0001193125-16-757945.txt : 20161103 0001193125-16-757945.hdr.sgml : 20161103 20161103063320 ACCESSION NUMBER: 0001193125-16-757945 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20161103 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20161103 DATE AS OF CHANGE: 20161103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAIRMOUNT SANTROL HOLDINGS INC. CENTRAL INDEX KEY: 0001010858 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36670 FILM NUMBER: 161970050 BUSINESS ADDRESS: STREET 1: 8834 MAYFIELD ROAD CITY: CHESTERLAND STATE: OH ZIP: 44026 BUSINESS PHONE: 800-255-7263 MAIL ADDRESS: STREET 1: 8834 MAYFIELD ROAD CITY: CHESTERLAND STATE: OH ZIP: 44026 FORMER COMPANY: FORMER CONFORMED NAME: FMSA HOLDINGS INC DATE OF NAME CHANGE: 20140818 FORMER COMPANY: FORMER CONFORMED NAME: FML HOLDINGS INC DATE OF NAME CHANGE: 19960318 8-K 1 d285723d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 3, 2016

 

 

FAIRMOUNT SANTROL HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36670   34-1831554

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

8834 Mayfield Road, Chesterland, Ohio   44026
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (800) 255-7263

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02 Results of Operations and Financial Condition.

On November 3, 2016, the Company issued a press release providing information regarding earnings for the quarter ended September 30, 2016, which provided detail not included in previously issued reports. A copy of the press release is furnished with this Current Report on Form 8-K as Exhibit 99.1.

The information in this Current Report on Form 8-K, including the exhibit attached hereto, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number

  

Description

99.1    Press release of the Company, dated November 3, 2016.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

      Fairmount Santrol Holdings Inc.
      (Registrant)
Date: November 3, 2016      

/s/ Michael F. Biehl

     

Michael F. Biehl

Executive Vice President and Chief Financial Officer


Exhibit Index

 

Exhibit Number

  

Description

99.1    Press release of the Company, dated November 3, 2016.
EX-99.1 2 d285723dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

FAIRMOUNT SANTROL ANNOUNCES THIRD-QUARTER 2016 RESULTS

 

    Total volumes of 2.4 million tons up 24% sequentially

 

    Revenues of $134.8 million up 18% sequentially

 

    Net loss of $20.6 million, including the pre-tax impact of $9.8 million in fees ($6.4 million after tax) from renegotiation of railcar contracts

 

    Completed common stock offering of 30.25 million shares in October 2016 for net proceeds of approximately $277 million

CHESTERLAND, Ohio, Nov. 3, 2016 (GLOBE NEWSWIRE) — Fairmount Santrol (NYSE:FMSA), a leading provider of
high-performance sand and sand-based products, today announced results for the third quarter of 2016.

Third-Quarter 2016 Results

Third-quarter 2016 revenues were $134.8 million, up 18% from $114.2 million in the second quarter of 2016 and down 21% 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% from 2.0 million tons in the second quarter of 2016 and an increase of 19% 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. The net loss for the second quarter of 2016 included the following pre-tax charges: asset impairments of $90.6 million, stock compensation expense of $3.9 million, inventory write-downs of $10.3 million, restructuring costs of $1.2 million, and $5.3 million of committed professional fees for cost reduction initiatives and debt extension fees. Net loss for the third-quarter 2015 was $46.2 million, or $(0.29) per share, and included $2.7 million of stock compensation expense and $5.9 million of pre-tax restructuring and impairment charges.

 

1


Adjusted EBITDA loss for the third quarter of 2016 was $4.9 million. The Adjusted EBITDA loss excludes $1.8 million of non-cash stock compensation expense, while the $9.8 million in fees related to the railcar renegotiations have not been added back. In the second quarter of 2016, Adjusted EBITDA loss was $21.8 million, excluding the impact from asset impairment charges of $90.6 million and non-cash stock compensation expense of $3.9 million.

“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.”

Business Segments

Proppant Solutions Segment

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

 

2


Proppant Solutions revenues were $103.1 million in third-quarter 2016, a 26% increase compared with $82.1 million in the second quarter of 2016 and a 27% 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% 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.

Proppant Solutions gross margin increased to $6.4 million in the third quarter of 2016 compared with a negative gross margin of $13.5 million in the second quarter of 2016, which included $9.9 million of inventory write-downs. Gross margin for the segment in the third quarter of 2015 was $26.8 million. The sequential increase in segment gross margin was largely driven by higher volumes, including the related leverage of the Company’s fixed cost structure, but also resulted from the continued implementation of cost reduction initiatives across all categories.

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 over 1 million tons of proppant via unit trains.

Industrial and Recreational Products Segment

Industrial and Recreational volumes were 668,000 tons in third-quarter 2016, up 1% from second-quarter 2016 and up 17% from the prior year’s third quarter. Strong demand from glass customers continued to drive volume and offset traditional seasonal softening in other markets such as sports and recreation.

 

3


Revenues for the segment were $31.6 million in third-quarter 2016, a 2% decrease from $32.1 million in the second quarter and an 8% increase from $29.4 million for the third quarter a year ago. The sequential decline in revenue was mainly due to the seasonal shift in product mix as noted above, with the 8% increase over the prior year’s third-quarter revenues largely attributable to strong performance in several key markets, including glass and building products.

Gross margin for the segment was $13.5 million in third-quarter 2016, compared with to $13.6 million in the second quarter, which included $0.4 million of inventory write-downs. Gross margin for the segment in the third quarter of 2015 was $12.5 million.

Balance Sheet and Other Information

Through the first nine months of 2016, operating cash flow was a $15.1 million use of cash, which was primarily due to negative cash flow from operating activities, partially offset by improvements in working capital. Capital expenditures including stripping costs were $28.7 million for the nine months ended September 30, 2016. The Company expects full-year 2016 capital expenditures, including stripping costs to be between $30 million and $33 million.

At the end of the third quarter of 2016, the Company completed renegotiation of the more significant leases and contracts associated with its railcar fleet. In exchange for the extension of certain railcar leases and payment of $9.8 million in fees, $49.5 million in purchase commitments were canceled and purchase commitments of $136.5 million, which includes $3.9 million of railcar price increases, related to future railcar deliveries, originally scheduled for 2017 and 2018, were deferred. The renegotiation is also expected to result in cash savings of approximately $15 million on lease payments with an associated reduction in expense of approximately $5 million starting in the fourth quarter of 2016 and through the end of 2017.

 

4


The Company also continues to expect an additional $15 million in annualized savings from its other previously announced cost reduction activities initiated during prior quarters in 2016.

In October 2016, the Company completed a primary common stock offering of 30.25 million common shares, which resulted in net proceeds of approximately $277 million, after deducting underwriting commissions and estimated offering expenses. In addition, the underwriter has 30 days from the offering date to exercise an over-allotment option for an additional 4.5 million shares. The Company intends to use the net proceeds from the offering primarily for general corporate purposes, which includes repayment of debt and satisfaction of other obligations. Also in October 2016, the Company repurchased, at a discount, $3.0 million in B-1 extended term debt, which was otherwise due in 2019.

Deckard said, “The completion of our railcar contract renegotiations and our successful equity offering were additional steps in our phased approach to reducing our overall cost platform and improving both our liquidity and our balance sheet, which better positions us to address our financial obligations. We were pleased with the demand for our equity offering and appreciate the support of our shareholders, our Board of Directors and our Fairmount Santrol Family Members.”

As of September 30, 2016, cash and cash equivalents totaled $213.4 million, and debt totaled $1.1 billion, compared with $61.6 million of cash and cash equivalents and total debt of $1.1 billion as of June 30, 2016. Following the October equity offering, cash and cash equivalents are expected to be in excess of $490 million on a pro-forma basis.

Outlook

Due to the ongoing uncertainty in the oil and gas markets, the Company is continuing to suspend its earnings guidance.

 

5


Use of Certain GAAP and Non-GAAP Financial Measures

The Company defines EBITDA as net income before interest expense, income tax expense, depreciation, depletion and amortization. Adjusted EBITDA is defined as EBITDA before non-cash stock-based compensation, asset impairment, and certain other non-cash income or expenses. The Company believes EBITDA and adjusted EBITDA are useful because they allow management to more effectively evaluate our operational performance and compare the results of our operations from period to period without regard to our financing methods or capital structure.

Segment gross margin is defined as total revenues less the cost of goods sold to produce and deliver the products of each segment. The definition excludes selling, general and administrative expenses attributed to the segments and certain corporate costs.

Conference Call

Fairmount Santrol will host a conference call and live webcast for analysts and investors today, November 3, at 10 a.m. Eastern Time to discuss the Company’s 2016 third-quarter financial results. Investors are invited to listen to a live audio webcast of the conference call, which will be accessible on the Investor Relations section of the Company’s website at FairmountSantrol.com. To access the live webcast, please log in 15 minutes prior to the start of the call to download and install any necessary audio software. An archived replay of the call will also be available on the website following the call. The call can also be accessed live by dialing (866) 393-4306 or, for international callers, (734) 385-2616. The passcode for the call is 96234819. A replay will be available shortly after the call and can be accessed by dialing (855) 859-2056 or (404) 537-3406. The passcode for the replay is 96234819. The replay of the call will be available through November 10, 2016.

About Fairmount Santrol

Fairmount Santrol is a leading provider of high-performance sand and sand-based products used by oil and gas exploration and production companies to enhance the productivity of their wells. The Company also provides high-quality products, strong technical leadership and applications knowledge to end users in the foundry, building products, water filtration, glass, and sports and recreation markets. Its expansive logistics capabilities include a wide-ranging network of

 

6


distribution terminals and rail cars that allow the Company to effectively serve customers wherever they operate. As one of the nation’s longest continuously operating mining organizations, Fairmount Santrol has developed a strong commitment to all three pillars of sustainable development, People, Planet and Prosperity. Correspondingly, the Company’s motto and action orientation is: “Do Good. Do Well.” For more information, visit FairmountSantrol.com.

Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside of the Company’s control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These factors include: changes in prevailing economic conditions, including continuing pressure on and fluctuations in demand for, and pricing of, our products; loss of, or reduction in business from the Company’s largest customers or their failure to pay the Company; possible adverse effects of being leveraged, including interest rate, event of default or refinancing risks, as well as potentially limiting the Company’s ability to invest in certain market opportunities; the level of cash flows generated to provide adequate liquidity; our ability to successfully develop and market new products, including Propel SSP®; our rights and ability to mine our property and our renewal or receipt of the required permits and approvals from government authorities and other third parties; our ability to implement and realize efficiencies from capacity expansion plans and cost reduction initiatives within our time and budgetary parameters; expectations regarding results of railcar contract renegotiations; increasing costs or a lack of dependability or availability of transportation services or infrastructure and geographic shifts in demand; changing legislative and regulatory initiatives relating to our business, including environmental, mining, health and safety, licensing, reclamation and other regulation relating to hydraulic fracturing (and changes in their enforcement and interpretation); silica-related health issues and corresponding litigation; seasonal and severe weather conditions; and other operating risks that are beyond our control.

 

7


Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Fairmount Santrol Holdings Inc.’s filings with the Securities and Exchange Commission (“SEC”). The risk factors and other factors noted in our filings with the SEC could cause our actual results to differ materially from those contained in any forward-looking statement.

Investor contact:

Sharon Van Zeeland

440-279-0204

Sharon.VanZeeland@fairmountsantrol.com

Media contact:

Kristin Lewis

440-279-0245

Kristin.Lewis@fairmountsantrol.com

 

 

LOGO

Source: Fairmount Santrol

 

8


Fairmount Santrol

Condensed Consolidated Statements of Income (Loss)

(unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,  
     2016     2015     2016     2015  
     (in thousands, except per share
amounts)
    (in thousands, except per share
amounts)
 

Revenues

   $ 134,775      $ 170,950      $ 394,482      $ 693,763   

Cost of goods sold (excluding depreciation, depletion, amortization, and stock compensation expense shown separately)

     114,873        131,679        347,466        499,357   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     19,902        39,271        47,016        194,406   

Operating expenses

        

Selling, general and administrative expenses

     15,443        18,314        53,194        61,538   

Depreciation, depletion and amortization expense

     17,759        15,260        54,401        47,759   

Stock compensation expense

     1,799        2,679        7,366        7,180   

Asset impairments

     —          4,169        90,654        10,644   

Restructuring charges

     —          284        1,155        8,957   

Other operating expense (income)

     9,362        (878     9,266        (278
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     (24,461     (557     (169,020     58,606   

Interest expense, net

     16,175        15,963        50,043        46,165   

Other non-operating expense (income)

     —          1,492        (5     1,492   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before provision for income taxes

     (40,636     (18,012     (219,058     10,949   

Provision (benefit) for income taxes

     (20,013     28,117        (98,786     12,057   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (20,623     (46,129     (120,272     (1,108

Less: Net income attributable to the non-controlling interest

     2        71        15        196   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to Fairmount Santrol Holdings Inc.

   $ (20,625   $ (46,200   $ (120,287   $ (1,304
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss per share

        

Basic

   $ (0.11   $ (0.29   $ (0.71   $ (0.01

Diluted

   $ (0.11   $ (0.29   $ (0.71   $ (0.01

Weighted average number of shares outstanding

        

Basic

     183,620        161,413        168,904        161,241   

Diluted

     183,620        161,413        168,904        161,241   

 

9


Fairmount Santrol

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

     Nine Months Ended September 30,  
     2016     2015  
     (in thousands)  

Net loss

   $ (120,272   $ (1,108

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

    

Depreciation and depletion

     50,891        44,355   

Amortization

     8,471        8,586   

Reserve for doubtful accounts

     2,645        —     

Write-off of deferred financing costs

     —          864   

Asset impairments

     90,654        6,967   

Non-cash restructuring charges

     —          1,162   

Inventory write-downs and reserves

     10,302        (83

Loss on sale of fixed assets

     315        424   

Unrealized loss on interest rate swaps

     —          48   

Deferred income taxes and taxes payable

     (80,248     4,417   

Refundable income taxes

     5,922        (9,997

Stock compensation expense

     7,366        7,180   

Change in operating assets and liabilities:

    

Accounts receivable

     (5,035     114,818   

Inventories

     7,039        54,764   

Prepaid expenses and other assets

     1,873        21,738   

Accounts payable

     4,723        (37,028

Accrued expenses

     225        20   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (15,129     217,127   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Proceeds from sale of fixed assets

     5,630        —     

Capital expenditures and stripping costs

     (28,712     (91,548

Other investing activities

     (1,631     —     
  

 

 

   

 

 

 

Net cash used in investing activities

     (24,713     (91,548
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments on long-term debt

     (78,250     (10,595

Payments on capital leases and other long-term debt

     (5,067     (5,522

Proceeds from option exercises

     3,950        1,767   

Proceeds from primary stock offering

     161,862        —     

Tax effect of stock options exercised, forfeited, or expired

     (1,051     32   

Distributions to non-controlling interest

     (551     (219

Other financing activities

     —          (4,592
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     80,893        (19,129
  

 

 

   

 

 

 

Change in cash and cash equivalents related to assets classified as held-for-sale

     1,376        (3,120

Foreign currency adjustment

     (479     (773
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     41,948        102,557   
  

 

 

   

 

 

 

Cash and cash equivalents:

    

Beginning of period

     171,486        76,923   
  

 

 

   

 

 

 

End of period

   $ 213,434      $ 179,480   
  

 

 

   

 

 

 

 

10


Fairmount Santrol

Condensed Consolidated Balance Sheets

(unaudited)

 

     September 30, 2016     December 31, 2015  
     (in thousands)  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 213,434      $ 171,486   

Accounts receivable, net

     78,798        73,566   

Inventories

     53,154        70,494   

Prepaid expenses and other assets

     9,259        13,404   

Refundable income taxes

     20,584        26,506   

Current assets classified as held-for-sale (includes cash, accounts receivable, inventories, and property, plant, and equipment)

     —          4,218   
  

 

 

   

 

 

 

Total current assets

     375,229        359,674   

Property, plant and equipment, net

     743,999        870,997   

Deferred income taxes

     834        834   

Goodwill

     15,301        15,301   

Intangibles, net

     94,386        96,482   

Other assets

     9,265        10,961   
  

 

 

   

 

 

 

Total assets

   $ 1,239,014      $ 1,354,249   
  

 

 

   

 

 

 

Liabilities and Equity

    

Current liabilities

    

Current portion of long-term debt

   $ 30,394      $ 17,385   

Accounts payable

     36,579        40,421   

Accrued expenses

     24,227        26,785   

Current liabilities directly related to current assets classified as held-for-sale (includes accounts payable and accrued expenses)

     —          934   
  

 

 

   

 

 

 

Total current liabilities

     91,200        85,525   

Long-term debt

     1,113,688        1,205,721   

Deferred income taxes

     6,701        89,569   

Other long-term liabilities

     40,772        33,802   
  

 

 

   

 

 

 

Total liabilities

     1,252,361        1,414,617   

Equity

    

Common stock

     2,408        2,391   

Additional paid-in capital

     494,278        776,705   

Retained earnings

     284,757        405,044   

Accumulated other comprehensive loss

     (21,976     (17,693

Treasury stock at cost

     (773,126     (1,227,663

Non-controlling interest

     312        848   
  

 

 

   

 

 

 

Total equity (deficit)

     (13,347     (60,368
  

 

 

   

 

 

 

Total liabilities and equity

   $ 1,239,014      $ 1,354,249   
  

 

 

   

 

 

 

 

11


Fairmount Santrol

Segment Reports

(unaudited)

 

    Three Months Ended September 30,     Nine Months Ended September 30,     Three Months Ended
June 30,
 
    2016     2015     2016     2015     2016  
    (in thousands, except volume amounts)     (in thousands, except volume amounts)     (in thousands, except
volume amounts)
 

Volume (tons)

         

Proppant Solutions

         

Raw sand

    1,657,799        1,309,428        4,301,124        4,184,045        1,230,077   

Coated proppant

    96,532        154,902        269,062        652,042        59,826   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Proppant Solutions

    1,754,331        1,464,330        4,570,186        4,836,087        1,289,903   

Industrial & Recreational Products

    668,333        569,971        1,916,755        1,745,474        661,244   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total volumes

    2,422,664        2,034,301        6,486,941        6,581,561        1,951,147   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenues

         

Proppant Solutions

  $ 103,140      $ 141,584      $ 302,705      $ 602,603      $ 82,102   

Industrial & Recreational Products

    31,635        29,366        91,777        91,160        32,147   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    134,775        170,950        394,482        693,763        114,249   

Segment gross margin

         

Proppant Solutions

    6,356        26,788        9,419        160,492        (13,529

Industrial & Recreational Products

    13,546        12,483        37,597        33,914        13,649   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total segment gross margin

    19,902        39,271        47,016        194,406        120   

 

12


Fairmount Santrol

Non-GAAP Financial Measures

(unaudited)

 

     Three Months Ended September 30,     Nine Months Ended September 30,     Three Months
Ended June 30,
 
     2016     2015     2016     2015     2016  
     (in thousands)     (in thousands)     (in thousands)  

Reconciliation of Adjusted EBITDA

          

Net loss attributable to Fairmount Santrol Holdings Inc.

   $ (20,625   $ (46,200   $ (120,287   $ (1,304   $ (87,886

Interest expense, net

     16,175        15,963        50,043        46,165        16,606   

Provision (benefit) for income taxes

     (20,013     28,117        (98,786     12,057        (63,019

Depreciation, depletion, and amortization expense

     17,759        15,260        54,401        47,759        18,056   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     (6,704     13,140        (114,629     104,677        (116,243

Non-cash stock compensation
expense(1)

     1,799        2,679        7,366        7,180        3,914   

Asset impairments(2)

     —          4,169        90,654        10,644        90,578   

Restructuring charges(3)

     —          284        —          8,957        —     

Loss on disposal of fixed assets(4)

     —          627        —          627        —     

Write-off of deferred financing costs(5)

     —          864        —          864        —     

Other charges(6)

     —          —          —          465        —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ (4,905   $ 21,763      $ (16,609   $ 133,414      $ (21,751
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Represents the non-cash expense for stock-based awards issued to our employees and outside directors.
(2) Non-cash charges associated with the impairment of mineral reserves and other long-lived assets.
(3) For the three months ended June 30, 2016 and 2015, respectively, we incurred cash charges of approximately $1.2 million and $6.1 million for restructuring. We are no longer reflecting cash charges as an adjustment to EBITDA in 2016 results.
(4) Includes losses related to the sale and disposal of certain assets in property, plant, and equipment.
(5) Represents the write-off of deferred financing fees in relation to the amendment of our Revolving Credit Facility.
(6) Cash payment associated with an audit of our Employee Stock Bonus Plan.

 

13

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