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[August 2007]
CARBO Ceramics Announces Second Quarter Earnings
CARBO Ceramics Inc (Irving, TX, USA) has announced quarterly net income of US$12.9 million on revenues of US$77.9 million for the quarter ended 30 June 2007. For the first half of 2007, the company reported net income of US$26.2 million on revenues of US$161.9 million.President and CEO Gary Kolstad commented on the quarter's results, stating: "We are pleased with our performance in the quarter. Record proppant sales volume in the U.S. and an impressive 36 percent increase in revenues from Pinnacle Technologies resulted in a 6 percent increase in total revenues compared to last year's second quarter. This revenue growth was achieved despite the lowest quarterly level of drilling activity in Canada since 1999.
“Our record U.S. results clearly demonstrate that, even in times of declining natural gas prices, our clients benefit from the increase in production that results from the higher conductivity of our ceramic proppant. We were also very happy with the progress of our operations in Russia. There is strong interest in our product in this growing market and our manufacturing facility is increasing production according to plan and producing excellent quality product."
Operating profit for the second quarter of 2007 increased US$1.1 million, or 6%, compared to the previous year's second quarter. This increase was due primarily to the increase in revenue and margins in the fracture and reservoir diagnostic business as fixed costs in this service business were spread over a significantly higher revenue base. While revenue in the proppant segment increased from the prior year, operating profit margins in this segment decreased due to increased costs in connection with the addition of the new manufacturing facility in Russia, including increased overhead expenses and costs directly related to the start-up of the facility and higher costs for raw materials for the production of high strength proppants.
Selling, general and administrative expenses for the second quarter of 2007 increased US$0.7 million compared to the same period last year due to planned increases in global staffing in support of enhanced marketing activities and administrative expenses necessary to support higher sales activity in an expanding global market.
Gary Kolstad provided input on the future outlook for the company when he
said: "Natural gas prices in North America have declined in recent weeks and this could have a short term impact on drilling activity in the region. However, we are optimistic about the second half of 2007. International drilling activity remains strong, and we have grown our business in the U.S. despite a reduction in the growth of drilling activity in the past year. Activity in Canada may continue to be depressed in the second half compared to last year, but we expect to see an improvement from the seasonal low experienced in the second quarter.“In the longer term, we believe the current low levels of drilling activity in Canada combined with the decline rates in natural gas wells will result in an increase in drilling in this region. In Russia, our manufacturing facility is ramping up as planned and we see strong interest in our products and services in the region. Prior to the end of this year, we expect to complete construction of our second production line in Toomsboro, Georgia, increasing our global manufacturing capacity to approximately 1.3 billion pounds per year. Over the balance of this year, we will continue to focus on increasing our global marketing activities and continue the research and development activities necessary to address the needs of our clients."
www.carboceramics.com
ENDS