Current CRR Stock Info

CARBO Ceramics (ticker: CRR), a production enhancement services provider based in Houston, Texas, is not immune from the recent commodity downswing. Even though United States production is expected to remain flat or even increase through 2015, the declining rig count will affect CARBO’s operations in the near-term. “This is pretty historic,” said Gary Kolstad, Chief Executive Officer of CARBO Ceramics, in the company’s Q4’14 conference call. “We’ve seen frac crews show up and the client will suddenly stop the operation, so don’t underestimate h...

Analyst Commentary

Capital One Securities (1.29.15)

Positive qtr, but outlook is still murky. 4Q EPS of 70c vs our est of 63c and the Street's 65c. The beat of our est was due to volumes which came in at 857MM lbs (409MM ceramics, 35MM RCS, and 413MM sand) vs our est of 687MM lbs (402MM ceramics, 35MM RCS, and 250MM sand). Ceramic volumes were slightly better and included the first sale of KryptoSphereHD (amt undisclosed) in the GOM. Volumes for 1Q are a complete wild card, but CRR has been introducing cost-neutral ceramic frac designs to compete directly against raw sand. Pricing cuts are likely coming (-10% modeled) as CRR tries to regain mkt share. '15 CAPEX will be roughly half of '14 as CRR defers the completion of Millen 2. A share repurchase program of 2MM shares (~9% of shares out) was approved yesterday.

'15/'16 ests from $1.16/$2.74 to $1.03/$2.38. Tgt from $42 to $39. Visibility is very limited, but, per CRR, it’s reasonable for volumes to be down 25% q/q (already modeled) and for decrementals to be in the 35% - 45% range. CRR really seems to be pushing cost neutral and production neutral jobs, and it’ll be interesting to see if these types of jobs can help curb the overall volume decline. Legacy ceramic pricing started to decline in December (modeling -10%), and CRR will likely be fairly aggressive on this front as it tries to regain mkt share. The HD job that was pumped in 4Q was small, and CRR isn’t giving any volume, price, or margin detail on the product. Original expectations were for HD to be pumped in 12 – 16 wells, and given the current environment, these expectations have been pulled down by ~25%. CRR does have the 2MM share repurchase program in place, but we wouldn’t expect the company to lever up substantially to complete it.  

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