Your host for today’s call is Mr. Gary Kolstad, President and Chief Executive Officer of CARBO Ceramics. Mr. Kolstad, please begin your call.
Good morning, everyone. I want to thank you for joining us to discuss CARBO’s Second Quarter results along with an outlook for the remainder of 2012.
Some of the highlights of the second quarter. The sales volume set a new quarterly record despite difficult market conditions, including an oversupply of varying quality Chinese ceramic proppant in North America. We achieved this sales volume record through our continued focus to further expand the use of CARBO’s high-quality, high-conductivity ceramic proppant in the liquids-rich basins, namely the Bakken and Eagle Ford. Although sales volumes were healthy in these basins, infrastructure to support industry activity remained limited.From a distribution standpoint, we continued to face logistical challenges and higher associated costs during the quarter. Our sand processing plant in Marshfield, Wisconsin became operational later in the second quarter of 2012. Shipments of our high-quality CARBO Northern White sand have started to arrive at our resin-coating facility in New Iberia. E&P clients’ continued focus on environmental risk reduction led to record quarterly sales for Falcon Technologies. Falcon’s technologically advanced spill prevention and containment systems are widely respected in the industry and provide superior protection for operators of oil and gas well sites. The board of directors recently approved a 13% increase in the dividend. This marks the 12th consecutive year we have increased the dividend and the board’s decision demonstrates continued confidence in our long-term cash flow outlook. A brief review of our financial and operational results. Revenues for the second quarter of 2012 increased 19%, or $27.9 million, compared with the second quarter of 2011. North American proppant sales volume increased 17%, while International proppant sales volume increased 20% compared to the same period last year. Operating profit for the second quarter of 2012 increased 2%, or $0.9 million, compared to the second quarter of 2011. The increase in operating profit was primarily the result of higher proppant sales volumes and a greater contribution from some of the company’s other business units, partially offset by changes in product mix and increases in freight, logistics, and SG&A expenses.