Your host for today's conference call is Mr. Gary Kolstad, President and Chief Executive Officer of CARBO Ceramics Incorporated. Mr. Kolstad, please begin.Gary Kolstad Good morning. I want to thank you for joining us to discuss CARBO's third quarter results along with our outlook for the remainder of the year. We are pleased that CARBO set a number of financial and operational records during the quarter. The exceptional third quarter results continue to highlight the importance that our clients placed on high-conductivity proppant, especially in the North America liquids rich resource plays such as the Bakken, Granite Wash, Eagle Ford and Permian. The demand for E&P Operators for our high quality high conductivity ceramic proppant continues to grow as evidenced by the company's record ceramic proppant sales volume for the quarter. The benefit E&P Operators see, as measured by increased production and higher Estimated Ultimate Recovery or EURs, continues to enhance their economic returns. We continue to work with our clients to optimize their fracs and maximize their profit through Economic Conductivity analysis. Regarding our commitment to capacity growths, we were excited to commence production ahead of schedule at the company's newest 250 million pound production line at our Toomsboro and Georgia plant. Separately, the company repurchased 55,000 shares of its common stock at an average price of $120.89 during the third quarter pursuant to its previously announced stock repurchase program. Since September 2008, 1.8 million shares of the 2 million share buyback program have been repurchased at an average price of $39.93. Before I turn to our outlook on the business, I'd like to provide a quick overview of our financial performance. Revenues for the third quarter of 2011 increased 41% when compared to the third quarter of 2010. North American as defined by Canada and the U. S., proppant sales volume increased 31%, while international proppant sales volume increased 29% compared to last year.
Operating profit for the quarter increased 80% compared to the third quarter of 2010. This increased due to higher sales volume and increase in the average proppant selling price, change in product mix and a higher contribution from other business units partially offset by an increase in selling, general and administrative expenses.Net income for the third quarter increased 83% or $16.7 million compared to the third quarter of 2010. Sales volume set a quarterly record, as demand for our high conductivity ceramic proppant remained strong and Canadian activity rebounded from the spring breakup. Global proppant sales volume totaled 432 million pounds for the third quarter, representing a year-over-year increase of 30%. Our environmental risk reduction business Falcon Technologies continues to gain traction amongst the various resource plays across North America, including the Marcellus, where our surplus amount of containment systems have now successfully deployed in Pennsylvania, West Virginia, and New York. Falcon remains focused on developing solutions that are engineered to protect the environment and our client's assets. Now turning to the outlook, we exited the third quarter with positive momentum. As a result, we expect proppant sales volume to remain healthy tempered by the typical fourth quarter seasonality. Although, broader economic issues remain fluid and commodity prices continue to fluctuate, we remain optimistic with respect to proppant demand in 2012. Noteworthy is the continued migration of North American upstream investment towards liquids rich resource plays, where multiphase flow reservoir conditions benefit the most from CARBO's high connectivity proppant. We were pleased to commence operations on Line 4 at Toomsboro ahead of schedule and we expect this line to produce at capacity during the fourth quarter. The addition of this line increases our total ceramic proppant capacity to 1.75 billion pounds per year. Regarding our future ceramic plant in Millen, Georgia, we have completed the due diligence process and are moving forward with the purchase of the real estate needed to construct the plant. Read the rest of this transcript for free on seekingalpha.com