Hi-Crush Inc. reported third quarter 2019 results. Revenues during the third quarter of 2019 totaled $173.0 million on total volumes sold of 2,685,736 tons. This compares to $178.0 million of revenues during the second quarter of 2019 on total volumes sold of 2,662,086 tons.
Revenues from sales of frac sand totaled $114.2 million in the third quarter of 2019, compared to $125.9 million in the second quarter of 2019. Total volumes sold were 2.69 million tons, a slight increase compared to the second quarter of 2019 and at the high end of the previously guided range of 2.4 to 2.7 million tons.
Average sales price was $43 per ton for the third quarter of 2019 compared to $47 per ton in the second quarter of 2019, driven by customer mix and continued pricing pressure.
Contribution margin was $10.99 per ton in the third quarter of 2019, compared to $13.80 per ton in the second quarter of 2019. The sequential decrease in contribution margin per ton primarily resulted from lower pricing due to continued oversupply of frac sand and increased competition.
“For the third quarter of 2019, we generated adjusted EBITDA of approximately $18 million, increased last mile truckloads by seven percent, and achieved frac sand sales at the high end of our guidance,” said Robert E. Rasmus, chairman and chief executive officer of Hi-Crush Inc. “We continue to receive positive feedback from customers in response to our equipment upgrades, expanded last mile services, and reliable frac sand supply. I am proud of our team and our ability to achieve these results despite challenging market conditions.
“We are well-positioned to navigate the current market backdrop, and are focused on three key priorities – leveraging our integrated portfolio to deliver high-quality customer service, improving profitability through operational optimization and cost reduction, as well as prudent capital allocation.”
During the third quarter of 2019, the company completed an impairment assessment of goodwill and long-lived assets, including Northern White production facilities, right-of-use assets and intangible assets based on current and expected utilization of the assets and market conditions. As a result, during the third quarter of 2019, the company recorded total asset impairments of $346.4 million primarily driven by $215.5 million for the write-down of the Augusta and Whitehall facilities to their estimated fair value, $76.3 million for railcar operating lease right-of-use assets, and $48.6 million for goodwill and certain intangible assets.
“Market conditions for frac sand softened late in the third quarter, driven by continued oversupply and further declines in activity, resulting in lower pricing and profitability,” said Laura C. Fulton, chief financial officer of Hi-Crush Inc. “We remained proactive in further rationalizing costs and spending across the organization, resulting in additional reductions in G&A and lower capex for the remainder of 2019 and into 2020. The non-cash impairment charges incurred for certain of our assets during the third quarter reflect market conditions, but do not impact our ability to efficiently execute on our strategy and deliver quality customer service.”