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Fairmount Santrol Third-Quarter Report Offers Promise


Fairmount Santrol announced results for the third quarter of 2016. Third-quarter revenues were $134.8 million, up 18 percent from $114.2 million in the second quarter of 2016 and down 21 percent from $171.0 million for the third quarter of 2015. Overall volumes sold were 2.4 million tons for the quarter, an increase of 24 percent from 2.0 million tons in the second quarter of 2016 and an increase of 19 percent from 2.0 million tons in the third quarter of 2015.

For third-quarter 2016, the company had a net loss of $20.6 million, or $(0.11) per share, compared with a net loss of $87.9 million, or $(0.54) per share, in the second quarter of 2016. The third-quarter net loss includes $9.8 million of pre-tax fees, or $0.03 per share, from renegotiation of railcar contracts, and $1.8 million of non-cash stock compensation expense, or $0.01 per share.

“We are encouraged by the early signs of improvement we saw in the proppant market during the third quarter,” said Jenniffer Deckard, president and chief executive officer. “Third-quarter volumes in our Proppant Solutions segment saw significant increases sequentially and over the prior-year period, as demand strengthened for both our raw frac sand and coated proppants. In addition, we instituted appropriate price increases on certain Northern White sand products late in the third quarter. As market conditions improve, we will continue to evaluate our operational footprint to ensure we are optimally positioned to quickly address upticks in demand and efficiently deliver product to both our Proppant Solutions and Industrial & Recreational customers. The third-quarter reopening of our Menomonie facility and the completed expansion of our Wedron facility earlier this year are expected to enable us to meet current demand for Northern White sand, which continues to grow.”

Proppant Solutions volumes for the third quarter of 2016 were 1.8 million tons, an increase of 36 percent compared with the second quarter of 2016 and up 20 percent compared with the prior-year period. Raw frac sand volumes were 1.7 million tons, a 35 percent sequential increase and a 27 percent increase compared with the same period a year ago. Coated proppant volumes were 96,500 tons, a 61 percent increase compared with the second quarter of 2016 and a 38 percent decrease from the prior-year period.

Proppant Solutions revenues were $103.1 million in third-quarter 2016, a 26 percent increase compared with $82.1 million in the second quarter of 2016 and a 27 percent decrease compared with $141.6 million in the third quarter a year ago. The sequential increase in revenues was largely driven by stronger volumes in both sand and coated proppants.

During the third quarter, average product price per ton across both raw and resin-coated sand was 6 percent below second-quarter average product price levels. This was largely due to product mix and to higher relative prices throughout the first half of the second quarter. At the exit of the third quarter, prices were slightly above second-quarter ending prices. Revenues from last year’s third quarter were higher primarily due to higher pricing and more coated proppants sold.

The company’s logistics capabilities continue to be a significant differentiator for the organization and add value for customers. Unit train deliveries have remained strong. In the third quarter, the company shipped more than 1 million tons of proppant via unit trains.