- Revenues for 4Q 2019 expected to be between
$123 million and $127 millionvs. $173 millionin 3Q 2019
- Expect 38% of 4Q 2019 revenues to be driven by logistics and equipment services vs. 33% in 3Q 2019
- Exited 2019 with cash of
$57.6 million, ABL Facility availability of $43.9 millionand total liquidity of $101.5 million
- Entered into four new logistics and equipment agreements with E&Ps
- Deploying next generation NexStage silo sets to major Permian E&P
- Extending the logistics and equipment service offering with the development of new mobile processing unit equipment
- Repurchased 348,653 additional shares under the stock repurchase program, bringing total to approximately 1.5 million
- Volumes of 2.1 million tons of sand sold during 4Q 2019; contribution margin expected to be approximately
Preliminary Fourth Quarter 2019 Financial and Operating Results
Revenues for the fourth quarter of 2019 are expected to total between
"I am proud of our team for our financial and operational achievements during the fourth quarter," said Mr.
"We also continue to advance on our strategy of partnering closely with operators, growing the percentage of frac sand volumes sold to E&Ps to a company record of 70 percent during the fourth quarter, while also increasing the percentage of revenues from our logistics and equipment services to 38 percent in the fourth quarter of 2019," continued Mr. Rasmus. "We remain focused on controlling what we can control, including a relentless commitment to customer service and managing costs across the entirety of our business, while maintaining liquidity in order to successfully execute our strategy.
"We have also experienced a rebound in completions activity and spot pricing to start 2020, driven by the abatement of seasonal factors and an improvement in supply and demand dynamics for certain areas of our business," concluded Mr. Rasmus.
Estimated financial and operating results for the fourth quarter of 2019 are not yet final and are subject to change as the Company completes its financial statement close process. Hi-Crush is scheduled to report audited results for the fourth quarter and full year 2019 after market close on
Logistics Services and Equipment Update
The Company recently entered into new logistics and equipment services agreements with four E&Ps, three of whom are new customers, for work beginning in
The Company also recently deployed next generation NexStage silo sets to an existing customer and leading E&P in the Permian basin, expanding the relationship with this customer to include equipment services. The company expects additional deployments throughout the first quarter of 2020. Combined with PropDispatch software, the Company’s integrated logistics offering delivers improved equipment reliability, fill times, and accuracy of sand consumption measurement, while allowing customers to receive real-time, actionable data to help inform operations, as well as providing for more accurate and timely invoicing.
The Company also announced an extension of its logistics and equipment service offering, with the commencement of engineering on its first mobile processing unit, to be branded as OnCoreTM Processing. The OnCore Processing solution is comprised of portable wet and dry plant equipment mounted on trailer chassis, and is designed to improve logistics efficiencies by moving the production and processing of raw frac sand as close to customers’ wellsites as possible. OnCore Processing is expected to allow Hi-Crush to profitably reduce costs for customers that have reserves on their acreage or adjacent land, and that are otherwise economically disadvantaged from other frac sand pull points.
The patented equipment is being manufactured through partnerships with third party equipment manufacturers with whom the Company has exclusivity agreements in place. The Company expects delivery of its first OnCore Processing unit during the second quarter of 2020, with deployment of the unit under a customer agreement expected shortly after delivery. The Company expects to deploy a second unit later in the second quarter of 2020.
"Our efforts throughout 2019 to continually innovate and improve on existing software, equipment, and service quality is a testament to our ability to proactively address the continuous evolution our industry undergoes," continued Mr. Rasmus. "Increasing capabilities in the last mile, deepening relationships with existing customers, adding new customers, and extending our offering through the development of OnCore Processing are all important components of Hi-Crush’s suite of offerings that emphasize providing the greatest value to customers and simplifying their supply chain. We also see opportunities for application of the OnCore Processing solution in markets and basins outside of
"We believe that the mobile processing equipment we are developing represents the next step in our chain of innovation and the evolution and optimization of frac sand logistics, and that it will continue to differentiate Hi-Crush and our diversified service offering. In certain cases, OnCore Processing is expected to allow customers to move sand supply closer to their development acreage and better maximize truck turn efficiencies. Importantly, and consistent with Hi-Crush’s focus on safety and environmental stewardship, the OnCore Processing solution is designed to reduce the total number of trucks required to haul sand, as well as reduce the truck miles driven on public roads by 1.2 million miles per OnCore Processing facility, per year. This will also result in a reduction in greenhouse gas emissions by more than 2,060 metric tons. We are excited about the economic and environmental implications of this new technology, its place in our fully-integrated offering, and the anticipated benefits it can provide to customers, stakeholders and communities."
Stock Repurchase Program
During the fourth quarter of 2019, the Company repurchased an additional 348,653 Hi-Crush shares under the Company’s stock repurchase program, bringing total repurchases to approximately 1.5 million shares since the program was authorized by the Board in
"Since the share repurchase program was authorized in mid-2019, the Company has bought back approximately 1.5 percent of its outstanding shares, evidencing our commitment to deliver shareholder value - and to act opportunistically to do so without compromising our focus on maintaining a strong balance sheet position," said Mr.
Fourth Quarter and Full Year 2019 Financial Results and Conference Call
As previously announced, the Company will release its fourth quarter and full year 2019 results after market close on
The call can be accessed live by dialing (877) 407-0789, or for international callers, (201) 689-8562. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921, or for international callers (412) 317-6671. The passcode for the replay is 13698202. The replay will be available until
Non-GAAP Financial Measures
Contribution margin is not a financial measure presented in accordance with generally accepted accounting principles in
The following table presents a reconciliation of contribution margin to gross profit, the most directly comparable GAAP financial measure.
|Three Months Ended|
|December 31, 2019|
|(Amounts in millions, except tons)||Low||High|
|Cost of goods sold (excluding depreciation, depletion and amortization)||104.0||108.0|
|Depreciation, depletion and amortization||11.0||12.0|
|Less: depreciation, depletion and amortization||(11.0||)||(12.0||)|
Some of the information in this news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "may," "should," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "hope," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," "likely," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush Inc.’s reports filed with the
Caldwell Bailey, Manager, Investor Relations
Source: Hi-Crush Inc.