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[May 2009]
CARBO Ceramics Announces First Quarter 2009 Earnings
CARBO Ceramics Inc (Irving, TX, USA) has reported net income of US$16.4 million on revenues of US$90.6 million for the quarter ended 31 March 2009. The company previously reported that it had sold its fracture and reservoir diagnostics business to Halliburton Energy Services Inc. Because of that transaction, which closed on 10 October 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.
President and CEO Gary Kolstad commented: "Given the challenging market conditions we faced during the quarter, we are pleased with our operating results. Notwithstanding significant sequential reductions in both the North American average rig count and natural gas commodity price, CARBO was able to leverage off the operating success that was achieved during the second half of 2008, including the continued demand for our newest product, CARBOHYDROPROP™."
Revenues for the first quarter of 2009 were flat, at US$90.6 million, when compared to the first quarter of last year and down 14% compared to the fourth quarter of 2008. Worldwide proppant sales volume totalled 253 million pounds for the first quarter of 2009, representing a year-over-year decrease of 11% and a sequential decrease of 14%. Proppant sales volume in the USA and Canada decreased 8% compared to the first quarter of 2008 and 16% sequentially, despite the significant drop in commodity prices and reduction in the average number of drilling rigs experienced both year-over-year and sequentially. During the first quarter of 2009, overseas proppant sales volume decreased 46% compared to the same period last year and decreased 30% sequentially.
Operating profit for the first quarter of 2009 increased US$6.2 million compared to the first quarter of 2008 due primarily to product mix, a decrease in freight costs and the cumulative effect of pricing increases introduced during the second half of 2008. Selling, general and administrative expenses increased in both absolute terms and as a percentage of revenue for the first quarter of 2009 compared to the same period last year due to increased expenses associated with marketing and sales activities, certain relocation initiatives, the company's new enterprise resource planning system and the company's allowance for doubtful accounts.
Gary Kolstad commented on the outlook for the company stating: "Although we achieved solid results this quarter, we were not immune to the rapid and large decrease in global upstream activity, as we experienced a decrease in global sales volume of 11 percent year-over-year and 14 percent sequentially. The rate and magnitude of the deterioration in North American drilling activity that occurred over the last several months, fueled by low natural gas and oil prices and the continued weakness in the U.S. credit markets, has presented our customers with formidable financial challenges. As such, we have started to negotiate reduced pricing arrangements in an effort to mitigate some of our anticipated sales volume erosion. While we recognize that the significantly reduced natural gas drilling activity should bring the natural gas fundamentals back into balance, we do not see any significant recovery before 2010.
“However, we believe the strength of our balance sheet will provide us the means to weather this downturn. In fact we remain committed to our capacity expansion efforts at our Toomsboro, Georgia facility and our technology development activities and continue to investigate strategic acquisition opportunities. Nonetheless we continue to implement prudent cost control initiatives in certain areas of the business, including discretionary and capital spending."
ENDS