Document
false0001549848 0001549848 2020-02-19 2020-02-19


 
 
 
 
 
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): February 19, 2020
  _______________________________ 
Hi-Crush Inc.
(Exact name of registrant as specified in its charter)
   _______________________________

Delaware
001-35630
90-0840530
(State or Other Jurisdiction of Incorporation or Organization)
(Commission File Number)
(IRS Employer Identification No.)

1330 Post Oak Blvd, Suite 600
Houston, Texas 77056
(Address of Principal Executive Offices and Zip Code)
(713980-6200 
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following (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))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Common stock, par value $0.01 per share
HCR
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
 
 
 
 
 






Item 2.02 Results of Operations and Financial Condition

On February 19, 2020, Hi-Crush Inc. (the "Company") issued a press release announcing its fourth quarter and full year 2019 conference call. The press release and presentation slides are being furnished with this Current Report on Form 8-K (this "Current Report") as Exhibits 99.1 and 99.2, respectively.

In accordance with General Instruction B.2 to Form 8-K, the information provided under this Item 2.02 and the information attached to this Current Report as Exhibit 99.1 and 99.2 shall be deemed to be "furnished" and shall not be deemed to be "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, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended ("the "Securities Act"), or the Exchange Act except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits
Exhibit Number
  
Exhibit Description
99.1
  
99.2
 
104
 
Cover Page Interactive Data File (embedded within the Inline XBRL document).






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.
 
 
 
 
Hi-Crush Inc.
 
 
 
 
 
 
Date:
February 19, 2020
 
By:
 
/s/ J. Philip McCormick, Jr.
 
 
 
 
 
J. Philip McCormick, Jr.
 
 
 
 
 
Chief Financial Officer



Exhibit


Exhibit 99.1
https://cdn.kscope.io/00bea4de3f77a2441fecfeaee604a4f3-hcrlogoa01.jpg
News Release

Hi-Crush Inc. Reports Fourth Quarter and Full Year 2019 Results

Generated revenues of $125.5 million in 4Q 2019 vs. $173.0 million in 3Q 2019
Reported Adjusted EBITDA of $7.2 million in 4Q 2019 vs. $17.9 million in 3Q 2019
Realized loss of $(0.21) per share in 4Q 2019; adjusted loss of $(0.13) per share, excluding non-cash asset impairments
Extending logistics and equipment service offerings with the development of OnCore ProcessingTM 
Delivered 63,076 total truckloads during 4Q 2019 and 264,492 truckloads for full year 2019
Reported total sand sales of 2.1 million tons in 4Q 2019 vs. 2.7 million tons in 3Q 2019; total sand sales of 9.9 million tons for full year 2019
Achieved contribution margin per ton of $9.02 in 4Q 2019 vs. $10.99 in 3Q 2019
Exited 4Q 2019 with total liquidity of $101.5 million, including $57.6 million of cash and no ABL borrowings

HOUSTON, February 19, 2020 - Hi-Crush Inc. (NYSE: HCR) (the "Company"), a fully-integrated provider of proppant logistics solutions, today reported fourth quarter and full year 2019 results. Revenues during the fourth quarter of 2019 totaled $125.5 million compared to $173.0 million during the third quarter of 2019. Revenues associated with logistics services was 38% of the total, compared to 33% in the third quarter of 2019. Truckloads delivered totaled 63,076 and sand sales volumes were 2,106,622 during the fourth quarter of 2019.

Net loss for the fourth quarter of 2019 was $(21.4) million, including $11.1 million of non-cash asset impairments associated with the write-down of certain terminal facilities, resulting in basic and diluted loss of $(0.21) per share, compared to net loss of $(268.5) million and basic and diluted loss of $(2.67) per share, including $346.4 million of non-cash asset impairments, for the third quarter of 2019. Adjusted net loss for the fourth quarter of 2019 was $(12.7) million or basic and diluted adjusted loss of $(0.13) per share, excluding the non-cash asset impairments. Adjusted EBITDA for the fourth quarter of 2019 was $7.2 million, compared to $17.9 million for the third quarter of 2019.

"I am pleased with our fully-integrated platform's ability to deliver excellent service quality across all business lines," said Mr. Robert E. Rasmus, Chairman and Chief Executive Officer of Hi-Crush Inc. "Our Pronghorn and NexStage logistics and equipment businesses realized continued commercial momentum, with the deployment of additional crews and next generation silo sets to both existing and new customers, despite a challenging environment in the fourth quarter."

"Our ability to differentiate Hi-Crush based on service quality and integrated solutions is more critical than ever," continued Mr. Rasmus. "We remain focused on providing efficient, high-quality, technology-enabled solutions that simplify our customers' supply chains, drive increased drilling and completion efficiency, and lower costs. The successful execution of our strategy is driving deeper relationships with our E&P customers, who accounted for 70% of our total sand sales volumes in the fourth quarter, along with increased adoption of our logistics service offering."

Fourth Quarter 2019 Results

Revenues during the fourth quarter of 2019 totaled $125.5 million, compared to $173.0 million in the third quarter of 2019. Revenues associated with logistics services were $47.8 million in the fourth quarter of 2019, compared to $57.4 million in the third quarter of 2019. Revenues from the sale of logistics equipment totaled $0.4 million in the fourth quarter of 2019, compared to $1.4 million in the third quarter of 2019.

Revenues from sales of frac sand totaled $77.3 million in the fourth quarter of 2019, compared to $114.2 million in the third quarter of 2019. Total frac sand volumes sold were 2.1 million tons in the fourth quarter of 2019, compared to 2.7 million tons in the third quarter of 2019. Average sales price was $37 per ton for the fourth quarter of 2019 compared to $43 per ton in the third quarter of 2019, driven by an increase in volumes sold from our in-basin Kermit complex, customer mix and continued pricing pressure for frac sand.






Volumes sold directly to E&Ps during the fourth quarter of 2019 were 70% of the total, compared to 63% in the third quarter of 2019 and 51% in the fourth quarter of 2018. Volumes sold through Pronghorn Energy Services, the Company's logistics business line, represented 39% of total volumes in the fourth quarter of 2019, compared to 34% in the third quarter of 2019.

Contribution margin was $9.02 per ton in the fourth quarter of 2019, compared to $10.99 per ton in the third quarter of 2019. The sequential decrease in contribution margin per ton primarily resulted from lower frac sand pricing and decreased customer completions activity, partially offset by strong operational execution and successful cost management initiatives.

General and administrative expenses totaled $11.6 million in the fourth quarter of 2019, excluding non-recurring expenses of $0.1 million associated with business development activities. General and administrative expenses totaled $11.5 million in the third quarter of 2019, excluding $0.5 million of business development activities and costs associated with the Company's previously completed corporate conversion from an MLP to a C-Corporation (the "Conversion").

"Our fourth quarter results were negatively impacted by seasonally lower activity levels experienced across the industry," said Mr. J. Philip McCormick, Jr., Chief Financial Officer of Hi-Crush Inc. "Our team remains intensely focused on controlling costs across our operations, as evidenced by our resilient contribution margin per ton performance and year-over-year reductions in G&A expenses. At the same time, we have been expanding capabilities, and today, we have positioned our fully-integrated platform to maximize value to customers and investors through a suite of equipment and services that is truly differentiated in the marketplace."

Full Year 2019 Results

Net loss for the full year 2019 was $(413.6) million, including $357.5 million of non-cash asset impairments and a $115.5 million non-cash charge for deferred taxes related to the Conversion from an MLP to a C-Corporation structure, resulting in basic and diluted loss of $(4.10) per share. Adjusted net loss for the full year 2019 was $(19.8) million or basic and diluted adjusted loss of $(0.20) per share, excluding the non-cash asset impairments and non-cash charge for deferred taxes. Adjusted EBITDA for the full year 2019 was $67.4 million.

Revenues for the full year 2019 totaled $636.4 million, driven by logistics services and 9.9 million tons of frac sand sold. Revenues for the full year 2018 totaled $842.8 million, driven by logistics services and 10.4 million tons of frac sand sold. Average frac sand sales price per ton was $44 per ton for the full year 2019, compared to $67 per ton for the full year 2018. Contribution margin averaged $11.62 per ton for the full year 2019.

Operational Update

Truckloads of frac sand delivered during the fourth quarter totaled 63,076, driven by activity across all major basins, the deployment of next generation NexStage silo sets, and the sale of approximately 2.1 million tons of frac sand from operating production facilities. During the fourth quarter of 2019, Hi-Crush operated Blair, and Wyeville in Wisconsin, and the Kermit Complex in West Texas, with sales activity occurring at the minegate, owned and operated in-basin terminals, and the wellsite.

Truckloads delivered by Pronghorn Energy Services decreased 19% in the fourth quarter of 2019 as compared to the third quarter of 2019. Truckloads delivered during the full year 2019 totaled 264,492, approximately 45% of which were associated with trucking hauls of third-party, non-Hi-Crush sand. As of December 31, 2019, the Company operated last mile crews in the Permian, Eagle Ford, Marcellus / Utica, Powder River, Mid-Con and Bakken regions.

During the fourth quarter of 2019, the Company deployed next generation NexStage silos to a major E&P in the Permian basin. The Company has deployed additional silo sets during the first quarter of 2020, and has scheduled further deployments with this E&P customer, which had previously been utilizing a competing silo solution. The Company has also scheduled deployments of next generation NexStage silo sets for additional E&Ps.

The Company continues to expand the range of functionality for its PropDispatch technology. Recent enhancements to the PropDispatch platform include enhanced inventory reporting with improved accuracy, driver-specific load and activity histories, and live GPS updating of trucks traveling to the wellsite. The Company plans for the continued expansion of the PropDispatch software's capabilities and further integration with the Company's broad range of logistics offerings.






"Our logistics and equipment operations delivered excellent service quality and leading safety metrics, while expanding our customer base," said Mr. M. Alan Oehlert, Chief Operating Officer of Hi-Crush Inc. "We are proud of our team’s ability to achieve zero trucking related non-productive time during an industry-wide trucking shortage experienced around year-end. We are also pleased with the rapid adoption and scheduled deployment of next generation NexStage silo sets to E&P customers. Our top priority is to continue listening to our customers to ensure we are providing services and solutions that address and anticipate their needs."

Innovation in the Last Mile: OnCore Processing

The Company previously announced an extension of its logistics and equipment service offering, with the commencement of manufacturing of its first mobile processing unit, branded as OnCore Processing. The OnCore Processing solution is comprised of portable wet and dry plant sand processing 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 will allow Hi-Crush to profitably reduce costs for customers that have reserves on their acreage or adjacent land, and whose operations are otherwise economically disadvantaged from other frac sand supply points.

The patented equipment is being manufactured through partnerships with third party equipment manufacturers with whom Hi-Crush 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 long-term, dedicated customer agreement expected shortly after delivery. The Company expects to deploy a second unit later in the second quarter of 2020.

"Our recently announced OnCore Processing solution reflects the next logical step in our chain of innovation," Mr. Rasmus continued. "Given the current levels of frac sand pricing, the only way to further structurally reduce sand costs for operators is to reduce the distance traveled from the mine to the wellsite. OnCore accomplishes this and is an important component in Hi-Crush’s suite of solutions that emphasize maximizing value to customers and simplifying their supply chain, especially when bundled with our Pronghorn and NexStage offerings."

Liquidity

Hi-Crush Inc. had total liquidity of $101.5 million as of December 31, 2019, comprised of $57.6 million of cash and $43.9 million in available borrowing capacity under its senior secured revolving credit facility (the "ABL Facility"). Hi-Crush Inc. currently remains undrawn on its ABL Facility, and anticipates no borrowings on the ABL Facility during 2020.

"We are focused on managing liquidity and maintaining a flexible balance sheet to best position us on a through-cycle basis," continued Mr. McCormick. "Our financial flexibility enables us to further advance our logistics strategy, including pursuing further development of next generation NexStage silos and our innovative OnCore Processing units. We are committed to pursuing our strategic initiatives, advancing technology and innovation within our fully-integrated platform, while maintaining a strong and flexible financial position."

Stock Repurchase Program

Hi-Crush Inc. repurchased 348,653 common shares for a total cost of $0.2 million during the fourth quarter of 2019. As of December 31, 2019, the Company has repurchased a total of 1,526,384 common shares for a total cost of $3.4 million. The Company's stock repurchase program had $21.6 million of remaining authorized capacity as of December 31, 2019. The repurchase program does not obligate the Company to repurchase any specific dollar amount or number of shares, and may be suspended, modified or discontinued by the Board of Directors at any time, in its sole discretion and without notice.

"We repurchased approximately 1.5% of the company’s outstanding shares during 2019, evidencing our commitment to delivering shareholder values in multiple ways," continued Mr. Rasmus. "We will remain opportunistic on potential further forms of capital return."

Capital Expenditures

Capital expenditures for the fourth quarter of 2019 and full year 2019 totaled $5.4 million and $71.7 million, respectively. Capital expenditures for the fourth quarter of 2019 were below the Company’s previously guided range of $7 to $10 million. Based on customer demand, the Company expects 2020 capital expenditures to increase with the development and deployment of next generation NexStage silo sets and OnCore Processing units. Based on current outlook, the Company has updated its expected capital expenditures for full year 2020 to a range of $45 to $60 million, which includes $10 to $15 million of maintenance capital expenditures.






"Customer reception for our next generation NexStage silo sets has been tremendous," continued Mr. Rasmus. "Additionally, we are extremely excited at the early positive feedback and significant interest level for our OnCore mobile processing unit. Given the response and explicit customer demand, we are prudently investing in the further development of our technology-driven customer solutions. Investments in these innovative and disruptive strategic initiatives will deliver significant value to all stakeholders, and support sustainable free cash flow over the long-term."

Outlook

For the first quarter of 2020, the Company expects to increase truckloads delivered, equipment lease revenue, sand sales, contribution margin per ton, and Adjusted EBITDA as compared to the fourth quarter of 2019. This is due to an increase in logistics activity with new customer work, more silo sets being deployed, and overall customer activity increasing. Based on current demand and ongoing customer conversations, the Company expects to deploy silo sets throughout the remainder of 2020 to existing and new customers. The Company currently expects truckloads delivered to increase by more than 25% during the first quarter of 2020 and frac sand volumes sold to increase by 15% to 25%, to 2.4 to 2.6 million tons.

"Hi-Crush’s ongoing success will be driven by our differentiation in the marketplace as the only fully-integrated provider of technology-enabled logistics solutions and frac sand production," said Mr. Rasmus. "Leveraging these capabilities, and advancing our business model away from being solely focused on commodity sand production will allow Hi-Crush to deliver unmatched customer service, deliver increased profitability, and ultimately to break out of the current period of malaise surrounding oilfield services, which will mean increased value creation for shareholders. We are investing capex today as a means of disrupting an otherwise sclerotic industry. The addition of OnCore Processing into our portfolio of solutions further differentiates Hi-Crush from the competition and will allow us to more profitably address a greater range of customer needs, in more ways, in more places. I am excited about what 2020 has in store for Hi-Crush."

Conference Call

On Thursday, February 20, 2020, Hi-Crush Inc. will hold a conference call for investors at 7:30 a.m. Central Time (8:30 a.m. Eastern Time) to discuss Hi-Crush Inc.’s fourth quarter and full year 2019 results. Hosting the call will be Robert E. Rasmus, Chairman and Chief Executive Officer, J. Philip McCormick, Jr., Chief Financial Officer and M. Alan Oehlert, Chief Operating Officer. The call can be accessed live over the telephone 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 March 5, 2020.

Interested parties may also listen to a simultaneous webcast of the conference call by logging onto Hi-Crush Inc.’s website at www.hicrushinc.com under the Investors-Event Calendar and Presentations section. A replay of the webcast will also be available for approximately 30 days following the call. The slide presentation to be referenced on the call will also be on Hi-Crush Inc.’s website at www.hicrushinc.com under the Investors-Event Calendar and Presentations section.

Hi-Crush Inc. filed with the Securities and Exchange Commission (the "SEC") its Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the "Form 10-K") on February 19, 2020. An electronic copy of the Form 10-K (including these financial statements) is available on Hi-Crush’s website at www.hicrushinc.com under the Investors-SEC Filings section, and also may be obtained through the SEC’s website at www.sec.gov. Interested parties also may receive a hard copy of the Form 10-K and these financial statements free of charge upon request to the secretary of our general partner at our principal executive offices. Our principal executive offices are located at 1330 Post Oak Blvd, Suite 600, Houston, Texas 77056, and our telephone number is (713) 980-6200.

About Hi-Crush Inc.

Hi-Crush Inc. is a fully-integrated provider of proppant and logistics services for hydraulic fracturing operations, offering frac sand production, advanced wellsite storage systems, flexible last mile services, and innovative software for real-time visibility and management across the entire supply chain. Our strategic suite of solutions provides operators and service companies in all major U.S. oil and gas basins with the ability to build safety, reliability and efficiency into every completion.

Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, free cash flow, contribution margin, adjusted net income and adjusted earnings per share are not financial measures presented in accordance with generally accepted accounting principles in the United States ("GAAP"), which may be used periodically by management when discussing our financial results with investors and analysts. The accompanying





schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure.

We define EBITDA as net income, plus; (i) depreciation, depletion and amortization; (ii) interest expense, net of interest income; and (iii) income tax expense (benefit). We define Adjusted EBITDA as EBITDA, plus; (i) non-cash impairments of goodwill and other assets; (ii) change in estimated fair value of contingent consideration; (iii) earnings (loss) from equity method investments; (iv) gain on remeasurement of equity method investments; (v) loss on extinguishment of debt; and (vi) non-recurring business development costs and other items. EBITDA and Adjusted EBITDA are supplemental measures utilized by our management and other users of our financial statements, such as investors, commercial banks and research analysts, to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

We define free cash flow as net cash provided by (used in) operating activities less maintenance and growth capital expenditures. Free cash flow is a supplemental measure utilized by our management and other users of our financial statements, such as investors, commercial banks and research analysts, to assess our ability to generate cash from operations for mandatory obligations, including debt repayment, and discretionary investment opportunities.

We use contribution margin, which we define as total revenues less costs of goods sold excluding depreciation, depletion and amortization, to measure our financial and operating performance. Contribution margin excludes other operating expenses and income, including costs not directly associated with the operations of our business such as accounting, human resources, information technology, legal, sales and other administrative activities. We believe contribution margin is a meaningful measure because it provides an operating and financial measure of our ability to generate margin in excess of our operating cost base. 

We define adjusted net income (loss) as net income (loss) adjusted for certain unusual and/or infrequent transactions, such as non-cash asset impairments, the tax impacts related to asset impairments and non-cash charge for deferred taxes related to the corporate conversion to a C-Corporation. We define adjusted earnings per common share as adjusted net income (loss) divided by the basic and diluted weighted average number of shares of common stock outstanding during the reporting period. Adjusted net income (loss) and adjusted earnings per common share are utilized by our management and other users of our financial statements, such as investors, commercial banks and research analysts, to assess the recurring historical financial performance of our assets.

Forward-Looking Statements

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 SEC, including those described under Item 1A of Hi-Crush Inc.’s Form 10-K for the year ended December 31, 2019. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any pending litigation, claims or assessments, including unasserted claims; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush Inc.’s forward-looking statements speak only as of the date made and Hi-Crush Inc. undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Investor contact:
Caldwell Bailey, Manager, Investor Relations
Marc Silverberg, ICR
ir@hicrushinc.com
(713) 980-6270






Consolidated Balance Sheets
(Amounts in thousands, except share amounts)
 
December 31,
 
2019
 
2018
Assets
 
 
 
Current assets:
 
 
 
Cash
$
57,559

 
$
114,256

Accounts receivable, net
71,824

 
101,029

Inventories
39,974

 
57,089

Prepaid expenses and other current assets
9,818

 
13,239

Total current assets
179,175

 
285,613

Property, plant and equipment, net
810,906

 
1,031,188

Operating lease right-of-use assets
44,086

 

Goodwill and intangible assets, net
38,141

 
71,575

Equity method investments
37,173

 
37,354

Other assets
1,656

 
8,108

Total assets
$
1,111,137

 
$
1,433,838

Liabilities and Stockholders' Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
40,592

 
$
71,039

Accrued and other current liabilities
42,818

 
61,337

Current portion of deferred revenues
10,598

 
19,940

Current portion of long-term debt
2,628

 
2,194

Current portion of operating lease liabilities
30,191

 

Total current liabilities
126,827

 
154,510

Deferred revenues
15,430

 
9,845

Long-term debt
445,339

 
443,283

Operating lease liabilities
79,924

 

Asset retirement obligations
10,964

 
10,677

Deferred tax liabilities
29,997

 

Other liabilities
1,532

 
8,276

Total liabilities
710,013

 
626,591

Commitments and contingencies
 
 
 
Stockholders' equity:
 
 
 
Limited partners interest, 100,874,988 units issued and outstanding at December 31, 2018

 
811,477

Preferred stock, $0.01 par value, 100,000,000 shares authorized; zero issued and outstanding at December 31, 2019

 

Common stock, $0.01 par value, 500,000,000 shares authorized; 100,711,015 issued and outstanding at December 31, 2019
1,007

 

Additional paid-in-capital
804,218

 

Retained deficit
(403,401
)
 

Accumulated other comprehensive loss
(700
)
 
(4,230
)
Total stockholders' equity
401,124

 
807,247

Total liabilities and stockholders' equity
$
1,111,137

 
$
1,433,838






Unaudited Consolidated Statements of Operations
(Amounts in thousands, except shares and per share amounts)
 
Three Months Ended
 
December 31,
 
September 30,
 
2019
 
2018
 
2019
Revenues
$
125,487

 
$
162,235

 
$
172,972

Cost of goods sold (excluding depreciation, depletion and amortization)
106,492

 
133,877

 
143,460

Depreciation, depletion and amortization
11,662

 
9,762

 
14,320

Gross profit
7,333

 
18,596

 
15,192

Operating costs and expenses:
 
 
 
 
 
General and administrative expenses
11,741

 
16,982

 
12,020

Depreciation and amortization
1,609

 
1,457

 
1,773

Accretion of asset retirement obligations
128

 
125

 
107

Asset impairments
11,110

 

 
346,384

Change in estimated fair value of contingent consideration
(2,174
)
 

 
(5,181
)
Other operating expenses, net
235

 
1,072

 
658

Loss from operations
(15,316
)
 
(1,040
)
 
(340,569
)
Other income (expense):
 
 
 
 
 
Earnings from equity method investments
1,733


1,250

 
1,880

Interest expense
(11,588
)
 
(10,140
)
 
(11,790
)
Loss before income tax
(25,171
)
 
(9,930
)
 
(350,479
)
Income tax benefit:
 
 
 
 
 
Current tax expense (benefit)
(289
)
 

 
1,087

Deferred tax benefit
(3,511
)
 

 
(83,069
)
Income tax benefit
(3,800
)
 

 
(81,982
)
Net loss
$
(21,371
)
 
$
(9,930
)
 
$
(268,497
)
Loss per common share:
 
 
 
 
 
Basic
$
(0.21
)
 
$
(0.08
)
 
$
(2.67
)
Diluted
$
(0.21
)
 
$
(0.08
)
 
$
(2.67
)
Weighted average common stock outstanding:
 
 
 
 
 
Basic
100,862,060

 
98,359,616

 
100,711,426

Diluted
100,862,060

 
98,359,616

 
100,711,426








Consolidated Statements of Operations
(Amounts in thousands, except shares and per share amounts)
 
Year Ended
 
December 31,
 
2019
 
2018
Revenues
$
636,370

 
$
842,840

Cost of goods sold (excluding depreciation, depletion and amortization)
521,746

 
577,974

Depreciation, depletion and amortization
51,316

 
38,284

Gross profit
63,308

 
226,582

Operating costs and expenses:
 
 
 
General and administrative expenses
51,584

 
55,032

Depreciation and amortization
6,755

 
3,865

Accretion of asset retirement obligations
494

 
498

Asset impairments
357,494

 

Change in estimated fair value of contingent consideration
(8,027
)
 

Other operating expenses, net
1,793

 
3,196

Income (loss) from operations
(346,785
)
 
163,991

Other income (expense):
 
 
 
Earnings from equity method investments
6,013

 
5,184

Gain on remeasurement of equity method investment
3,612

 

Interest expense
(45,774
)
 
(25,347
)
Loss on extinguishment of debt

 
(6,233
)
Income (loss) before income tax
(382,934
)
 
137,595

Income tax expense (benefit):
 
 
 
Current tax expense
1,057

 

Deferred tax benefit
(85,920
)
 

Deferred tax resulting from conversion to a corporation
115,488

 

Income tax expense
30,625

 

Net income (loss)
$
(413,559
)
 
$
137,595

Earnings (loss) per common share:
 
 
 
Basic
$
(4.10
)
 
$
1.46

Diluted
$
(4.10
)
 
$
1.42

Weighted average common stock outstanding:
 
 
 
Basic
100,974,770

 
91,248,042

Diluted
100,974,770

 
93,638,180





Unaudited Adjusted Net Income and Adjusted Earnings Per Common Share
(Amounts in thousands, except shares and per share amounts)
 
Three Months Ended
 
December 31, 2019
 
September 30, 2019
Net loss
$
(21,371
)
 
$
(268,497
)
Adjustments to reconcile to adjusted net loss:
 
 
 
Asset impairments
11,110

 
346,384

Income tax benefit related to asset impairments
(2,462
)
 
(81,400
)
Adjusted net loss
$
(12,723
)
 
$
(3,513
)
 
 
 
 
Basic weighted average common shares outstanding
100,862,060

 
100,711,426

Potentially dilutive common shares

 

Diluted weighted average common shares outstanding
100,862,060

 
100,711,426

 
 
 
 
Adjusted loss per share - basic
$
(0.13
)
 
$
(0.03
)
Adjusted loss per share - diluted
$
(0.13
)
 
$
(0.03
)

 
Year Ended
 
December 31, 2019
Net loss
$
(413,559
)
Adjustments to reconcile to adjusted net loss:
 
Asset impairments
357,494

Income tax benefit related to asset impairments
(79,221
)
Deferred tax resulting from conversion to a corporation
115,488

Adjusted net loss
$
(19,798
)
 
 
Basic weighted average common shares outstanding
100,974,770

Potentially dilutive common shares

Diluted weighted average common shares outstanding
100,974,770

 
 
Adjusted loss per share - basic
$
(0.20
)
Adjusted loss per share - diluted
$
(0.20
)







Unaudited EBITDA and Adjusted EBITDA
(Amounts in thousands)
 
Three Months Ended
 
December 31,
 
September 30,
 
2019
 
2018
 
2019
Reconciliation of Adjusted EBITDA to net loss:
 
 
 
 
 
Net loss
$
(21,371
)
 
$
(9,930
)
 
$
(268,497
)
Depreciation, depletion and amortization expense
13,271

 
11,219

 
16,093

Interest expense
11,588

 
10,140

 
11,790

Income tax benefit
(3,800
)
 

 
(81,982
)
EBITDA
(312
)
 
11,429

 
(322,596
)
Non-cash impairment of assets
11,110

 

 
346,384

Change in estimated fair value of contingent consideration
(2,174
)
 

 
(5,181
)
Earnings from equity method investments
(1,733
)
 
(1,250
)
 
(1,880
)
Non-recurring business development costs and other items (1)
314

 
4,710

 
1,173

Adjusted EBITDA
$
7,205

 
$
14,889

 
$
17,900


(1)
During the three months ended December 31, 2019 and September 30, 2019, non-recurring business development costs and other items are primarily associated with the Conversion, business acquisitions and severance costs. During the three months ended December 31, 2018, non-recurring business development costs and other items are primarily associated with business development and legal costs associated with the acquisition of the sponsor and general partner.

 
Year Ended
 
December 31,
 
2019
 
2018
Reconciliation of Adjusted EBITDA to net income (loss):
 
 
 
Net income (loss)
$
(413,559
)
 
$
137,595

Depreciation, depletion and amortization expense
58,071

 
42,149

Interest expense
45,774

 
25,347

Income tax expense
30,625

 

EBITDA
(279,089
)
 
205,091

Non-cash impairment of assets
357,494

 

Change in estimated fair value of contingent consideration
(8,027
)
 

Earnings from equity method investments
(6,013
)
 
(5,184
)
Gain on remeasurement of equity method investment
(3,612
)
 

Loss on extinguishment of debt

 
6,233

Non-recurring business development costs and other items (1)
6,627

 
6,495

Adjusted EBITDA
$
67,380

 
$
212,635


(1)
During the year ended December 31, 2019, non-recurring business development costs and other items are primarily associated with the Conversion, business acquisitions and severance costs. During the year ended December 31, 2018, non-recurring business development costs and other items are primarily associated with business development and legal costs associated with the acquisition of the sponsor and general partner and lease termination costs associated with the relocation of our corporate offices.






Consolidated Cash Flow Information
(Amounts in thousands)
 
Year Ended
 
December 31,
 
2019
 
2018
Operating activities
$
29,878

 
$
237,303

Investing activities
(74,656
)
 
(188,137
)
Financing activities
(11,934
)
 
57,367

Effects of exchange rate on cash
15

 
(1
)
Net change in cash
$
(56,697
)
 
$
106,532



Unaudited Free Cash Flow
(Amounts in thousands)
The following table presents a reconciliation of free cash flow to the most directly comparable GAAP financial measure, as applicable, for each of the periods indicated:
 
Three Months Ended
 
Year Ended
 
December 31, 2019
 
December 31, 2019
Net cash provided by operating activities
$
17,780

 
$
29,878

Less: Maintenance capital expenditures
(1,890
)
 
(12,941
)
Less: Growth capital expenditures (1)
(3,476
)
 
(27,536
)
Free cash flow
$
12,414

 
$
(10,599
)
(1)
For the year ended December 31, 2019, we have excluded growth capital expenditures of $31,219 spent during the first nine months related to construction projects associated with completion of our second Kermit facility and expansion at our Wyeville facility, both of which were fully-funded in 2018. All other growth capital expenditures related to investments in our logistics and wellsite operations are included in the above.


Unaudited Contribution Margin and Per Ton Operating Activity
(Amounts in thousands, except tons and per ton amounts)
 
Three Months Ended
 
December 31,
 
September 30,
 
2019
 
2018
 
2019
Revenues
$
125,487

 
$
162,235

 
$
172,972

Cost of goods sold (excluding depreciation, depletion and amortization)
106,492

 
133,877

 
143,460

Depreciation, depletion and amortization
11,662

 
9,762

 
14,320

Gross profit
7,333

 
18,596

 
15,192

Add back depreciation, depletion and amortization
11,662

 
9,762

 
14,320

Contribution margin
$
18,995

 
$
28,358

 
$
29,512

Sand sold
2,106,622

 
1,976,805

 
2,685,736

Contribution margin per ton sold
$
9.02

 
$
14.35

 
$
10.99


 
Year Ended
 
December 31,
 
2019
 
2018
Revenues
$
636,370

 
$
842,840

Cost of goods sold (excluding depreciation, depletion and amortization)
521,746

 
577,974

Depreciation, depletion and amortization
51,316

 
38,284

Gross profit
63,308

 
226,582

Add back depreciation, depletion and amortization
51,316

 
38,284

Contribution margin
$
114,624

 
$
264,866

Sand sold
9,865,706

 
10,407,296

Contribution margin per ton sold
$
11.62

 
$
25.45







hcrinvestorpresentationq
Q4 2019 Earnings Presentation February 2020 Hi-Crush, Inc. (NYSE: HCR)


 
Forward Looking Statements and Non-GAAP Measures Forward-Looking Statements and Cautionary Statements Some of the information in this presentation 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 (the "Exchange Act"). 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 SEC, including those described under Item 1A of Hi-Crush Inc.’s Form 10-K for the year ended December 31, 2019. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any pending litigation, claims or assessments, including unasserted claims; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush Inc.’s forward-looking statements speak only as of the date made and Hi-Crush Inc. undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. Use of Non-GAAP Information This presentation may include non-GAAP financial measures. Such non-GAAP measures are not alternatives to GAAP measures, and you should not consider these non-GAAP measures in isolation or as a substitute for analysis of our results as reported under GAAP. For additional disclosure regarding such non-GAAP measures, including reconciliations to their most directly comparable GAAP measure, please refer to Hi-Crush Inc.’s most recent earnings release at www.hicrushinc.com. Investor Presentation | February 2020 2


 
Operational Update & Strategy


 
Fully-Integrated Solutions Offering Benefits of our efficient, reliable, high- quality, technology-enabled solutions: Increased drilling & completion efficiency Lower cost for us and our customers Ability to remain responsive to customer needs Differentiated sustainability & safety benefits Investor Presentation | February 2020 4


 
Differentiation in a Fragmented Industry We are the only full-service solutions provider in highly-fragmented industry Fully-integrated Generates sustainable, platform reduces costs long-term value for all for us and customers stakeholders Partners closely Delivers higher with E&P margin via increased customers operational efficiency Uses technology to drive Enhances operational productivity & deepen leverage across customer integration basins Investor Presentation | February 2020 5


 
4Q and FY19 Results 4Q19 and FY19 Current Updates • Last mile truckloads delivered were steady • Achieved record monthly truckloads of for much of 4Q19; seasonal decline in the ~30,700 in January 2020 last two weeks of December • Commencing work throughout 1Q20 • FY19 total truckloads of ~264,000 for new logistics services customers • Deployed additional NexStage silos • Deployed next generation NexStage silos with existing customer during 1Q20 to major Permian E&P • Scheduled additional deployments of silos with other E&Ps • Reported 4Q19 frac sand sales volumes of • Highest January frac sand sales 2.1mm tons, including 70% to E&Ps volumes in company history realized • Realized FY19 frac sand sales volumes of in January 2020 9.9mm tons • Latest release improves integration with • Continued expansion of software silo inventory systems and terminal assets, capabilities and further integration with and improves data integrity to enable more Hi-Crush logistics solutions accurate analysis Investor Presentation | February 2020 6


 
Fully-Integrated Platform Customer Solutions Logistics Mobile Solution Equipment Flexible solutions Mobile processing units Silos & container Real-time logistics and inventory management software In-Basin Terminal Network Northern White Production facilities Owned & operated Production facilities Fully-Integrated Platform Investor Presentation | February 2020 7


 
Integrated Platform Tailored to Serve E&Ps E&P Benefits Expansion of sales to E&P Hi-Crush Benefits of Aligning with Hi-Crush customers driven by of Aligning with E&Ps accelerating adoption of  Dedicated frac sand provider last-mile services  E&Ps value strategic with sand, silos, containers relationships with suppliers and integrated technology 70% offering differentiated, reliable,  Optionality in last mile and of 4Q19 volumes sold to fully-integrated solutions E&P customers in-basin delivery points  Greater visibility into evolving activity, demand trends and  Diversified operations 70% across all major basins 66% market fundamentals  Integrated production and 51%  Addressing E&Ps’ need for a delivery process aligned with direct-sourced, preferred dynamic planning cycles 33% provider of flexible, full-scope proppant logistics solutions  Reliable supply from multiple frac sand production 14%  Partnering with the right E&Ps facilities enhances stability as drilling & 0% completion “manufacturing”  Safety centric culture with a track-record among the best programs are more consistent in industry through commodity cycles % of total quarterly sales volumes Investor Presentation | February 2020 8


 
Our Operational Reach All Basins Bakken Highlights Wisconsin Marcellus / Utica • Pronghorn last mile solutions operating in all major basins Powder River • NexStage deploying innovative equipment supporting efficient last mile delivery and wellsite management DJ / Niobrara MidCon • Hi-Crush sand production facilities and terminal network meet customers demand for Permian efficient sand supply • PropDispatch utilized for major market share of trucking logistics Eagle Ford Investor Presentation | February 2020 9


 
PropDispatch: Real-Time Logistics Management Key Benefits  Increased efficiency: Reduce landed sand Real-time monitoring of truckloads cost with real-time data on turn times, driver between transload & well pad performance, congestion and demurrage  Enhanced stage reporting: Delivers Manages and displays well pad enhanced inventory management capabilities inventory to plan for future stages and ordering  Weight surety: Assists drivers to ensure Delivers real-time comprehensive maximum weight per load customer dashboards  ELD connectivity: Integrates with electronic logging device platforms to capture driver Efficiently dispatches drivers based availability and assist in dispatch process on location and proximity to supply Investor Presentation | February 2020 10


 
Corporate Values Evidence Commitment to ESG Evidence of Our Commitment Inaugural Corporate Responsibility Report (published December 2019) Hi-Crush Total Recordable Incident Rate (TRIR) 46% below industry average1 Lowest greenhouse gas emissions per ton of sand sold among reporting companies2 >90% reduction of particulate matter emissions >90% from wellsite sand operations from Pronghorn, meeting OSHA PEL regulations Our Wisconsin production facilities participate in the Wisconsin Department of Natural Resources Green Tier Program as a Tier 1 participant To access our Responsibility materials: 1) Based on 1.3 Total Recordable Incident Rate (TRIR) for total company during 2019; sand https://www.hicrushinc.com/responsibility mining industry average TRIR during 2019 of 1.9. 2) Reported 0.022 MT of CO2 produced per ton of sand sold during 2018 Investor Presentation | February 2020 11


 
Last Mile Innovation


 
OnCore ProcessingTM – Mobile Unit Overview OnCore Processing Units Overview . Hi-Crush designed, engineered and commenced manufacturing of its first mobile processing unit . Units comprised of portable wet and dry plant equipment mounted on trailer chassis . Specialized equipment that allows for mobile-based washing, drying and sorting of frac sand Complements NexStage Silo . Reflects next step in chain of innovation Solution Development Plans . Patented equipment being manufactured through partnerships with third party equipment manufacturers . Exclusivity agreements in place with manufacturers . First OnCore unit to be delivered in 2Q20; second unit to be delivered shortly thereafter Investor Presentation | February 2020 13


 
OnCore Processing – Benefits & Impacts Further supports our strategy to provide significant value to customers by lowering costs and simplifying their supply chain Benefits of OnCore Solution ESG Benefits  Easy mobilization and onsite setup  Closer proximity to wellsite reduces trucking costs Reduction of  Smaller footprint than traditional fixed plants  Ability to utilize full-range of power sources 1.2 million miles  Expandable silo storage capacity in truck miles on 1  Reduced manpower requirements to operate public roads  Lower required investment than alternative solutions Reduction of >2,000 metric tons in greenhouse gas emissions1 1) Per OnCore Processing facility, per year Investor Presentation | February 2020 14


 
OnCore Processing Schematic Pronghorn truck load-out Dry plant NexStage silos WIP pile Finished sand conveyed into silos Wet plant Footprint Comparison “Fixed Plant” Mining Complex 10 1,000+ acres1 acres PATENT PENDING U.S. PAT. APP. NO. 62/901,848 1) 5 acre equipment footprint plus 5 acre reserve minimum. Investor Presentation | February 2020 15


 
Financial Update


 
Balance Sheet & Liquidity Update Liquidity Update1 Debt Structure1 No ABL $57.6mm + Senior Notes ABL Facility Cash Borrowings ($43.9mm availability) • $450mm • $43.9mm of availability • No maturities until August • $200mm total $101.5mm 2026 capacity Total Liquidity • No ABL borrowings Liquidity No near-term Flexible sufficient to maturities balance sheet support or covenant position business needs restrictions 1) As of December 31, 2019. Investor Presentation | February 2020 17


 
Key Financial Metrics $ in 000s, except per ton 4Q 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 Revenues $ 162,235 $ 159,910 $ 178,001 $ 172,972 $ 125,487 Adjusted EBITDA1 $ 14,889 $ 17,574 $ 24,701 $ 17,900 $ 7,205 Average selling price ($/ton) $ 58 $ 48 $ 47 $ 43 $ 37 Sales volumes (tons) 1,976,805 2,411,262 2,662,086 2,685,736 2,106,622 Contribution margin ($/ton)2 $ 14.35 $ 12.19 $ 13.80 $ 10.99 $9.02 • Revenues declined sequentially in 4Q19, driven by sales mix, lower volumes and reduced average pricing. Volume decline primarily driven by Northern White sand volumes. • Faced industry-wide weakness, as expected, driven by customer budget exhaustion and other seasonal factors. • Adjusted EBITDA totaled $7.2mm, driven by lower volumes and average pricing, partially offset by strong execution and cost management. 1) EBITDA is defined as net income, plus: (i) depreciation, depletion and amortization, (ii) interest expense, net of interest income, and (iii) income tax expense (benefit). We define Adjusted EBITDA as EBITDA, plus: (i) non-cash impairments of goodwill and other assets, (ii) change in estimated fair value of contingent consideration, (iii) earnings (loss) from equity method investments, (iv) gain on remeasurement of equity method investments, (v) loss on extinguishment of debt, and (vi) non-recurring business development costs and other items. 2) Contribution margin is defined as total revenues less costs of goods sold excluding depreciation, depletion and amortization. Investor Presentation | February 2020 18


 
4Q 2019: Summary – Statements of Operations Unaudited Quarterly Consolidated Statements of Operations (Amounts in thousands, except per share amounts) 4Q 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 Revenues $ 162,235 $ 159,910 $ 178,001 $ 172,972 $ 125,487 Cost of goods sold (excluding depreciation, depletion and amortization) 133,877 130,522 141,272 143,460 106,492 Depreciation, depletion and amortization 9,762 11,272 14,062 14,320 11,662 Gross profit 18,596 18,116 22,667 15,192 7,333 Operating costs and expenses: General and administrative expenses 16,982 12,613 15,210 12,020 11,741 Depreciation and amortization 1,457 1,676 1,697 1,773 1,609 Accretion of asset retirement obligations 125 129 130 107 128 Asset impairments — — — 346,384 11,110 Change in estimated fair value of contingent consideration — — (672) (5,181) (2,174) Other operating expenses, net 1,072 431 469 658 235 Income (loss) from operations (1,040) 3,267 5,833 (340,569) (15,316) Other income (expense): Earnings from equity method investments 1,250 1,116 1,284 1,880 1,733 Gain on remeasurement of equity method investment — — 3,612 — — Interest expense (10,140) (10,590) (11,806) (11,790) (11,588) Loss before income tax (9,930) (6,207) (1,077) (350,479) (25,171) Income tax expense (benefit) — — 116,407 (81,982) (3,800) Net loss $ (9,930) $ (6,207) $ (117,484) $ (268,497) $ (21,371) Loss per common share: Basic $ (0.08) $ (0.06) $ (1.16) $ (2.67) $ (0.21) Diluted $ (0.08) $ (0.06) $ (1.16) $ (2.67) $ (0.21) Investor Presentation | February 2020 19


 
4Q 2019: EBITDA, Adjusted EBITDA and Free Cash Flow Unaudited EBITDA and Adjusted EBITDA (Amounts in thousands) 4Q 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 Reconciliation of Adjusted EBITDA to net loss: Net loss $ (9,930) $ (6,207) $ (117,484) $ (268,497) $ (21,371) Depreciation, depletion and amortization expense 11,219 12,948 15,759 16,093 13,271 Interest expense 10,140 10,590 11,806 11,790 11,588 Income tax expense (benefit) — — 116,407 (81,982) (3,800) EBITDA 11,429 17,331 26,488 (322,596) (312) Non-cash impairments of assets — — — 346,384 11,110 Change in estimated fair value of contingent consideration — — (672) (5,181) (2,174) Earnings from equity method investments (1,250) (1,116) (1,284) (1,880) (1,733) Gain on remeasurement of equity method investment — — (3,612) — — Non-recurring business development costs and other items (1) 4,710 1,359 3,781 1,173 314 Adjusted EBITDA $ 14,889 $ 17,574 $ 24,701 $ 17,900 $ 7,205 Free Cash Flow 2Q 2019 3Q 2019 4Q 2019 2019 YTD Net cash provided by operating activities $ 17,582 $ 3,123 $ 17,780 $ 29,878 Less: Maintenance capital expenditures (3,717) (3,328) (1,890) (12,941) Less: Growth capital expenditures (2) (8,089) (4,893) (3,476) (27,536) Free cash flow $ 5,776 $ (5,098) $ 12,414 $ (10,599) 1) Non-recurring business development costs and other items for 4Q 2018 costs are associated with the acquisition of the sponsor and general partner, as well as severance costs. Non-recurring business development costs and other items for 2019 costs are primarily associated with the Conversion, business acquisitions and severance costs. 2) We have excluded growth capital expenditures of $5,840, $174 and $31,219 spent during 2Q 2019, 3Q 2019 and YTD 2019, respectively, related to construction projects associated with completion of our second Kermit facility and expansion at our Wyeville facility, both of which were fully-funded in 2018. There was no growth capital expenditures excluded from 4Q 2019. All other growth capital expenditures related to investments in our logistics and wellsite operations are included in the above. Investor Presentation | February 2020 20


 
Investor Contacts Caldwell Bailey Manager, Investor Relations Marc Silverberg Managing Director (ICR, Inc.) Phone: (713) 980-6270 E-mail: ir@hicrushinc.com Investor Presentation | February 2020 21