first line at our Millen, Georgia ceramic proppant plant near the end of the first quarter of 2014. The first line at Millen will add 250 million pounds of high quality, high conductivity ceramic proppant capacity, bringing CARBO’s overall ceramic proppant capacity to two billion pounds annually.

“As for our other businesses, we expect Consulting, Software and Falcon to have a solid year in 2013. These businesses will continue to provide technical, engineering and environmental solutions to the oil and gas industry.

“We will continue to execute on the growth plans we have identified, develop innovative products, provide the highest quality products and services, and focus on clients’ needs – all while maintaining a long-term view. We believe this strategy will continue to grow an enduring company,” Mr. Kolstad concluded.

As previously announced, a conference call to discuss the Company’s fourth quarter 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 through the following link:


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 (866) 652-5200 (for U.S. and Canadian callers) or (412) 317-6060 (for locations outside North America) and referencing conference number 10023322. The conference call also can be accessed through the company’s website, www.carboceramics.com.

A telephonic replay of the earnings conference call will be available through Feb 7, 2013, at 9:00 a.m. Eastern Time. To access the replay from the U.S. and Canada, please dial 1-877-344-7529; international callers outside North America should dial 1-412-317-0088. Please reference conference number 10023322. Interested parties may also access the archived webcast of the earnings teleconference through the company’s website approximately two hours after the end of the call.

CARBO is the world’s largest supplier of ceramic proppant for fracturing oil and gas wells and a supplier of resin-coated sand proppant; the provider of the industry’s most widely used fracture simulation software; and a provider of fracture design and consulting services. The company also provides a broad range of technologies for spill prevention, containment and countermeasures.<s> </s>

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 the cost of raw materials and natural gas used in manufacturing our products, 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, distribution 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.

- tables follow -

                                  Three Months Ended      Twelve Months Ended
                                        December 31              December 31
                               -----------              -----------
                              ____2012____              ____2011____             ____2012____           ____2011____
                              ------------              ------------             ------------           ------------
                         (In thousands except per (In thousands except per
                               share data)              share data)
    Revenues                                  $153,622                  $158,123              $645,536               $625,705
    Cost of sales                              107,984                    93,275               422,031                363,990
                                               -------                    ------               -------                -------
    Gross profit                                45,638                    64,848               223,505                261,715
      Selling, general &
       expenses                                 15,232                    15,627                64,033                 62,381
      Start-up costs                                 -                        57                    68                    184
      Loss on disposal
       or impairment of
       assets                                      530                        11                   518                  1,548
                                                   ---                       ---                   ---                  -----
    Operating profit                            29,876                    49,153               158,886                197,602
    Interest income,
     net                                            82                        37                    64                    197
    Foreign currency
     exchange (loss)
     gain, net                                     (45)                       93                   (76)                  (135)
    Other expense, net                             (70)                      (95)                 (284)                  (214)
                                                   ---                       ---                  ----                   ----
    Income before
     income taxes                               29,843                    49,188               158,590                197,450
    Income taxes                                10,016                    16,071                52,657                 67,314
                                                ------                    ------                ------                 ------
    Net income                                 $19,827                   $33,117              $105,933               $130,136
                                               =======                   =======              ========               ========
    Earnings per
      Basic                                      $0.86                     $1.43                 $4.59                  $5.62
                                                 =====                     =====                 =====                  =====
      Diluted                                    $0.86                     $1.43                 $4.59                  $5.62
                                                 =====                     =====                 =====                  =====

    Average shares
      Basic                                     22,976                    22,976                22,969                 23,011
                                                ======                    ======                ======                 ======
      Diluted                                   22,976                    22,978                22,969                 23,012
                                                ======                    ======                ======                 ======

    Depreciation and
     amortization                              $11,560                   $10,354               $44,893                $36,015
                                               =======                   =======               =======                =======

Selected Balance Sheet Information

                            December 31, 2012     December 31, 2011
                            -----------------     -----------------
                             (In thousands)
      Cash and cash
       equivalents                        $90,635               $41,270
      Other current assets                259,282               261,295
      Property, plant and
       equipment, net                     426,232               392,659
      Intangible and other
       assets, net                         20,565                33,477
    Total assets                          808,878               740,865

    Liabilities and
     Shareholders' Equity
      Accrued income taxes                   $727 $                   -
      Other current
       liabilities                         50,103                79,066
      Deferred income taxes                44,970                31,641
      Shareholders' equity                713,078               630,158
                                          -------               -------
    Total liabilities and
     shareholders' equity                $808,878              $740,865
                                         ========              ========

SOURCE CARBO Ceramics Inc.

Source: PR Newswire