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[Nov 2005]
Record Quarterly Revenues for CARBO Ceramics
Ceramic proppant manufacturer CARBO Ceramics Inc (Irving, TX, USA) announced net income of US$12.5 million (up 8%) for the third quarter, achieved on record quarterly revenues of US$64.1 million (up 10%). This meant that for the first nine months of the year, revenues totalled US$189.1 million resulting in record net income of US$36.2 million.
The increase in Q3 revenues was attributable to a 5% increase in ceramic proppant sales volume and an 8% increase in the average selling price - partially offset by a 14% decline in revenues from Pinnacle Technologies.
World-wide proppant sales for Q3 totalled 190.6 million pounds, with record North American sales volume offsetting a decline in overseas sales volume compared to the previous year. Continuing strong shipments in the USA and Mexico combined with a strong recovery in Canada (following the normal seasonal decline in the second quarter) accounted for the new North American sales record.
Q3 2005 sales volume in Mexico exceeded Q3 2004 by 95% and sales volume in Canada increased by 59% over Q3 2004. Sales volume in the USA exceeded Q3 2004 by 33% despite some disruption in the US distribution system caused by the Gulf Coast hurricanes.
A 55% decline in overseas sales volumes resulted mainly from decreases in sales volumes to Russia and the North Sea. Sales in Russia have slowed due to the transfer of the ownership of Yukos's assets and an increase in availability of locally produced proppant, while North Sea sales declined due to continued project delays on a major drilling programme in that region.
President and CEO Dr Mark Pearson said: "We continue to be very optimistic about the future demand for ceramic proppants and we are highly focused on adding capacity at our new facility in Wilkinson County, Georgia. That plant remains on schedule for completion prior to the end of this year.
"We expect our first shipment from the facility early next year and expect high commodity prices combined with this year's shortage of ceramic proppant to result in strong demand for the products produced by this facility in 2006. In the short term, we will be adversely impacted by the price of natural gas. Natural gas is a large component of our manufacturing costs and the high price that we anticipate paying for gas this winter will put pressure on our operating margins.
"For the year to date in 2005, forward purchases of much of our U.S. natural gas requirements resulted in the company paying an average of approximately $7.40/Mcf for natural gas delivered to our domestic plants. However, beginning in November, we will be paying current market rates for all of our domestic requirements. While we have instituted an additional fuel surcharge effective November 1, this will not fully offset our cost increases and we anticipate that the consolidated operating profit margin in the fourth quarter may decline by 1 to 2 percentage points based on current expectations for natural gas pricing."
www.carboceramics.com
ENDS