Fairmount Santrol announced results for the first quarter ended March 31, 2018. Total company volumes sold were 3.2 million tons for the quarter, down 4 percent from the fourth quarter of 2017 but an increase of 20 percent from 2.7 million tons in the first quarter of 2017.
First-quarter 2018 revenues were $273.3 million, relatively flat from $273.9 million in the fourth quarter of 2017 and 58 percent higher compared with $172.6 million in the first quarter of 2017.
For first-quarter 2018, the company had net income of $28.9 million, or $0.13 per diluted share, compared with net income of $19.9 million, or $0.09 per diluted share, in the fourth quarter of 2017. Net income for first-quarter 2018 included pre-tax merger related expenses of $3.3 million. Net loss for first-quarter 2017 was $11.6 million, or $(0.05) per diluted share.
For the first quarter of 2018, Proppant Solutions volumes were 2.6 million tons, a decrease of 5 percent from the fourth quarter of 2017 and more than 25 percent greater than the first quarter of 2017. Raw frac sand volumes were 2.4 million tons, representing a 6 percent sequential decline and a 26 percent increase compared with the first quarter of 2017.
While demand remained robust and growing throughout the quarter, raw sand volumes were sequentially lower due to seasonal factors, less production as a result of process engineering changes and a slight impact from rail downtime in the first quarter.
Coated proppant volumes were 215,000 tons, which is a 1 percent increase from the 213,000 tons sold in the fourth quarter of 2017, and a 33 percent increase compared with first quarter of 2017.
Proppant Solutions revenues were $242.2 million in first-quarter 2018, a 1 percent decline compared with $245.2 million in the fourth quarter of 2017, and more than a 70 percent increase compared with $141.0 million in the first quarter a year ago. Despite growing market demand, Proppant Solutions revenues were relatively flat with the fourth quarter due to the impact of lower volumes, which was offset by a more favorable product mix of coated proppant sales and higher average pricing of nearly $4 per ton on raw sand proppants.
Proppant Solutions gross profit increased to $78.9 million, or $30 per ton, in the first quarter of 2018 compared with $77.2 million, or $28 per ton, in the fourth quarter of 2017. Proppant Solutions gross profit improved in the first quarter due to a more favorable mix of coated proppant sales coupled with higher average pricing on raw sand proppants, offset somewhat by increased operating costs due to lower volumes and seasonal factors.
Gross profit for the first quarter of 2018 was also impacted by $1.8 million in start-up costs from the company’s Wexford, Mich., and Kermit, Texas, mines. Proppant gross profit in the first quarter of 2017 was $27.3 million, or $13 per ton, and included $0.9 million in start-up costs from the Brewer, Mo., and Maiden Rock, Wis., mines.
Jenniffer Deckard, president and chief executive officer, said, “I am pleased with our ability to work through seasonal and operational headwinds, including continued adverse weather conditions, during the first quarter. While dealing with these headwinds, we continued to focus on improving profitability, which grew significantly. We exited the quarter with the strongest sales volume month in our Company’s history and look forward to continuing this momentum, including the opening of our Kermit, Texas, plant, which is expected to begin operations in May.”
Deckard continued, “Market fundamentals in the second quarter have remained strong, and we are well-positioned to capitalize on these trends due to our increase in production at Kermit and Wexford, and our increasing effective capacity at our other plants.”