Ceramic Industry

CARBO Ceramics Sees Reduced Revenue in 2nd Qtr (posted 8/12/09)

August 12, 2009
Revenues for the second quarter of 2009 decreased 22% compared to the second quarter of 2008 and 24% sequentially.

CARBO Ceramics Inc. recently reported net income of $9.4 million, or $0.41 per diluted share, on revenues of $69.3 million for the quarter ended June 30, 2009. The company previously reported that it had sold its fracture and reservoir diagnostics business; because of the transaction, which closed on October 10, 2008, the 2008 operating results of this business have been accounted for as discontinued operations. Continuing operations include the company’s ceramic proppant, software, consulting services and geotechnical monitoring businesses.

“The economic challenges faced by the oil and gas industry over the last several months have resulted in significant reductions in drilling and completion activities,” said Gary Kolstad, president and CEO. “Given this trend, we are pleased with our second quarter operating results. While our sales volumes and associated revenues were lower than those experienced last quarter and during the same period last year, the percentage declines in either case are better than the declines experienced in the worldwide and North American rig counts. In the second quarter, we continued to see strong demand for our newest product, CARBOHYDROPROP®, in the large resource plays, as well as more operator acceptance of the benefits of Economic Conductivity™. We believe these events are particularly significant given the operating environment we faced during the quarter, and are a testament to the value that E&P companies can derive from CARBO’s products.”

Revenues for the second quarter of 2009 decreased 22% compared to the second quarter of 2008 and 24% compared to the first quarter of 2009. Worldwide proppant sales volume totaled 216 million pounds for the second quarter of 2009, representing a year-over-year decrease of 23% and a sequential decrease of 14%. Quarterly proppant sales volume in the U.S. decreased 17% year-over-year, but actually grew by 1% sequentially, in spite of drilling rig count decreases of approximately 50% and 30%, respectively.

Operating profit for the second quarter of 2009 decreased $3.2 million compared to the second quarter of 2008, while operating margins increased slightly as a lower sales volume was partially offset by reduced freight and other operational costs and a favorable product mix. Selling, general and administrative expenses were virtually flat year-over-year and lower sequentially as savings were realized from cost reduction initiatives. Income from continuing operations for the second quarter of 2009 decreased $2.4 million compared to the second quarter of 2008.

“Although the decline rate of the North American rig count has recently slowed, it is still unclear as to when the market will bottom,” said Kolstad. “At some point, the self-correcting nature of the oil and gas industry should react positively to the reduced natural gas drilling activity; however, it is possible that a notable recovery is not experienced until sometime in 2010. Nevertheless, we will continue to focus our efforts on expanding our client base in the large resource plays where our business keeps building as a result of the growing acceptance for our products. With respect to our financial situation, our balance sheet and overall financial condition remain strong. In fact, we recently announced an increase to our quarterly dividend, demonstrating continued confidence in CARBO’s outlook and financial strength.”

For additional details, including an archive of a recent conference call discussing these results, visit www.carboceramics.com.