Fairmount Santrol Second Quarter Results Promising

Fairmount Santrol announced results for the second quarter ended June 30, 2017. Second-quarter 2017 revenues were $233.2 million, up 35 percent from $172.6 million in the first quarter of 2017 and up 104 percent from $114.2 million in the second quarter of 2016.

Total company volumes sold were 3.3 million tons for the quarter, up 22 percent from 2.7 million tons sold in the first quarter of 2017 and an increase of 68 percent from 2.0 million tons in the second quarter of 2016.

For second-quarter 2017, the company had net income of $10.5 million, or $0.05 per diluted share, compared with a net loss of $11.6 million, or $(0.05) per diluted share, in the first quarter of 2017. Net loss for second-quarter 2016 was $87.9 million, or $(0.54) per diluted share.

Jenniffer Deckard, president and chief executive officer, said, “Our second-quarter results demonstrate our ability to capture growth, in both raw sand and coated proppants, from improving conditions in the oil and gas markets and to deliver solid, steady growth in our I&R segment. We have prudently added capacity in our Proppant Solutions segment as customer demand has strengthened and pricing has improved, and we have leveraged our logistics network to deliver strong profitability growth in the second quarter.”

The company recently announced plans for a new facility near Kermit, Texas, in the Permian basin that is expected to add 3 million tpy of proppant-sand production. The Kermit facility further broadens the company’s product portfolio, and with the re-opening of the Shakopee, Minn., mine, will enable the company to capitalize on growing market demand.

For the second quarter of 2017, Proppant Solutions volumes were 2.6 million tons, an increase of 24 percent compared with the first quarter of 2017 and up over 100 percent compared with the prior-year period. Raw proppant sand volumes were 2.4 million tons, a 25 percent sequential increase and a 95 percent increase compared with the same period a year ago.

As incremental capacity was brought online from Brewer and Maiden Rock, the company was able to capture additional market demand, which contributed to overall volume growth. However, supply remains tight, particularly for finer grades. Coated proppant volumes were 193,000 tons, a 20 percent increase compared with the first quarter of 2017 and a 133,000-ton increase from the prior-year period.

Proppant Solutions revenues were $198.8 million in second-quarter 2017, a 41 percent increase compared with $141.0 million in the first quarter of 2017 and a $117 million increase compared with $82.1 million in the second quarter a year ago. Proppant Solutions revenues were positively impacted by higher volumes and pricing, as well as by a mix shift toward in-basin sales.

Proppant Solutions gross profit increased to $54.4 million, or $21 per ton, in the second quarter of 2017 compared with $27.3 million, or $13 per ton, in the first quarter of 2017. Second-quarter 2017 Proppant Solutions gross profit includes $1.5 million of costs related to plant start-ups and $3.2 million of freight charges to move 1,200 railcars to the company’s active fleet.

Average raw proppant sand pricing in second-quarter 2017 increased more than $8 per ton as compared to first-quarter 2017, based on a consistent mix.

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