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Carbo Ceramics (CRR). Chris Orndorff. Financial Fundamentals (3/20/13). Current Price: $95.07 52 week range: $60.33-106.51 Beta: 1.18 Market Cap: $2.2 Billion P/E: 20.72 on EPS of $4.59 Dividend Yield: 1.1% ROE: 18.2% Trailing 12-month Revenue: $645.5 Million

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Carbo Ceramics (CRR)

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Carbo ceramics crr

Carbo Ceramics (CRR)

Chris Orndorff


Financial fundamentals 3 20 13

Financial Fundamentals (3/20/13)

  • Current Price: $95.07

  • 52 week range: $60.33-106.51

  • Beta: 1.18

  • Market Cap: $2.2 Billion

  • P/E: 20.72 on EPS of $4.59

  • Dividend Yield: 1.1%

  • ROE: 18.2%

  • Trailing 12-month Revenue: $645.5 Million

  • Cash: $90.6 Million, Debt: $0


Business

Business

Carbo Ceramics makes ceramic beads that are used to prop open oil wells (called proppant). These ceramic beads help to keep fracked wells open so that the liquids are able to flow freely to the surface. Carbo’s ceramic proppant is considered by many to be the best proppant available.


Carbo ceramics crr

Ceramic vs Alternative Proppant Diagram


Assets

Assets

  • Plentiful Bauxite fields that serve as its raw resources

  • Best proppant in the industry designation

  • Strong customers Haliburton and Schlumberger who are two of the most important companies in fracking

  • Strong ability to manage costs: much of the reason the stock popped back in late January – early February of 2013


Customers

Customers

  • Halliburton (HAL)

    • Considered to be one of the top dogs in fracking in the Dakotas

    • Heavy user of Carbo’s products

  • Schlumberger (SLB)

    • One of the most diversified liquids plays in the world

    • Working to increase efficiency of its proppant use, however, is loyal to Carbo


Competitive advantage

Competitive Advantage

Carbo Ceramics competitive advantages lie in a few main points:

  • First, they have the best proppant in the industry and strong local exposure to American fracking operations

  • Second, they have strong patents on their products

  • Third, they have strong industry research that proves that their products have significantly higher yields than alternative products – allows them to more easily persuade prospective customers


Why did the share price dip before

Why Did the Share Price Dip Before?

The share price drop resulted largely due to investor fear of falling rig counts eating into profitability. This was due to the natural gas glut as well as falling gas commodity prices. Never fear, however, because the rig count is already stabilizing and increasing in fact. In addition, the natural gas glut is disappearing and prices are stabilizing and increasing. Second, investors were worried due to strong


Continued

Continued…

Chinese competition. This has been resolved in large part by the increased fracking operations in China pulling those manufacturers back to China. In addition, many oil rig operators are switching to Carbo’s products for the higher yield rate.


Opportunities

Opportunities

  • Carbo Ceramics is set to open their new distribution center in the Bakken region sometime this year: this will greatly assist in lowering logistical costs

  • Carbo is set to release their new ultra-deepwater frackingproppant this year as well which will be a boon for them in the offshore industry


Competition

Competition

  • US Silica – Sand proppant: generally considered to be considerably inferior in terms of yield but is cheaper; can steal market share

  • Chinese imports – low-quality ceramic and sand proppant that tends to have much lower yields but is very cheap; flooded the market for a while but there is now a pullback due to a few factors


Website

Website

  • http://www.carboceramics.com/


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