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“We are pleased with the overall quarterly results, and especially with the economic success our customers are realizing by increasingly using our high-conductivity ceramic proppants in the oil and gas shale plays,” said Gary Kolstad, president and CEO. “While the fourth quarter worldwide rig count was down 29% year-over-year, our overall global proppant volumes were only down 5%. Currently, all of our plants are producing at capacity. The growth of the resource plays and the increasing desire to maximize conductivity continue to have a positive effect on the demand for our product offerings.
“As we indicated in our remarks last quarter, we expected our fourth quarter proppant deliveries to be modestly lower due to the holidays as compared to our strong third quarter results. However, our proppant sales orders accelerated exiting the fourth quarter, while pricing improved slightly, and this gives us confidence going into 2010. Separately, during the fourth quarter we incurred costs associated with the substantially completed integration of our recently acquired business, Falcon Technologies. We are excited about the growth prospects for this business and are seeing increased customer acceptance of this technology in the resource plays.”
Revenues for the fourth quarter of 2009 decreased 15% compared to the fourth quarter of 2008. The company’s worldwide proppant sales volume totaled 278 million pounds for the fourth quarter of 2009, representing a year-over-year decrease of 5%. Proppant sales volume for the fourth quarter declined in the North American and international markets year-over-year, following a 40% and 7% decline in rig count, respectively.
Operating profit for the fourth quarter of 2009 decreased $11.6 million compared to the fourth quarter of 2008. Revenue decreases, resulting from decreases in volume and average selling price experienced during the fourth quarter of 2009, were partially offset by decreases in the cost of sales, which was positively affected by lower raw material and natural gas costs. Selling, general, administrative and other operating expenses for the fourth quarter of 2009 decreased $1.2 million on a year-over-year basis. Income from continuing operations for the fourth quarter of 2009 decreased $7.9 million compared to the fourth quarter of 2008.
For the year ended December 31, 2009, revenues decreased 12% compared to 2008 due primarily to a decrease in proppant revenue. The decrease in revenue in the company’s proppant business was primarily the result of a decrease in proppant sales volume of 10% and a lower average selling price compared to the record year of 2008.
CARBO’s worldwide proppant sales volume totaled 1.043 billion pounds for 2009, a decrease of 10% compared to 2008. Sales volume in North America (excluding Mexico) decreased primarily due to results in Canada, as the U.S. sales volume was down less than 2%. International sales volume (including Mexico) decreased primarily due to decreases in Russia and Europe/Africa/Middle East. However, the decrease in international sales volume was partially offset by growth in Latin America. Full-year income from continuing operations for 2009 decreased 13% compared to 2008.
“We continue to see increasing demand for our products and services and an expanding customer base that has recognized the benefits of Economic Conductivity™,” said Kolstad. “Our commitment to investing in proppant manufacturing capacity remains unchanged, and we expect completion of the third line at our Toomsboro, Ga., plant near the end of 2010. We remain dedicated to new product development across all our businesses. We are opening up new Falcon Technologies locations in certain resource plays due to customer demand and acceptance for our containment and spill prevention products and services. The oil and gas industry experienced a positive trend in drilling activity during the fourth quarter of 2009, which makes us more optimistic about our business in 2010 than we were last year; however, we, like others, remain prudently cautious about the economy and natural gas fundamentals. The increased trend of horizontal drilling and the economic success our customers are achieving by using our high-conductivity ceramic proppant bring confidence to our 2010 outlook.”
For additional information, visit www.carboceramics.com.