Fairmount announced results for the first quarter of 2016. First-quarter 2016 revenues were $145.5 million, up 8 percent from $134.9 million in the fourth quarter of 2015, and down 52 percent from $301.5 million for the same period in 2015. Overall volumes sold were 2.1 million tons for the quarter, an increase of 10 percent from 1.9 million tons in the fourth quarter of 2015 and a decline of 8 percent from 2.3 million tons in the first quarter of 2015.
Adjusted EBITDA for the first quarter, which excludes stock compensation expense of $1.7 million, was $10.0 million compared with $4.7 million in the fourth quarter of 2015. Fourth-quarter 2015 Adjusted EBITDA excluded the impact from stock compensation expense, restructuring costs and impairment charges totaling $74.4 million. The sequential increase in Adjusted EBITDA was largely due to higher overall volumes and the realization of continued cost reduction efforts.
For first-quarter 2016, the company had a net loss of $11.8 million, or $(0.07) per diluted share, compared with a net loss of $90.8 million, or $(0.56) per diluted share, in the fourth quarter of 2015. Net income for first-quarter 2015 was $30.8 million, or $0.18 per diluted share.
“We are encouraged by our first-quarter performance, as we were able to increase volumes sequentially in both our Proppant Solutions and Industrial & Recreational segments while continuing to improve our efficiencies and reduce our costs across all categories,” said Jenniffer Deckard, president and chief executive officer. “Our differentiated capabilities and strong customer relationships, combined with the hard work and resilience of our team, drove our overall performance. However, industry fundamentals have continued to be challenging.”
Deckard added, “Liquidity is a top priority for Fairmount Santrol and in the second quarter we are pleased to have successfully worked with our valued lending partners to extend approximately $70 million of our B-1 term loans to July 2018. We are continuing to take the actions necessary to enhance our flexibility and improve our cost position, including the difficult second-quarter 2016 decisions to idle two facilities in Wisconsin and to further reduce positions across the organization. These actions resulted in an additional 10 percent combined workforce reduction, bringing total workforce reductions to approximately 40 percent since early 2015. We now believe we are appropriately staffed for our current business levels, and for the market environment in which we are operating.”
Deckard concluded, “We have concentrated our business into our most cost-effective locations, including the recently completed expansion of our low-cost, optimally located Wedron, Ill., sand-processing facility. We are also building upon our legacy of innovation by introducing new products that are aligned with today’s unique customer needs. While the market remains challenging and unpredictable, we believe we are well positioned to manage through the downturn and to participate in the eventual market recovery.”
Proppant Solutions volumes for the first quarter of 2016 were 1.5 million tons, up 12 percent compared with the fourth quarter of 2015 and down 14 percent compared with the prior-year period. Raw frac sand volumes were 1.4 million tons, a 13 percent sequential increase and a 5 percent decline compared with volumes for the same period a year ago. Coated proppant volumes were 112,704 tons, 1 percent lower versus the fourth quarter of 2015 and a 61 percent decline from the prior-year period.
Proppant Solutions revenues were $117.5 million in the first quarter, a 9 percent increase compared with $107.5 million in the fourth quarter of 2015 and a 57 percent decrease compared with $272.9 million in the same period a year ago. The sequential increase in revenues was driven by increased volumes sold and an increase of in-basin shipments. The positive impact from these factors was partially offset by pricing pressure across all product lines.
Adjusted contribution margin, which excludes $76,000 of restructuring costs for the Proppant Solutions segment, increased to $12.7 million in the first quarter compared with $9.5 million in the fourth quarter of 2015. Excess rail car costs reduced the adjusted contribution margins in first-quarter 2016 and fourth-quarter 2015 by $7.9 million and $9.0 million, respectively. Fourth-quarter 2015 contribution margin was adjusted for restructuring costs and impairment charges totaling $76.8 million. Contribution margin in the first quarter of 2015 was $83.8 million.
The company continues to capitalize on the demand for cost-effective proppant solutions by leveraging its operational scale, extensive distribution network and unit train capabilities. In the first quarter of 2016, the company shipped more than 70 percent of total Northern White frac sand volumes via unit train. This was the fifth consecutive quarter in which the company’s unit train deliveries increased.