Revenue Increases 83% for CARBO Ceramics in 2017
CARBO’s worldwide ceramic and sand proppant sales volumes totaled 2.6 billion lbs for 2017, an increase of 287% compared to 2016.
CARBO Ceramics Inc. recently reported financial results for the fourth quarter and fiscal year 2017. The company reported revenues of $60.3 million for the quarter ended December 31, 2017, compared to revenue of $29.1 million in the same period of 2016. Revenues for 2017 increased by 83% (or $85.7 million) compared to 2016, primarily attributable to increases in oilfield ceramic technology products, industrial ceramics, oilfield sand and environmental product revenues. Worldwide ceramic and sand proppant sales volumes totaled 2.6 billion lbs for 2017, an increase of 287% compared to 2016.
“Revenue for 2017 increased 83% compared to 2016 as we accelerated growth in oilfield ceramic technology products, industrial ceramics, oilfield sand and environmental product revenues,” said Gary Kolstad, CEO. “We set out on a multi-year strategy to transform the company and emerge from the significant and prolonged oil and gas industry downturn as a more diversified company with multiple revenue streams coming from both the Oil and Gas and Industrial sectors. Our Industrial business growth opportunities should lead to continued increases in their contribution to our overall revenue. We are executing on this transformation strategy by leveraging our leading technology, experienced operating personnel, marketing and sales expertise, and existing asset base.
“While we pioneered base ceramic proppant 38 years ago and expect to continue to be the industry leader, diversification away from our historical reliance of approximately 80% of our revenue being generated from base ceramic is necessary given the changing proppant buying habits of our clients during this last oil and gas downturn. I am very proud of our efforts in 2017, when we grew the company’s total revenue 83% and base ceramic proppant shrank to approximately 30% of our total revenue.
“We were pleased with the fourth quarter results as revenues increased 20% sequentially despite seeing a slowdown in oil and gas activity in December. Oilfield ceramic technology products and industrial ceramic products revenues increased significantly. Fourth quarter increases in base ceramic proppant demand resulted in the best quarter of the year for base ceramic sales after adjusting for the Russia proppant business, which we sold in the third quarter.
“We made many achievements in our industrial ceramics business during 2017. New products were launched successfully, and we achieved client growth in several end markets. New clients accounted for roughly one-quarter of industrial sales in 2017. For example, in the foundry market we continue to see increased client interest in our industrial ceramic products as the new OSHA silica Permissible Exposure Limits (PEL) requirements are set to take effect in mid-2018. In addition to meeting OSHA requirements and improving worker safety, our ceramic media also provides our clients value through higher quality castings and reduction in operating costs.
“As noted last quarter, due to client demand we announced additional sand capacity utilizing an ‘asset-lite’ business model. First production from this project has commenced and we expect to ramp to a maximum annual rate of 600,000 tons as we enter the second quarter. This project increases our total available sand capacity to over 1.3 million tons per year.
“As previously mentioned, increasing the utilization of our manufacturing plants through mineral processing is important to the company’s future profitability. In December, we signed a multi-year toll manufacturing agreement to be the exclusive toll processor for a product in the agricultural industry. This is a milestone for CARBO and we are pursuing additional opportunities to further increase utilization at our manufacturing plants.”
Revenues for the fourth quarter of 2017 increased 108%, or $31.3 million, compared to the same period of 2016. The increase was primarily attributable to increases in oilfield ceramic technology products, industrial ceramics, oilfield sand and environmental product revenues.
Operating loss for the fourth quarter of 2017 decreased to $17.3 million, compared to $29.3 million in the same period of 2016. The decrease in operating loss was primarily attributable to increased sales combined with a reduction in certain fixed structural costs, as well as a decrease in slowing and idling expenses.
“A key goal in 2018 is continued progress on our transformation strategy to diversify revenue streams,” said Kolstad. “It is our belief that execution on this transformation strategy will result in profitable growth and positive cash from operating activities. Although seasonality will impact the first half of 2018, we believe our revenue and operating cash will show improvement in the first half of 2018 compared to the first half of 2017.
“We believe revenues from the Oil and Gas and Industrial sectors will grow in 2018. Looking at them separately, revenue from the Oil and Gas sector should follow industry activity while revenue from the Industrial sector should see strong double-digit growth year over year.
“If the recent strengthening in oil price continues in 2018, we believe base ceramic demand could improve in 2018… Regarding our sand business, first sales for our North East project have begun in January. We will continue to utilize various business models, including an 'asset-lite' model like this, to serve client demand.
“We achieved solid growth in our industrial ceramics business during 2017, and we believe we will significantly grow this business in 2018 and in the foreseeable future. It is important that we continue to expand in the markets we serve today, as well as develop new markets. We expect to add additional resources in 2018 to meet our objectives to grow this business by strong double digits again in 2018.”
For more information, visit www.carboceramics.com.