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Hi-Crush Frac Sand Volumes Up in First Quarter


Hi-Crush Inc. reported first-quarter 2020 results, along with additional financial and operational updates. Revenues during the first quarter of 2020 totaled $146.4 million compared to $125.5 million during the fourth quarter of 2019.

•    Revenues associated with logistics services were $60.7 million in the first quarter of 2020, compared to $47.8 million in the fourth quarter of 2019.
•    Revenues from sales of frac sand totaled $85.7 million in the first quarter of 2020, compared to $77.3 million in the fourth quarter of 2019.

Net loss for the first quarter of 2020 was $146.9 million, including $145.7 million of non-cash asset impairments associated with the write-down of certain production and terminal facilities. This resulted in basic and diluted loss of $1.46 per share, compared to net loss of $21.4 million and basic and diluted loss of $0.21 per share, including $11.1 million of non-cash asset impairments, for the fourth quarter of 2019. Adjusted net loss for the first quarter of 2020 was $15.5 million or basic and diluted adjusted loss of $0.15 per share, excluding the non-cash asset impairments.

Total frac sand volumes sold were 2.5 million tons in the first quarter of 2020, compared to 2.1 million tons in the fourth quarter of 2019. Volumes sold directly to exploration and production companies during the first quarter of 2020 were 63% of the total, compared to 70% in the fourth quarter of 2019 and 63% in the first quarter of 2019. Contribution margin was $8.48 per ton in the first quarter of 2020, compared to $9.02 per ton in the fourth quarter of 2019.

General and administrative expenses totaled $12.3 million in the first quarter of 2020, excluding non-recurring expenses of $0.6 million associated with business development activities. General and administrative expenses totaled $11.6 million in the fourth quarter of 2019, excluding $0.1 million of business development activities.

During the first quarter of 2020, the oil and natural gas industry, and Hi-Crush, faced a sharp and rapid decline, which was driven by a decrease in crude oil prices and overall oilfield activity, predominantly caused by decisions made by the Organization of Petroleum Exporting Countries and other oil producing nations, and impacts to the demand for crude oil associated with the emerging COVID-19 pandemic.

In response to the continued effects on the company's business and operations caused by the COVID-19 pandemic and decrease in the price of crude oil during the first quarter of 2020, Hi-Crush has taken a number of steps to better align its cost structure with current and expected market demand.

The company has reduced its workforce by approximately 60% since mid-March 2020, lowered expected capital expenditures for full-year 2020 by nearly 40% since initial guidance, and idled three production and three terminal facilities during April 2020.

The company currently operates only its Wyeville facility in Wisconsin and one of its Kermit facilities in West Texas, both at reduced rates of utilization. Working production capacity for Hi-Crush is currently 5.7 million tpy, out of total nameplate capacity of 17.3 million tpy.

Hi-Crush also adjusted the deployment schedule for its first OnCore Processing mobile frac sand unit due to the deterioration in market conditions experienced by the industry since late-March 2020. The first OnCore unit is deployed for field demonstrations for potential customers at Hi-Crush’s Kermit complex in West Texas. Hi-Crush has also delayed completing production of its second OnCore unit until current market conditions improve.