Exhibit 99.1
FOR IMMEDIATE RELEASE
FAIRMOUNT SANTROL ANNOUNCES FOURTH-QUARTER AND FULL-YEAR 2016 RESULTS
FOURTH-QUARTER HIGHLIGHTS
| | • | | Volumes of 2.4 million tons similar to the prior quarter, including Proppant Solutions volumes of 1.8 million tons up 5% sequentially |
| | • | | Revenues of $140.5 million up 4% sequentially, including Proppant Solutions revenues of $113.4 million up 10% sequentially |
| | • | | Completed primary equity offering in October 2016, generating net proceeds of $278 million |
| | • | | Retired $302 million of long-term debt through repurchases and prepayments |
CHESTERLAND, Ohio, March 9, 2017 (GLOBE NEWSWIRE) – Fairmount Santrol (NYSE:FMSA), a leading provider of high-performance sand and sand-based product solutions, today announced results for the fourth quarter and full year ended December 31, 2016.
Fourth-Quarter 2016 Results
Fourth-quarter 2016 revenues were $140.5 million, up 4% from $134.8 million in the third quarter of 2016 and up 4% from $134.9 million in the fourth quarter of 2015. Overall volumes sold were 2.4 million tons for the quarter, similar to the third quarter of 2016 and an increase of 26% from 1.9 million tons in the fourth quarter of 2015.
For fourth-quarter 2016, the Company had a net loss of $19.9 million, or $(0.09) per diluted share, compared with a net loss of $20.6 million, or $(0.11) per diluted share, in the third quarter of 2016. Net loss for fourth-quarter 2015 was $90.8 million, or $(0.56) per diluted share.
Adjusted EBITDA for the fourth quarter of 2016 was $11.7 million, which excludes a gain on the repurchase of debt of $5.1 million (net of professional fees and deferred financing fee write-offs), asset impairments and other charges of $2.7 million, and non-cash stock compensation expense of $1.5 million. Professional fees of $1.2 million related to the fourth-quarter equity
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offerings have not been excluded from Adjusted EBITDA. In the third quarter of 2016, Adjusted EBITDA was a $4.9 million loss, which excludes $1.8 million of non-cash stock compensation expense, but $10.6 million in fees related to railcar renegotiations and an equity offering have not been excluded. In the fourth-quarter of 2015, Adjusted EBITDA totaled $4.7 million and excluded a $69.5 million non-cash impairment of goodwill and other assets, a $7.3 million loss on the disposal of assets, $0.3 million of other restructuring charges, and $2.7 million of income related to stock compensation forfeitures.
Full-Year 2016 Results
Full-year 2016 revenues were $535.0 million, compared with $828.7 million in 2015. Overall volumes sold in 2016 were 8.9 million tons, compared with 8.5 million tons in 2015. The reduction in revenues was due mainly to lower pricing and a mix shift within Proppant Solutions from coated proppants to raw frac sand.
Net loss for full-year 2016 was $140.2 million, or $(0.78) per diluted share, compared to a net loss of $92.1 million, or $(0.57) per diluted share, in 2015. The 2016 net loss includes $125.7 million in pre-tax expenses related to stock compensation, asset impairments, inventory write-offs, restructuring charges, a gain on the repurchase of debt (net of professional fees and the write-off of deferred financing fees), and other professional expenses. The after-tax impact of these charges is $81.6 million, or $0.50 per diluted share. The 2015 net loss included pre-tax expenses of $103.2 million related to stock compensation, goodwill and asset impairments and restructuring charges, which equate to $67.1 million after-tax, or $0.41 per diluted share.
The full-year Adjusted EBITDA loss for 2016 totaled $4.9 million compared to $138.1 million of Adjusted EBITDA in 2015. Adjusted EBITDA for 2016 does not exclude $10.3 million in inventory write-downs and $18.3 million in professional fees for cost reductions, railcar renegotiations and stock offering expenses.
“Market conditions improved in the fourth quarter, and we were pleased to see volume growth continue in our Proppant Solutions segment. We were particularly encouraged by the increase in demand for our value-added coated products,” said Jenniffer Deckard, President and Chief Executive Officer. “Another positive trend was our ability to sustain price increases both in the
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fourth quarter of 2016 and at the beginning of 2017. Yet we believe proppant pricing remains at unsustainably low levels. As demand increases to more closely align with supply, particularly for finer grades, we expect to continue to raise prices.”
Deckard added, “2016 presented challenging market conditions, but the entire Fairmount Santrol team continued to execute, innovate, and take actions throughout the year to enable us to manage through the downturn. We are encouraged by recent improvements in the energy markets we serve, even though some uncertainty still exists. We are very confident that the actions we have taken – to improve our cost structure and balance sheet, to strengthen and broaden our innovative product portfolio, and to enhance our extensive production and logistics network – have positioned the Company to perform well as the market recovers.”
Business Segments
Proppant Solutions Segment
For the fourth quarter of 2016, Proppant Solutions volumes were 1.8 million tons, an increase of 5% compared with the third quarter of 2016 and up 35% compared with the prior-year period. Raw frac sand volumes were 1.7 million tons, a 5% sequential increase and a 39% increase compared with the same period a year ago. Coated proppant volumes were 101,400 tons, a 5% increase compared with the third quarter of 2016 and an 11% decrease from the prior-year period.
Proppant Solutions revenues were $113.4 million in fourth-quarter 2016, a 10% increase compared with $103.1 million in the third quarter of 2016 and a 6% increase compared with $107.5 million in the fourth quarter a year ago. During the fourth quarter, average product price per ton across Proppant Solutions was 5% above third-quarter average product price levels, and was positively impacted by price increases that were initiated during the fourth quarter.
Proppant Solutions gross profit increased to $17.1 million, or 15.1% of sales, in the fourth quarter of 2016 compared to $6.4 million, or 6.2% of sales, in the third quarter of 2016. Gross profit for the segment in the fourth quarter of 2015 was $14.7 million, or 13.7% of sales.
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In response to increased customer demand, the Company recently reopened its previously idled facilities in Maiden Rock, Wisconsin, and Brewer, Missouri. The Maiden Rock facility has a stated annual capacity of over 1.2 million tons of Northern White sand and is located adjacent to Class 1 rail lines with unit train capabilities. The Brewer facility has a stated annual capacity of approximately 1.0 million tons of Northern White sand and has nearby access to a transload facility that is also unit train capable. Following the reactivation of these two facilities, the Company’s total active stated annual frac sand capacity is approximately 11.9 million tons.
The Company also reopened its coating facility in Cutler, Illinois, during the first quarter of 2017, to meet increased customer demand for resin-coated products.
Industrial and Recreational Products Segment
Industrial and Recreational volumes were 587,000 tons in fourth-quarter 2016, down 12% from third-quarter 2016 and up 6% from the prior year’s fourth quarter. The decrease in sequential demand was impacted by typical seasonal factors including lower sports and recreational volumes and seasonal shutdowns in the foundry business. The increase in volumes over the prior-year period was driven by strong growth in the glass and building products business.
Revenues for the segment were $27.1 million in fourth-quarter 2016, a 14% decrease from $31.6 million in the third quarter and a 1% decrease from $27.5 million for the fourth quarter a year ago. The sequential decline in revenue was due in part to the seasonal slowdown noted above, along with a shift in industrial end markets. The decline from the prior-year period was due to a shift toward raw sand products.
Gross profit for the segment was $11.2 million, or 41.3% of sales, in fourth-quarter 2016, compared with $13.5 million, or 42.8% of sales, in the third quarter. Gross profit for the segment in the fourth quarter of 2015 was $10.7 million, or 39.0% of sales.
Balance Sheet and Other Information
For full-year 2016, net cash used by operating activities was $6.6 million, which was caused in large part by a weaker pricing environment and lower sales of high-margin resin products. Net cash provided by financing activities was $54.9 million, with proceeds of $439.6 million from
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two primary equity offerings partially offset by $216.0 million in debt repurchases at a discount and $166.8 million of debt repayments at par, for a total debt reduction of $382.8 million. Capital expenditures, including stripping costs, were $30.6 million for the year ended December 31, 2016.
As of December 31, 2016, cash and cash equivalents totaled $194.1 million, and total debt was $843.0 million, compared with $213.4 million of cash and cash equivalents and total debt of $1,144.1 million as of September 30, 2016.
Capital expenditures, including stripping costs, are expected to approximate $47 million to $50 million in 2017, which includes regular plant maintenance, terminal and production investments moving back to baseline levels, and in anticipation of future-period growth.
Outlook
Due to the volatility and ongoing uncertainty in the oil and gas markets, the Company will not provide sales and earnings guidance for 2017. However, in the first quarter of 2017 there are signs of continuing improvement in proppant volumes, mix and pricing.
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 impairments, and certain other 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 costs or capital structure.
Conference Call
Fairmount Santrol will host a conference call and live webcast for analysts and investors today, March 9, 2017, at 10 a.m. Eastern Time to discuss the Company’s 2016 fourth-quarter and full-year financial results. Investors are invited to listen to a live audio webcast of the conference call,
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which will be accessible on the Investor Relations section of the Company’s website. 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 (877) 201-0168 or, for international callers, (647) 788-4901. The passcode for the call is 57952116. A replay will be available shortly after the call and can be accessed by dialing (800) 585-8367 or (416) 621-4642. The passcode for the replay is 57952116. The replay of the call will be available through March 16, 2017.
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 distribution terminals and railcars 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, visitFairmountSantrol.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
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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, facility reactivation 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.
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 contacts:
Sharon Van Zeeland
440-279-0204
Sharon.VanZeeland@fairmountsantrol.com
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Matthew Schlarb
440-214-3284
Matthew.Schlarb@fairmountsantrol.com
Source: Fairmount Santrol
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Fairmount Santrol
Condensed Consolidated Statements of Income (Loss)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Year Ended December 31, | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | |
| | | (in thousands, except per
share amounts) | | | (in thousands, except per
share amounts) | |
Revenues | | $ | 140,531 | | | $ | 134,946 | | | $ | 535,013 | | | $ | 828,709 | |
Cost of goods sold (excluding depreciation, depletion, and amortization shown separately) | | | 112,248 | | | | 109,488 | | | | 459,714 | | | | 608,845 | |
Operating expenses | | | | | | | | | | | | | | | | |
Selling, general and administrative expenses(A) | | | 18,580 | | | | 16,473 | | | | 79,140 | | | | 85,191 | |
Depreciation, depletion and amortization expense | | | 17,875 | | | | 18,995 | | | | 72,276 | | | | 66,754 | |
Goodwill and other asset impairments | | | 2,494 | | | | 76,833 | | | | 93,148 | | | | 87,476 | |
Restructuring charges | | | — | | | | 263 | | | | 1,155 | | | | 9,221 | |
Other operating expense (income) | | | (367 | ) | | | 1,635 | | | | 8,899 | | | | 1,357 | |
| | | | | | | | | | | | | | | | |
Loss from operations | | | (10,299 | ) | | | (88,741 | ) | | | (179,319 | ) | | | (30,135 | ) |
Interest expense, net | | | 15,324 | | | | 16,077 | | | | 65,367 | | | | 62,242 | |
Gain on repurchase of debt, net | | | (5,110 | ) | | | — | | | | (5,110 | ) | | | — | |
Other non-operating expense (income) | | | (5 | ) | | | — | | | | (10 | ) | | | 1,492 | |
| | | | | | | | | | | | | | | | |
Loss before benefit from income taxes | | | (20,508 | ) | | | (104,818 | ) | | | (239,566 | ) | | | (93,869 | ) |
Benefit from income taxes | | | (655 | ) | | | (13,996 | ) | | | (99,441 | ) | | | (1,939 | ) |
| | | | | | | | | | | | | | | | |
Net loss | | | (19,853 | ) | | | (90,822 | ) | | | (140,125 | ) | | | (91,930 | ) |
Less: Net income attributable to the non-controlling interest | | | 52 | | | | 9 | | | | 67 | | | | 205 | |
| | | | | | | | | | | | | | | | |
Net loss attributable to Fairmount Santrol Holdings Inc. | | $ | (19,905 | ) | | $ | (90,831 | ) | | $ | (140,192 | ) | | $ | (92,135 | ) |
| | | | | | | | | | | | | | | | |
Loss per share | | | | | | | | | | | | | | | | |
Basic | | $ | (0.09 | ) | | $ | (0.56 | ) | | $ | (0.78 | ) | | $ | (0.57 | ) |
Diluted | | $ | (0.09 | ) | | $ | (0.56 | ) | | $ | (0.78 | ) | | $ | (0.57 | ) |
Weighted average number of shares outstanding | | | | | | | | | | | | | | | | |
Basic | | | 212,609 | | | | 161,433 | | | | 179,429 | | | | 161,297 | |
Diluted | | | 212,609 | | | | 161,433 | | | | 179,429 | | | | 161,297 | |
(A) - Stock compensation expense included within selling, general, and administrative expenses.
Fairmount Santrol
Condensed Consolidated Statements of Cash Flows
(unaudited)
| | | | | | | | |
| | | Year Ended December 31, | |
| | | 2016 | | | 2015 | |
| | | (in thousands) | |
Net loss | | $ | (140,125 | ) | | $ | (91,930 | ) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | | | | | | | | |
Depreciation and depletion | | | 67,614 | | | | 62,218 | |
Amortization | | | 11,641 | | | | 11,416 | |
Reserve for doubtful accounts | | | 1,851 | | | | 1,968 | |
Write-off of deferred financing costs | | | 2,618 | | | | 864 | |
Gain on repurchase of debt, gross | | | (8,178 | ) | | | — | |
Goodwill and other asset impairments | | | 93,148 | | | | 76,038 | |
Non-cash restructuring charges | | | — | | | | 1,162 | |
Inventory write-downs and reserves | | | 10,302 | | | | 1,591 | |
Loss on sale of fixed assets | | | 420 | | | | 8,712 | |
Unrealized loss on interest rate swaps | | | — | | | | 49 | |
Deferred income taxes and taxes payable | | | (82,732 | ) | | | 20,983 | |
Refundable income taxes | | | 5,428 | | | | (26,506 | ) |
Stock compensation expense | | | 8,870 | | | | 4,525 | |
Change in operating assets and liabilities: | | | | | | | | |
Accounts receivable | | | (4,385 | ) | | | 127,718 | |
Inventories | | | 7,543 | | | | 59,527 | |
Prepaid expenses and other assets | | | 11,496 | | | | 23,234 | |
Accounts payable | | | 4,196 | | | | (38,698 | ) |
Accrued expenses | | | 3,701 | | | | (6,877 | ) |
| | | | | | | | |
Net cash provided by (used in) operating activities | | | (6,592 | ) | | | 235,994 | |
| | | | | | | | |
Cash flows from investing activities | | | | | | | | |
Proceeds from sale of fixed assets | | | 5,670 | | | | — | |
Capital expenditures and stripping costs | | | (30,597 | ) | | | (113,750 | ) |
Earnout payments | | | (1,287 | ) | | | — | |
Other investing activities | | | — | | | | (250 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (26,214 | ) | | | (114,000 | ) |
| | | | | | | | |
Cash flows from financing activities | | | | | | | | |
Payments on long-term debt | | | (10,840 | ) | | | (13,532 | ) |
Prepayments on term loans | | | (155,926 | ) | | | — | |
Repurchase of term loans | | | (216,000 | ) | | | — | |
Fees for repurchase of term loans | | | (450 | ) | | | — | |
Payments on capital leases and other long-term debt | | | (5,947 | ) | | | (6,975 | ) |
Proceeds from option exercises | | | 6,438 | | | | 1,767 | |
Proceeds from primary stock offering | | | 439,556 | | | | — | |
Tax effect of stock options exercised, forfeited, or expired | | | (1,100 | ) | | | (1,472 | ) |
Transactions with non-controlling interest | | | (842 | ) | | | (301 | ) |
Other financing activities | | | — | | | | (4,578 | ) |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 54,889 | | | | (25,091 | ) |
| | | | | | | | |
Change in cash and cash equivalents related to assets classified as held-for-sale | | | 1,376 | | | | (1,376 | ) |
Foreign currency adjustment | | | (876 | ) | | | (964 | ) |
| | | | | | | | |
Increase in cash and cash equivalents | | | 22,583 | | | | 94,563 | |
| | | | | | | | |
Cash and cash equivalents: | | | | | | | | |
Beginning of period | | | 171,486 | | | | 76,923 | |
| | | | | | | | |
End of period | | $ | 194,069 | | | $ | 171,486 | |
| | | | | | | | |
Fairmount Santrol
Condensed Consolidated Balance Sheets
(unaudited)
| | | | | | | | |
| | | December 31, 2016 | | | December 31, 2015 | |
| | | (in thousands) | |
Assets | | | | | | | | |
Current assets | | | | | | | | |
Cash and cash equivalents | | $ | 194,069 | | | $ | 171,486 | |
Accounts receivable, net | | | 78,942 | | | | 73,566 | |
Inventories, net | | | 52,650 | | | | 70,494 | |
Prepaid expenses and other assets | | | 7,065 | | | | 13,404 | |
Refundable income taxes | | | 21,077 | | | | 26,506 | |
Current assets classified as held-for-sale (includes cash, accounts receivable, inventories, and property, plant, and equipment) | | | — | | | | 4,218 | |
| | | | | | | | |
Total current assets | | | 353,803 | | | | 359,674 | |
Property, plant and equipment, net | | | 727,735 | | | | 870,997 | |
Deferred income taxes | | | 1,244 | | | | 834 | |
Goodwill | | | 15,301 | | | | 15,301 | |
Intangibles, net | | | 95,341 | | | | 96,482 | |
Other assets | | | 9,486 | | | | 10,961 | |
| | | | | | | | |
Total assets | | $ | 1,202,910 | | | $ | 1,354,249 | |
| | | | | | | | |
Liabilities and Equity | | | | | | | | |
Current liabilities | | | | | | | | |
Current portion of long-term debt | | $ | 10,707 | | | $ | 17,385 | |
Accounts payable | | | 37,263 | | | | 40,421 | |
Accrued expenses | | | 26,185 | | | | 26,785 | |
Current liabilities directly related to current assets classified as held-for-sale (includes accounts payable and accrued expenses) | | | — | | | | 934 | |
| | | | | | | | |
Total current liabilities | | | 74,155 | | | | 85,525 | |
Long-term debt | | | 832,306 | | | | 1,205,721 | |
Deferred income taxes | | | 7,057 | | | | 89,569 | |
Other long-term liabilities | | | 38,272 | | | | 33,802 | |
| | | | | | | | |
Total liabilities | | | 951,790 | | | | 1,414,617 | |
Equity | | | | | | | | |
Common stock | | | 2,422 | | | | 2,391 | |
Additional paid-in capital | | | 297,649 | | | | 776,705 | |
Retained earnings | | | 264,852 | | | | 405,044 | |
Accumulated other comprehensive loss | | | (19,002 | ) | | | (17,693 | ) |
Treasury stock at cost | | | (294,874 | ) | | | (1,227,663 | ) |
Non-controlling interest | | | 73 | | | | 848 | |
| | | | | | | | |
Total equity (deficit) | | | 251,120 | | | | (60,368 | ) |
| | | | | | | | |
Total liabilities and equity | | $ | 1,202,910 | | | $ | 1,354,249 | |
| | | | | | | | |
Fairmount Santrol
Segment Reports
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Three Months Ended
September 30, | |
| | | Three Months Ended
December 31, | | | Year Ended
December 31, | | |
| | | 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 | | | 1,743,318 | | | | 1,253,257 | | | | 6,044,442 | | | | 5,437,302 | | | | 1,657,799 | |
Coated proppant | | | 101,429 | | | | 114,414 | | | | 370,491 | | | | 766,456 | | | | 96,532 | |
| | | | | | | | | | | | | | | | | | | | |
Total Proppant Solutions | | | 1,844,747 | | | | 1,367,671 | | | | 6,414,933 | | | | 6,203,758 | | | | 1,754,331 | |
Industrial & Recreational Products | | | 586,898 | | | | 555,495 | | | | 2,503,653 | | | | 2,300,969 | | | | 668,333 | |
| | | | | | | | | | | | | | | | | | | | |
Total volumes | | | 2,431,645 | | | | 1,923,166 | | | | 8,918,586 | | | | 8,504,727 | | | | 2,422,664 | |
| | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | |
Proppant Solutions | | $ | 113,439 | | | $ | 107,480 | | | $ | 416,144 | | | $ | 710,083 | | | $ | 103,140 | |
Industrial & Recreational Products | | | 27,092 | | | | 27,466 | | | | 118,869 | | | | 118,626 | | | | 31,635 | |
| | | | | | | | | | | | | | | | | | | | |
Total revenues | | | 140,531 | | | | 134,946 | | | | 535,013 | | | | 828,709 | | | | 134,775 | |
Segment gross profit | | | | | | | | | | | | | | | | | | | | |
Proppant Solutions | | | 17,082 | | | | 14,734 | | | | 26,501 | | | | 175,226 | | | | 6,356 | |
Industrial & Recreational Products | | | 11,201 | | | | 10,724 | | | | 48,798 | | | | 44,638 | | | | 13,546 | |
| | | | | | | | | | | | | | | | | | | | |
Total segment gross profit | | | 28,283 | | | | 25,458 | | | | 75,299 | | | | 219,864 | | | | 19,902 | |
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Fairmount Santrol
Non-GAAP Financial Measures
(unaudited)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Year Ended
December 31, | | | Three Months Ended
September 30, | |
| | | 2016 | | | 2015 | | | 2016 | | | 2015 | | | 2016 | |
| | | (in thousands) | | | (in thousands) | | | (in thousands) | |
Reconciliation of Adjusted EBITDA | | | | | | | | | | | | | | | | | | | | |
Net loss attributable to Fairmount Santrol Holdings Inc. | | $ | (19,905 | ) | | $ | (90,831 | ) | | $ | (140,192 | ) | | $ | (92,135 | ) | | $ | (20,625 | ) |
Interest expense, net | | | 15,324 | | | | 16,077 | | | | 65,367 | | | | 62,242 | | | | 16,175 | |
Provision (benefit) for income taxes | | | (655 | ) | | | (13,996 | ) | | | (99,441 | ) | | | (1,939 | ) | | | (20,013 | ) |
Depreciation, depletion, and amortization expense | | | 17,875 | | | | 18,995 | | | | 72,276 | | | | 66,754 | | | | 17,759 | |
| | | | | | | | | | | | | | | | | | | | |
EBITDA | | | 12,639 | | | | (69,755 | ) | | | (101,990 | ) | | | 34,922 | | | | (6,704 | ) |
Non-cash stock compensation expense(1) | | | 1,504 | | | | (2,655 | ) | | | 8,870 | | | | 4,525 | | | | 1,799 | |
Goodwill and other asset impairments(2) | | | 2,494 | | | | 69,545 | | | | 93,148 | | | | 80,188 | | | | — | |
Restructuring charges(3) | | | — | | | | 263 | | | | — | | | | 9,221 | | | | — | |
Loss on disposal of fixed assets(4) | | | — | | | | 7,288 | | | | — | | | | 7,915 | | | | — | |
Write-off of deferred financing costs(5) | | | 2,618 | | | | — | | | | 2,618 | | | | 864 | | | | — | |
Gain on repurchase of debt(6) | | | (8,178 | ) | | | — | | | | (8,178 | ) | | | — | | | | — | |
Transaction expenses(7) | | | 450 | | | | — | | | | 450 | | | | — | | | | — | |
Other charges(8) | | | 180 | | | | — | | | | 180 | | | | 465 | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 11,707 | | | $ | 4,686 | | | $ | (4,902 | ) | | $ | 138,100 | | | $ | (4,905 | ) |
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(1) Represents the non-cash expense for stock-based awards issued to our employees and outside directors.
(2) Non-cash charges in 2016 are associated with the impairment of mineral reserves and other long-lived assets. The fourth quarter of 2015 included a $69.2 million impairment of goodwill in the Proppant Solutions segment.
(3) Expenses associated with restructuring activities and plant closures, including pension withdrawal, severance payments, and other liabilities. We no longer reflect cash charges related to restructuring 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 term loan repurchases in 2016; and the amendment of our Revolving Credit Facility in 2015.
(6) Gain related to the discount on term loan repurchases.
(7) Expenses associated with term loan repurchases.
(8) Loss on the curtailment of a pension plan in 2016 and cash payment associated with an audit of our Employee Stock Bonus Plan in 2015.
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