CARBO Ceramics Inc. Announces Third Quarter 2010 Earnings

Conference Call Scheduled for Today, 10:00 a.m. Central Time

- Quarterly revenues of $118.5 million were up 29 percent compared to the prior year

- Quarterly global proppant sales volume of 332 million pounds up 12 percent versus the prior year

- Net income of $20.2 million, or $0.87 per diluted share, for the quarter

Oct 28, 2010, 04:30 ET from CARBO Ceramics Inc.

HOUSTON, Oct. 28 /PRNewswire-FirstCall/ -- CARBO Ceramics Inc. (NYSE: CRR) today reported net income of $20.2 million, or $0.87 per diluted share, on revenues of $118.5 million for the quarter ended September 30, 2010.

President and CEO Gary Kolstad commented, "We are pleased with the record results for the third quarter.  Our business continues to benefit from robust oilfield activity levels across the major shale plays in North America.  Demand for our products remains strong as clients continue to benefit from the high conductivity achieved by our ceramic proppant both in oil and gas reservoirs.  CARBO's plants operated at high utilization levels during the quarter, which assisted in achieving a quarterly sales volume of 332 million pounds.  The start-up of the third 250 million pound production line at our Toomsboro, Georgia facility remains on schedule for November of this year.  We are eager to bring on this additional capacity as it will alleviate some of the capacity constraints that exist today.  We continued the geographical expansion of our Falcon Technologies™ business which commenced operations in the Marcellus shale during the third quarter."

"During the third quarter we were encouraged by the client acceptance of CARBOBOND.  Looking forward, we remain committed to developing new and innovative products that meet the challenges and demands of our clients and enhance Economic Conductivity®," Mr. Kolstad stated.  

Third Quarter Results

Revenues for the third quarter of 2010 increased 29 percent, or $26.7 million, when compared to the third quarter of 2009.  The Company's worldwide proppant sales volume totaled 332 million pounds for the third quarter of 2010 and represents a year-over-year increase of 12 percent.  North American proppant sales volume increased 16 percent year-over-year, while international proppant sales volume decreased 6 percent compared to the same period last year.

Operating profit for the third quarter of 2010 increased 45 percent, or $9.7 million, compared to the third quarter of 2009.  This increase is due to higher sales volume and an increase in the average proppant selling price, partially offset by an increase in freight costs.  Selling, general, administrative and other operating expenses for the third quarter of 2010 increased $2.5 million on a year-over-year basis, largely due to the inclusion of the Falcon Technologies™ business acquired in October 2009 and higher research and development spending.

Net income for the third quarter of 2010 increased 40 percent, or $5.8 million, compared to the third quarter of 2009.

Technology and Business Highlights

  • CARBO's penetration into the North American oil resource plays continued this quarter with increasing customer demand in reservoirs such as the Eagle Ford, Bakken, Granite Wash and Bone Springs.
  • CARBOBOND™, a resin-coated ceramic proppant, has seen encouraging client acceptance.  During the third quarter, numerous wells utilized CARBOBOND™ and received positive performance feedback.  
  • CARBONRT™, a non-radioactive, environmentally responsible, traceable ceramic proppant was recently introduced and successfully deployed in various reservoirs around the globe.
  • CARBO recently presented several papers at the SPE Annual Technical Conference and Exhibition, highlighting the benefits of ceramic proppant in both the Bakken and Haynesville Shales.  Presentations were also made which highlighted refracturing technology and hydraulic fracturing performance for various well types using numeric reservoir simulation. 
  • Falcon Technologies™ has developed a spray-on, seamless, surface mounted secondary containment system. In many locations the subsurface conditions and/or local regulations restrict the construction of below-surface secondary containment systems.  This Professional Engineer (PE) certified system is designed to meet our customers' environmental stewardship needs while providing them a measure of insurance regarding the uncertainties associated with a leak or catastrophic event.
  • StrataGen® Engineering's Data and Neural Analysis(SM) business offering is providing completion designs using neural network data mining for the Bakken. These designs, currently used by two operators, successfully improved their well production and performance forecasts.

Outlook

CEO Gary Kolstad commented on the outlook for the Company stating, "Although natural gas fundamentals remain weak, the shift in oilfield activity by our clients to oily, liquids-rich plays is encouraging, and we anticipate that demand for our ceramic proppant will remain high. As we enter the fourth quarter, a typically slower quarter in recent years, we expect seasonality to curb sales volumes, especially surrounding the holidays."  

"We are optimistic about our long-term growth opportunities. We expect global productive capacity to increase by 40%, with the addition of Line 3 and 4 at our Toomsboro facility, or 500 million pounds over the next 12 months.  The outlook for the Falcon Technologies™ business is encouraging as we see a sustained focus on environmental stewardship by our clients. We continue to identify and evaluate other key geographic regions to further expand Falcon's footprint. The new Houston Technology Center was completed during the third quarter which will centralize our R&D efforts and support CARBO's future growth by reducing the time from concept to commercialization of new products."  

"Our third quarter results once again highlight the successful execution of our business strategy, one which we believe will continue to position CARBO as the leader in the ceramic proppant industry," Kolstad concluded.      

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 1-877-317-6789 about 10 minutes before the start time and reference the CARBO conference call.  Canada-based callers should dial 1-866-605-3852 and international callers should dial 1-412-317-6789. 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 for fracturing oil and gas wells; the provider of the industry's most popular 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, along with 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 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 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

September 30

Nine Months Ended

September 30

____2010____

____2009____

____2010____

____2009____

(In thousands except per share data)

(In thousands except per share data)

Revenues

$   118,517

$      91,783

$    353,498

$    251,747

Cost of sales

      74,018

      59,512

     225,193

     160,300

Gross profit

44,499

32,271

128,305

91,447

 Selling, general & administrative expenses

13,240

10,856

38,936

31,210

 Start-up costs

           102

               -

            621

                -

Operating profit

31,157

21,415

88,748

60,237

Interest income, net

57

78

131

398

Foreign currency exchange (loss) gain, net

(63)

30

(50)

(216)

Other (expense) income, net

           (92)

           (50)

          (308)

           128

Income before income taxes

31,059

21,473

88,521

60,547

Income taxes

      10,884

        7,071

       30,620

      20,330

Net income

$     20,175

$      14,402

$      57,901

$      40,217

Earnings per share:

 Basic

$        0.87

$         0.62

$         2.51

$         1.73

 Diluted

$        0.87

$         0.62

$         2.50

$         1.73

Average shares outstanding:

 Basic

    22,967

    22,919

    22,968

    23,153

 Diluted

    22,974

    22,933

    22,977

    23,170

Depreciation and amortization

$      6,978

$       5,970

$     20,308

$     18,294

Selected Balance Sheet Information

September 30, 2010

December 31, 2009

(In thousands)

Assets

 Cash and cash equivalents

$         52,800

$         69,557

 Other current assets

188,039

149,313

 Property, plant and equipment, net

318,800

270,722

 Intangible and other assets, net

10,351

10,104

Total assets

583,513

513,412

Liabilities and Shareholders' Equity

 Accrued income taxes

$                  -

$           3,609

 Other current liabilities

57,320

28,849

 Deferred income taxes

26,719

23,638

 Shareholders' equity

       499,474

       457,316

Total liabilities and shareholders' equity

$       583,513

$       513,412

SOURCE CARBO Ceramics Inc.



RELATED LINKS

http://www.carboceramics.com