CARBO Ceramics Inc. (NYSE:CRR) Q3 2018 Earnings Conference Call Transcript
Oct 25, 2018 • 11:30 am ET
Hello and welcome to today's CARBO Ceramics Inc. Third Quarter 2018 Earnings Conference Call. Please be advised this call is being recorded today, October 25th, 2018 and your participation implies consent to our recording this call. If you do not agree to these terms, simply disconnect.
(Forward-Looking Cautionary Statement)
Your host for today's call is Mr. Gary Kolstad, President and Chief Executive Officer of CARBO Ceramics Inc. Mr. Kolstad, please begin your call.
Thank you and welcome everyone to our third quarter 2018 earnings call. Before I discuss the third quarter, I want to discuss three key accomplishments we have achieved in our transformation strategy. These steps are important to understand the shareholders as they outline our long-term growth and profitability strategy. We have a clear strategy and a very experienced management team committed to execute it.
First, we have had very good year-to-date growth in our industrial and environmental businesses with each growing approximately 45%. We expect to keep growing these business sectors in the years ahead. Year-to-date, they are approximately 22% of our total revenue and we would like to keep increasing their percentage every year moving forward. We are focused on growing these two business sectors to increase our profitability and offset the deep cyclicality of the oilfield.
Second, we have had good year-to-date growth in our oilfield business in technology ceramic products, STRATAGEN consulting and FracPro software. We expect these subsectors to continue to perform well as we move into the future. This is important to understand as we have technology and technical experts that no other competitor has and E&P operators acknowledge this. The other two subsectors, base ceramic and sand are influenced by industry activity. We manage them with the goal of being cash producers.
Third, we've done a good job of reducing structural costs, finding new avenues of revenue generation for our idle plant assets, investing in new technology and building a very strong balance sheet. We ended the quarter with $59 million in cash. And with the LoI on the sale of Millen plant for $26 million, it implies a net debt of less than $10 million.
Now turning to the third quarter; we are pleased with the growth rates of both our industrial and environmental business sectors as a result of our long-term growth strategy to diversify our revenue streams. I'm confident we have the right strategy, technology and assets to execute our transformation plan. Although our oilfield sector revenue was down year-on-year, we're very pleased to see our oilfield technology revenue grow in what remains a tough environment. In addition, we are able to improve our cash position from the second quarter. A decline in oil & gas completion activity along with the increases in sand supplies from new regional sand mines impacted our oilfield business during the third quarter. Adjusting to this market decline, we incurred approximately $400,000 of severance during the third quarter.
Now, for a brief discussion on our business sectors. The oilfield sector; Oilfield technology ceramic revenue