Conference Call Scheduled for Today, 10:00 a.m. Central Time
IRVING, Texas, Feb. 5 /PRNewswire-FirstCall/ -- CARBO Ceramics Inc.
(NYSE: CRR) today reported income from continuing operations of
$20.5 million, or $0.85 per diluted share, on revenues of $105.6
million for the quarter ended December 31, 2008. The Company
previously reported that it had sold its fracture and reservoir
diagnostics business to Halliburton Energy Services Inc. Because of
the transaction, which closed on October 10, 2008, the 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, "I am proud
of the success CARBO achieved this year, and want to congratulate
our employees for delivering quality products and services to our
clients. During 2008, we set several quarterly records in proppant
sales volume, revenues and profit. These results are a testament to
the success of our Economic Conductivity(TM) technical marketing
effort. This effort, along with the introduction of our newest
product, CARBOHYDROPROP(TM), which experienced overwhelming demand
over the course of the year, indicates there is an ongoing
awareness and acceptance by the E&P industry of the economic
benefits of employing our ceramic proppant. This is particularly
evident in an increasing number of reservoirs, including but not
limited to North American resource plays such as the Bakken and
Haynesville shale areas. With oil and natural gas reservoirs
becoming more complex, current economics being challenging, and
exploration and production companies seeking a greater return on
their investment, we believe that CARBO's ceramic proppant should
continue to be in demand, given the fact that it enhances
productivity and recovery in wells, when compared to using lower
performing sand-based proppants." "During the fourth quarter of
2008, the proppant business generated record revenue, with a global
proppant sales volume increase of 19 percent when compared to last
year's fourth quarter. North American proppant sales volume
increased by 30 percent compared to the fourth quarter of 2007
despite an increase of only 2 percent in the U.S. natural gas rig
count and a 14 percent increase in the rig count in Canada." Fourth
Quarter Results Revenues for the fourth quarter increased 30
percent compared to last year's fourth quarter due primarily to a
19 percent increase in proppant sales volume and an increase in
average selling price. Worldwide proppant sales totaled 293 million
pounds for the quarter. Proppant sales volume in North America
increased 30 percent compared to the fourth quarter of 2007 due to
strong demand for the Company's ceramic proppant in resource plays
such as the Bakken and Haynesville Shale areas. Overseas proppant
sales volume decreased 25 percent compared to the same period last
year, as strong North American demand limited the supply to several
of these markets. Operating profit for the fourth quarter of 2008
increased $13.0 million compared to the fourth quarter of 2007 due
primarily to the significant increase in proppant sales volume,
product mix and the cumulative effect of pricing increases
experienced on certain of our products. Selling, general and
administrative expenses increased as a percentage of revenue for
the fourth quarter of 2008 compared to the same period last year
due to higher spending for marketing and sales activities
associated with higher proppant sales, information technology
expenses associated with the Company's new enterprise resource
planning system and start-up costs resulting from the re-start of
the Company's New Iberia manufacturing facility that was previously
idled. Income from continuing operations for the fourth quarter of
2008 increased $8.5 million compared to the fourth quarter of 2007.
Full Year Results For the year ended December 31, 2008, revenues
increased 29 percent compared to 2007 due primarily to an increase
in proppant revenue. The increase in revenue in the Company's
proppant business was primarily the result of a 33 percent increase
in North American proppant sales volume. CARBO's worldwide proppant
sales volume totaled 1,162 million pounds for the full year 2008.
Sales volume in North America increased 33 percent from 2007 as a
result of a 39 percent increase in U.S. sales volume and a 14
percent increase in sales to Canada offset by a 6 percent decline
in sales to Mexico. Overseas sales volume increased 5 percent
primarily due to increased sales volume in Russia offset by some
sales volume decreases in other undersupplied overseas markets. For
the year ended December 31, 2008, operating profit increased 22
percent compared to 2007 due primarily to the significant increase
in proppant sales volume and product mix. Selling, general and
administrative expenses increased both in absolute terms and as a
percentage of revenue due to increases in marketing, research and
development activity, and administrative expenses necessary to
support higher operating and sales activity. In addition, the
Company experienced a $2.6 million decrease in foreign currency
exchange gains resulting from fluctuations in Russian and Chinese
currency valuations relative to the U.S. dollar in 2008 when
compared to 2007. The Company recognizes gains and losses resulting
from fluctuations in these currencies as a result of the capital
structure of its investments in those countries. The Company
benefitted from a reduction in its effective tax rate due to a
depletion deduction afforded to mining operations, which it began
taking in 2008, that favorably impacted the Company. Full year
income from continuing operations for 2008 increased 22 percent
compared to 2007. As previously disclosed, on August 28, 2008 the
Company's Board of Directors authorized the repurchase of up to two
million shares of the Company's common stock. As of December 31,
2008 the Company had repurchased and retired approximately 1.1
million shares at an average cost of $39.79 per share, or an
aggregate cost of $42.2 million. Technology and Business Highlights
Highlights for the fourth quarter of 2008 included: -- E&P
operators continued to employ Economic Conductivity(TM) in their
proppant selection decisions in the Haynesville Shale of East Texas
and North Louisiana. Demand for CARBO's high quality ceramics in
this resource play, particularly CARBOHYDROPROP(TM), experienced
exceptional growth. -- Applied Geomechanics sold and installed a
fiber optic monitoring system for a large copper mine operator in
Arizona. The ongoing operation with dual 2400-ft fiber optic
cables, monitors deformation in the underlying rock strata during
large-scale pumping of the water table. -- CARBO signed a one-year
contract with a major Russian oil producer to supply engineering
support, including fracture candidate selection and fracture
treatment effectiveness analysis. This work is being performed
across several Western Siberia fields. Outlook CEO Gary Kolstad
commented on the outlook for the Company stating, "As we enter
2009, we are cautiously optimistic with respect to our prospects
for the year, but also recognize the limited forward visibility of
the industry and the challenges our clients face with commodity
prices. Although the industry has already experienced over a 27
percent decline in the U.S. rig count from its peak in late third
quarter 2008, analysts forecast the industry will probably
experience additional declines over the course of 2009. This
downturn in drilling activity, prompted by the continued weakness
in the U.S. credit markets, weakness in commodity prices and
current global economic uncertainty, poses a serious challenge for
all service companies. Although we are not immune to the effects of
this downturn, we find ourselves well positioned with demand for
our proppant in North America currently continuing to be strong,
especially in the developing resource plays. Additionally, with the
sale of our fracture and reservoir diagnostics business, we have
built a cash reserve that will allow us to follow through on our
near term capacity expansion efforts and continue to fund our
strategic technology development initiatives. Our strong financial
position will also allow us to be opportunistic when considering
strategic opportunities including sourcing of our raw materials and
acquisitions." As previously announced, a conference call to
discuss the Company's fourth quarter and year-to-date results has
been scheduled for today at 10:00 a.m. central time (11:00 a.m.
eastern). To participate in the call, please dial 877-261-8992 and
refer to the "CARBO Ceramics Conference Call" or conference ID
#23632524. International callers should dial 847-619-6548. The call
can also be accessed live or on a delayed basis via the Company's
Web site, http://www.carboceramics.com/. CARBO Ceramics Inc., based
in Irving, Texas, is the world's largest supplier of ceramic
proppant, the provider of the world's most popular fracture
simulation software, and a leading provider of fracture design,
engineering and consulting services. The Company also provides a
broad range of technologies for geotechnical monitoring. The
statements in this news release that are not historical statements,
including statements regarding our future financial and operating
performance, are forward-looking statements within the meaning of
the federal securities laws, including the Private Securities
Litigation Reform Act of 1995. All forward-looking statements are
based on management's current expectations and estimates, which
involve risks and uncertainties that could cause actual results to
differ materially from those expressed in forward-looking
statements. Among these factors are changes in overall economic
conditions, changes in demand for our products, changes in the
demand for, or price of, oil and natural gas, risks of increased
competition, technological, manufacturing and product development
risks, loss of key customers, changes in government regulations,
foreign and domestic political and legislative risks, the risks of
war and international and domestic terrorism, risks associated with
foreign operations and foreign currency exchange rates and
controls; weather-related risks and other risks and uncertainties
described in our publicly available filings with the Securities and
Exchange Commission. We assume no obligation to update
forward-looking statements, except as required by law. - tables
follow - Three Months Ended Twelve Months Ended December 31
December 31 2008 2007 2008 2007 (In thousands except (In thousands
except per share data) per share data) Revenues $105,581 $80,992
$387,828 $299,996 Cost of sales 63,749 55,513 260,394 198,070 Gross
profit 41,832 25,479 127,434 101,926 Selling, general &
administrative expenses 10,142 7,440 37,644 28,984 Start-up costs
877 44 1,108 1,215 Loss on disposal or impairment of assets 40 268
1,599 268 Operating profit 30,773 17,727 87,083 71,459 Interest
income (expense), net 414 (5) 491 419 Foreign currency exchange
gain (loss), net (659) 505 257 2,882 Other income (expense), net
256 (86) 518 (181) Income before income taxes 30,784 18,141 88,349
74,579 Income taxes 10,295 6,195 27,944 24,938 Income from
continuing operations 20,489 11,946 60,405 49,641 Discontinued
operations (1): Operating results, net of income taxes (481) 1,681
5,784 4,229 Gain on disposal, net of income taxes 44,127 - 44,127 -
Net income $64,135 $13,627 $110,316 $53,870 (1) Discontinued
operations include the Company's fracture mapping and reservoir
monitoring assets which were sold to Halliburton Energy Services,
Inc. on October 10, 2008 for $142.3 million. Basic earnings per
share: Continuing operations $0.85 $0.49 $2.48 $2.04 Discontinued
operations 1.81 0.07 2.05 0.17 Basic earnings per share $2.66 $0.56
$4.53 $2.21 Diluted earnings per share: Continuing operations $0.85
$0.49 $2.47 $2.03 Discontinued operations 1.81 0.07 2.04 0.17
Diluted earnings per share $2.66 $0.56 $4.51 $2.20 Average shares
outstanding: Basic 24,095 24,400 24,373 24,367 Diluted 24,165
24,512 24,461 24,484 Depreciation and amortization: Continuing
operations $6,165 $5,889 $24,638 $19,895 Discontinued operations -
1,311 3,994 4,867 $6,165 $7,200 $28,632 $24,762 Selected Balance
Sheet Information Dec. 31, 2008 Dec. 31, 2007 (In thousands) Assets
Assets of continuing operations: Cash and cash equivalents $154,817
$12,296 Other current assets 140,895 114,037 Property, plant and
equipment, net 244,902 253,261 Intangible and other assets, net
3,806 2,465 Assets of discontinued operations - 66,191 Total assets
549,279 453,123 Liabilities and Shareholders' Equity Liabilities of
continuing operations: Accrued income taxes 47,929 2,474 Other
current liabilities 35,919 26,766 Deferred income taxes 22,897
30,420 Liabilities of discontinued operations - 4,024 Shareholders'
equity 442,534 389,439 Total liabilities and shareholders' equity
549,279 453,123 DATASOURCE: CARBO Ceramics Inc. CONTACT: Ernesto
Bautista III, CFO of CARBO Ceramics Inc., +1-972-401-0090 Web Site:
http://www.carboceramics.com/
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