CARBO Ceramics Inc. (NYSE:CRR): Hurtling To End Game?

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Shares of oilfield services company CARBO Ceramics Inc. (NYSE:CRR) were smashed 26.69% Thursday after it declared a dismal earnings report for its third quarter.

The stock closed at $7.17, after 16.97 million shares changed hands. Average volume? Just 725.84K shares.

Technically, the stock has been heading downhill ever since it broke the March 2009 low of $23.86 in September 2015.

Year to date the stock is down 58.31% and 70.37% from its 52-week high. The market capitalization of the company is a mere $170 million dollars.

CARBO Ceramics Inc. (NYSE:CRR) reports a disappointing third quarter

Carbo reported Q3 EPS of $-0.81, which missed by $0.09, and revenue of $20.2 million, which missed by $5.58 million and was down by 73.4% year on year.

That’s a huge plunge in revenue, and may raise questions whether the company’s business model is now broken.

CEO Gary Kolstad explained: “The oilfield operating environment remains challenging as E&P operators continue to focus on low-cost completions while limiting spend on production enhancement technologies.  Third quarter ceramic pricing and sales volumes were lower than expected.  Average sales price for ceramic proppant was impacted by product mix and continued fire sales of low quality Chinese ceramic proppant priced at a level where we chose not to participate.”

The company is also facing problems due to the increasing use of sand instead of ceramic proppant by E&P companies on cost considerations amidst difficult market conditions.

CARBO Ceramics Inc. (NYSE:CRR): What’s the outlook?

CEO Gary Kolstad’s comments on the conference call:

  • “We believe the industry will see a gradual recovery in activity, and while we believe there will be a return to value added oilfield technology products such as ceramic proppants by E&P operators, it may be slow to materialize and ultimately depend upon a number of industry factors.”
  • “There will always be a ceramic proppant market. The size of the ceramic proppant market after the industry recovers is unknown.”
  • “And we track pretty closely that low quality Chinese stuff that’s sitting around and we like the trends there, that fact that there hasn’t been any imported in six months of any nature and we also track what we think is the inventory sitting around. And so there’s been a nice decline this year.”

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