FAIRMOUNT SANTROL HOLDINGS INC., 10-Q filed on 8/9/2017
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2017
Jul. 31, 2017
Document And Entity Information [Abstract]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 30, 2017 
 
Document Fiscal Year Focus
2017 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
FMSA 
 
Entity Registrant Name
Fairmount Santrol Holdings Inc. 
 
Entity Central Index Key
0001010858 
 
Current Fiscal Year End Date
--12-31 
 
Entity Filer Category
Accelerated Filer 
 
Entity Common Stock Shares Outstanding
 
224,080,573 
Condensed Consolidated Statements of Income (Loss) (Unaudited) (USD $)
Share data in Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Statement [Abstract]
 
 
 
 
Revenues
$ 233,226,000 
$ 114,249,000 
$ 405,809,000 
$ 259,707,000 
Cost of goods sold (excluding depreciation, depletion, and amortization shown separately)
163,136,000 
114,129,000 
294,888,000 
232,593,000 
Operating expenses
 
 
 
 
Selling, general and administrative expenses
25,863,000 
25,040,000 
48,333,000 
43,318,000 
Depreciation, depletion and amortization expense
19,846,000 
18,056,000 
39,288,000 
36,642,000 
Asset impairments
 
90,578,000 
90,654,000 
Restructuring charges
 
1,155,000 
 
1,155,000 
Other operating expense (income)
355,000 
(426,000)
(705,000)
(96,000)
Income (loss) from operations
24,026,000 
(134,283,000)
24,005,000 
(144,559,000)
Interest expense, net
12,983,000 
16,606,000 
25,520,000 
33,868,000 
Other non-operating income
 
 
 
(5,000)
Income (loss) before provision (benefit) for income taxes
11,043,000 
(150,889,000)
(1,515,000)
(178,422,000)
Provision (benefit) for income taxes
520,000 
(63,019,000)
(628,000)
(78,773,000)
Net income (loss)
10,523,000 
(87,870,000)
(887,000)
(99,649,000)
Less: Net income attributable to the non-controlling interest
40,000 
16,000 
218,000 
13,000 
Net income (loss) attributable to Fairmount Santrol Holdings Inc.
$ 10,483,000 
$ (87,886,000)
$ (1,105,000)
$ (99,662,000)
Earnings (loss) per share
 
 
 
 
Basic
$ 0.05 
$ (0.54)
 
$ (0.62)
Diluted
$ 0.05 
$ (0.54)
 
$ (0.62)
Weighted average number of shares outstanding
 
 
 
 
Basic
224,015 
161,647 
223,878 
161,547 
Diluted
228,184 
161,647 
223,878 
161,547 
Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Statement Of Income And Comprehensive Income [Abstract]
 
 
 
 
Net income (loss)
$ 10,523 
$ (87,870)
$ (887)
$ (99,649)
Other comprehensive income (loss), before tax
 
 
 
 
Foreign currency translation adjustment
481 
(507)
442 
(360)
Pension obligations
61 
34 
122 
108 
Change in fair value of derivative agreements
560 
(5,296)
2,173 
(8,214)
Total other comprehensive income (loss), before tax
1,102 
(5,769)
2,737 
(8,466)
Provision (benefit) for income taxes related to items of other comprehensive income (loss)
609 
(2,436)
1,925 
(3,160)
Comprehensive income (loss), net of tax
11,016 
(91,203)
(75)
(104,955)
Comprehensive income attributable to the non-controlling interest
40 
16 
218 
13 
Comprehensive income (loss) attributable to Fairmount Santrol Holdings Inc.
$ 10,976 
$ (91,219)
$ (293)
$ (104,968)
Condensed Consolidated Balance Sheets (Unaudited) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Current assets
 
 
Cash and cash equivalents
$ 178,527 
$ 194,069 
Accounts receivable, net of allowance for doubtful accounts of $2,465 and $3,055 at June 30, 2017 and December 31, 2016, respectively
123,753 
78,942 
Inventories, net
60,807 
52,650 
Prepaid expenses and other assets
5,628 
7,065 
Refundable income taxes
2,487 
21,077 
Total current assets
371,202 
353,803 
Property, plant and equipment, net
716,362 
727,735 
Deferred income taxes
1,244 
1,244 
Goodwill
15,301 
15,301 
Intangibles, net
92,524 
95,341 
Other assets
8,206 
9,486 
Total assets
1,204,839 
1,202,910 
Current liabilities
 
 
Current portion of long-term debt
12,172 
10,707 
Accounts payable
51,654 
37,263 
Accrued expenses and deferred revenue
48,912 
26,185 
Total current liabilities
112,738 
74,155 
Long-term debt
783,946 
832,306 
Deferred income taxes
7,839 
7,057 
Other long-term liabilities
43,311 
38,272 
Total liabilities
947,834 
951,790 
Commitments and contingent liabilities (Note 13)
   
   
Equity
 
 
Preferred stock: $0.01 par value, 100,000 authorized shares Shares outstanding: 0 at June 30, 2017 and December 31, 2016
   
   
Common stock: $0.01 par value, 1,850,000 authorized shares Shares outstanding: 224,081 and 223,601 at June 30, 2017 and December 31, 2016, respectively
2,423 
2,422 
Additional paid-in capital
298,038 
297,649 
Retained earnings
263,314 
264,852 
Accumulated other comprehensive loss
(18,190)
(19,002)
Total equity attributable to Fairmount Santrol Holdings Inc. before treasury stock
545,585 
545,921 
Less: Treasury stock at cost Shares in treasury: 18,285 and 18,666 at June 30, 2017 and December 31, 2016, respectively
(288,849)
(294,874)
Total equity attributable to Fairmount Santrol Holdings Inc.
256,736 
251,047 
Non-controlling interest
269 
73 
Total equity
257,005 
251,120 
Total liabilities and equity
$ 1,204,839 
$ 1,202,910 
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Statement Of Financial Position [Abstract]
 
 
Allowance for doubtful accounts
$ 2,465 
$ 3,055 
Preferred stock, par value
$ 0.01 
$ 0.01 
Preferred stock, shares authorized
100,000,000 
100,000,000 
Preferred stock, shares outstanding
Common stock, par value
$ 0.01 
$ 0.01 
Common stock, shares authorized
1,850,000,000 
1,850,000,000 
Common stock, shares outstanding
224,081,000 
223,601,000 
Shares in treasury
18,285,000 
18,666,000 
Condensed Consolidated Statements of Equity (Unaudited) (USD $)
In Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Other Comprehensive Income (Loss) [Member]
Treasury Stock [Member]
Subtotal [Member]
Non-controlling Interest [Member]
Beginning balances at Dec. 31, 2015
$ (60,368)
$ 2,391 
$ 776,705 
$ 405,044 
$ (17,693)
$ (1,227,663)
$ (61,216)
$ 848 
Beginning balances, shares at Dec. 31, 2015
 
161,433 
 
 
 
77,765 
 
 
Stock options exercised
2,007 
2,001 
 
 
 
2,007 
 
Stock options exercised, shares
 
587 
 
 
 
 
 
 
Stock compensation expense
5,567 
 
5,567 
 
 
 
5,567 
 
Tax effect of stock options exercised, forfeited, or expired
(1,297)
 
(1,297)
 
 
 
(1,297)
 
Transactions with non-controlling interest
(551)
 
 
 
 
 
 
(551)
Net income (loss)
(99,649)
 
 
(99,662)
 
 
(99,662)
13 
Other comprehensive income (loss)
(5,306)
 
 
 
(5,306)
 
(5,306)
 
Ending balances at Jun. 30, 2016
(159,597)
2,397 
782,976 
305,382 
(22,999)
(1,227,663)
(159,907)
310 
Ending balances, shares at Jun. 30, 2016
 
162,020 
 
 
 
77,765 
 
 
Beginning balances at Dec. 31, 2016
251,120 
2,422 
297,649 
264,852 
(19,002)
(294,874)
251,047 
73 
Beginning balances, shares at Dec. 31, 2016
 
223,601 
 
 
 
18,666 
 
 
Re-issuance of treasury stock
6,025 
 
 
 
 
6,025 
6,025 
 
Re-issuance of treasury stock, shares
 
381 
 
 
 
(381)
 
 
Share-based awards exercised or distributed
(5,489)
(5,490)
 
 
 
(5,489)
 
Share-based awards exercised or distributed, shares
 
99 
 
 
 
 
 
 
Stock options exercised, shares
155 
 
 
 
 
 
 
 
Stock compensation expense
5,879 
 
5,879 
 
 
 
5,879 
 
Impact of adoption of ASU 2016-09 (See Note 9) (ASU 2016-09 [Member])
(699)
 
 
(699)
 
 
(699)
 
Tax impact of adoption of ASU 2016-09 (ASU 2016-09 [Member])
266 
 
 
266 
 
 
266 
 
Transactions with non-controlling interest
(22)
 
 
 
 
 
 
(22)
Net income (loss)
(887)
 
 
(1,105)
 
 
(1,105)
218 
Other comprehensive income (loss)
812 
 
 
 
812 
 
812 
 
Ending balances at Jun. 30, 2017
$ 257,005 
$ 2,423 
$ 298,038 
$ 263,314 
$ (18,190)
$ (288,849)
$ 256,736 
$ 269 
Ending balances, shares at Jun. 30, 2017
 
224,081 
 
 
 
18,285 
 
 
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Statement Of Cash Flows [Abstract]
 
 
Net loss
$ (887)
$ (99,649)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
Depreciation and depletion
35,508 
34,284 
Amortization
6,305 
5,745 
Reserve for doubtful accounts
(209)
1,954 
Write-off of deferred financing costs
389 
 
Asset impairments
 
90,654 
Inventory write-downs and reserves
1,266 
10,302 
(Gain) loss on sale of fixed assets
(552)
35 
Deferred income taxes and taxes payable
1,044 
(59,913)
Refundable income taxes
18,591 
(15,535)
Stock compensation expense
5,179 
5,567 
Change in operating assets and liabilities:
 
 
Accounts receivable
(44,602)
10,524 
Inventories
(9,423)
3,500 
Prepaid expenses and other assets
(991)
3,745 
Accounts payable
11,024 
298 
Accrued expenses and deferred revenue
31,606 
(4,450)
Net cash provided by (used in) operating activities
54,248 
(12,939)
Cash flows from investing activities
 
 
Proceeds from sale of fixed assets
1,216 
3,918 
Capital expenditures and stripping costs
(14,236)
(21,948)
Earnout payments
(250)
 
Other investing activities
 
(150)
Net cash used in investing activities
(13,270)
(18,180)
Cash flows from financing activities
 
 
Payments on long-term debt
(4,299)
(5,899)
Prepayments on term loans
(50,000)
(69,580)
Payments on capital leases and other long-term debt
(2,087)
(4,109)
Proceeds from option exercises
536 
2,007 
Tax payments for withholdings on share-based awards exercised or distributed
(1,091)
(292)
Tax effect of stock options exercised, forfeited, or expired
 
(1,297)
Transactions with non-controlling interest
(22)
(551)
Net cash used in financing activities
(56,963)
(79,721)
Change in cash and cash equivalents related to assets classified as held-for-sale
 
1,376 
Foreign currency adjustment
443 
(387)
Decrease in cash and cash equivalents
(15,542)
(109,851)
Cash and cash equivalents:
 
 
Beginning of period
194,069 
171,486 
End of period
$ 178,527 
$ 61,635 
Significant Accounting Policies
Significant Accounting Policies

1.

Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements of Fairmount Santrol Holdings Inc. and its consolidated subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal, recurring nature) and disclosures necessary for a fair statement of the financial position, results of operations, comprehensive income, and cash flows of the reported interim periods.  The condensed consolidated balance sheet as of December 31, 2016 was derived from audited financial statements, but does not include all disclosures required by GAAP.  Interim results are not necessarily indicative of the results to be expected for the full year or any other interim period.  These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as filed in the 2016 Annual Report on Form 10-K and notes thereto and information included elsewhere in this Quarterly Report on Form 10-Q.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 – Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors).  The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.  This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively.  A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.  The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases.  The Update is expected to impact the Company’s consolidated financial statements as the Company has certain operating and land lease arrangements for which it is the lessee.  ASC 842 supersedes the previous leases standard, ASC 840 – Leases.  The standard is effective on January 1, 2019, with early adoption permitted.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.

In April and May 2016, the FASB issued ASU No. 2016-10 – Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing, ASU No. 2016-11 – Revenue Recognition and Derivatives and Hedging – Recession of SEC Guidance, ASU No. 2016-12 – Revenue from Contracts with Customers – Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20 – Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.  These ASU’s each affect the guidance of the new revenue recognition standard in ASU No. 2014-09 – Revenue from Contracts with Customers and related subsequent ASUs.  This guidance is effective beginning January 1, 2018.  The Company is in the process of reviewing its various customer contracts in both of its business segments with a combination of applicable sales, legal, and accounting personnel.  The review of a sample of contracts has been completed.  In this review, the Company has identified several indicators of potential variable consideration, including price adjustments in the contracts as well as provisions similar to take-or-pay arrangements that could modify the timing of revenue recognition.  The Company is in the process of further review of these indicators and whether they will result in a change in the timing of revenue recognition.  The Company intends to continue this analysis in the quarter ending September 30, 2017 and then apply this guidance to all contracts in order to be prepared for a January 1, 2018 implementation.  The Company intends to use the modified retrospective method and will record cumulative effect of initially applying the standard as an adjustment to opening retained earnings.  This review is in data-gathering and contract review stages and, therefore, the effect of the new guidance on the Company’s financial statements and disclosures is not yet readily determinable.

In January 2017, the FASB issued ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.  The ASU eliminates Step 2 from goodwill impairment testing.  Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  As a result of the ASU, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.  The ASU is effective beginning January 1, 2020, with early adoption permitted, and applied prospectively.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.

In March 2017, the FASB issued ASU 2017-07 – Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.  The ASU requires that an employer report the service cost component in the same line item in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period as well as appropriately described relevant line items.  The ASU also requires only the service cost component to be eligible for capitalization when applicable.  The ASU is effective beginning January 1, 2018 with early adoption permitted.  The income statement components of the ASU should be applied retrospectively while the balance sheet component should be applied prospectively.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.

In May 2017, the FASB issued ASU 2017-09 – Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting.  The ASU provides further guidance on changes to the terms or conditions of a share-based payment award and which changes require the application of modification accounting.  Further, an entity should apply modification accounting unless the following conditions are met:

 

The award’s fair value is the same immediately before and after the original award is modified;

 

The vesting conditions of the modified award are the same immediately before and after the award is modified; and

 

The classification of the modified award, as either an equity instrument or liability instrument, is the same immediately before and after the award is modified.

This guidance is effective beginning January 1, 2018, with early adoption permitted, and should be applied prospectively.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.  

Inventories, net
Inventories, net

2.

Inventories, net

At June 30, 2017 and December 31, 2016, inventories consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Raw materials

 

$

8,447

 

 

$

7,465

 

Work-in-process

 

 

11,162

 

 

 

12,681

 

Finished goods

 

 

42,439

 

 

 

33,760

 

 

 

 

62,048

 

 

 

53,906

 

Less: LIFO reserve

 

 

(1,241

)

 

 

(1,256

)

Inventories, net

 

$

60,807

 

 

$

52,650

 

 

Property, Plant, and Equipment, net
Property, Plant, and Equipment, net

3.

Property, Plant, and Equipment, net

At June 30, 2017 and December 31, 2016, property, plant, and equipment consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Land and improvements

 

$

82,408

 

 

$

86,298

 

Mineral reserves and mine development

 

 

255,679

 

 

 

253,766

 

Machinery and equipment

 

 

588,637

 

 

 

596,962

 

Buildings and improvements

 

 

187,619

 

 

 

161,057

 

Furniture, fixtures, and other

 

 

3,456

 

 

 

3,440

 

Construction in progress

 

 

14,062

 

 

 

6,748

 

 

 

 

1,131,861

 

 

 

1,108,271

 

Accumulated depletion and depreciation

 

 

(415,499

)

 

 

(380,536

)

Property, plant, and equipment, net

 

$

716,362

 

 

$

727,735

 

 

Under ASC 360 Property, Plant, and Equipment, the Company is required to evaluate the recoverability of the carrying amount of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  Based on the adverse business conditions and the idling of certain assets in 2016, the Company evaluated certain of its asset groups that contained mineral reserves and other long-lived assets contained in the Proppant Solutions segment and concluded that the carrying amounts of those assets were not recoverable.  Fair value was determined by prices obtained from third parties for the assets and from estimating the net present value of the future cash flows over the life of the assets.  Using Level 3 inputs of the fair value hierarchy, critical assumptions for these valuations included future selling prices of products, future operating costs, and the cost of capital.  The Company incurred $90,578 and $90,654 of such asset impairments in the three and six months ended June 30, 2016, respectively.  These impairments are recorded as asset impairments in operating expenses in the Condensed Consolidated Statements of Income (Loss).  There were no such impairments included in the six months ended June 30, 2017.

Long-Term Debt
Long-Term Debt

4.

Long-Term Debt

At June 30, 2017 and December 31, 2016, long-term debt consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Term B-2 Loans

 

 

673,316

 

 

 

719,632

 

Extended Term B-1 Loans

 

 

110,048

 

 

 

117,634

 

Industrial Revenue bond

 

 

10,000

 

 

 

10,000

 

Revolving credit facility and other

 

 

72

 

 

 

88

 

Capital leases, net

 

 

8,800

 

 

 

3,634

 

Deferred financing costs, net

 

 

(6,118

)

 

 

(7,975

)

 

 

 

796,118

 

 

 

843,013

 

Less: current portion

 

 

(12,172

)

 

 

(10,707

)

Long-term debt including leases

 

$

783,946

 

 

$

832,306

 

On April 28, 2016, the Company entered into an amendment to the 2013 Amended Credit Agreement that extended the maturity of certain of the Term B-1 Loans to July 15, 2018 (the “2016 Extended Term Loans”).  The Company made a prepayment of principal of $69,580 and accrued interest of $227 on April 28, 2016 to the lenders consenting to the amendment.  The extended remainder of the Term B-1 Loans, plus accrued interest, was due at maturity on July 15, 2018.  Accrued interest related to the $16,723 principal payment (net of original issue discount) due on March 17, 2017 was also due on the same date.

On October 17, 2016, the Company repurchased $3,000 of the Extended Term B-1 Loans at 91.5% of par.  On November 17, 2016, the Company fully prepaid the $16,766 of the Term B-1 Loans due March 2017 as well as the $69,580 of the 2016 Extended Term Loans.  On November 29, 2016, the Company repurchased, at an average of 96.3% of par, a total of $213,000 of term loans, which consisted of $37,867 of the Extended Term B-1 Loans and $175,133 of the Term B-2 Loans.  The related net gain on the October and November 2016 debt repurchases was $5,110.  On June 27, 2017, the Company prepaid $50,000 of term loans at par, which consisted of $42,979 of the Term B-2 Loans and $7,021 of the Extended Term B-1 Loans and recognized expenses of $389 relating to the write-off of unamortized capitalized debt issuance costs.

As of June 30, 2017, the Term B-2 Loans, Extended Term B-1 Loans, and the Revolving Credit Facility had actual interest rates of 4.8%, 4.8%, and 4.3%, respectively.

Beginning in 2017, the full amount of the Revolving Credit Facility ($100,000) is available, so long as the Company’s leverage ratio does not exceed a revised limit (6.50:1.00 for the first quarter of 2017 declining quarterly to 4.75:1.00 for the fourth quarter of 2017).  The Revolving Credit Facility termination date is September 6, 2018.  As of June 30, 2017, the Company’s leverage ratio exceeded the revised limits so there was $15,980 available unused capacity on the Revolving Credit Facility and $15,270 committed to outstanding letters of credit.  As of June 30, 2017, the Company had not drawn on the Revolving Credit Facility.

The Company has a $10,000 Industrial Revenue Bond outstanding related to the construction of a manufacturing facility in Wisconsin.  The bond bears interest, which is payable monthly, at a variable rate.  The rate was 0.91% at June 30, 2017.  The bond matures on September 1, 2027 and is collateralized by a letter of credit of $10,000.

Accrued Expenses and Deferred Revenue
Accrued Expenses and Deferred Revenue

5.

Accrued Expenses and Deferred Revenue

At June 30, 2017 and December 31, 2016, accrued expenses and deferred revenue consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Accrued payroll and fringe benefits

 

$

8,145

 

 

$

7,018

 

Accrued bonus

 

 

14,669

 

 

 

3,536

 

Contingent consideration

 

 

3,220

 

 

 

2,507

 

Accrued income taxes

 

 

347

 

 

 

421

 

Accrued real estate taxes

 

 

3,834

 

 

 

4,821

 

Deferred revenue

 

 

9,316

 

 

 

75

 

Other accrued expenses

 

 

9,381

 

 

 

7,807

 

Accrued expenses and deferred revenue

 

$

48,912

 

 

$

26,185

 

 

Earnings (Loss) per Share
Earnings (Loss) per Share

6.

Earnings (Loss) per Share  

The table below shows the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2017 and 2016, respectively:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Fairmount Santrol Holdings Inc.

 

$

10,483

 

 

$

(87,886

)

 

$

(1,105

)

 

$

(99,662

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

224,015

 

 

 

161,647

 

 

 

223,878

 

 

 

161,547

 

Dilutive effect of employee stock options, RSUs, and PRSUs

 

 

4,169

 

 

 

-

 

 

 

-

 

 

 

-

 

Diluted weighted average shares outstanding

 

 

228,184

 

 

 

161,647

 

 

 

223,878

 

 

 

161,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - basic

 

$

0.05

 

 

$

(0.54

)

 

$

-

 

 

$

(0.62

)

Earnings (loss) per common share - diluted

 

$

0.05

 

 

$

(0.54

)

 

$

-

 

 

$

(0.62

)

 

Potentially dilutive shares were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share in the six months ended June 30, 2017 and the three and six months ended June 30, 2016 because the Company was in a loss position in those periods.  The calculation of diluted weighted average shares outstanding for the three months ended June 30, 2017 excludes 6,858 potential common shares because the effect of including these potential common shares would be antidilutive.

As a result of ASU No. 2016-09 – Compensation – Stock Compensation (Topic 718), windfalls and excess tax benefits are no longer included in the calculation of assumed proceeds and the calculation of diluted weighted average shares outstanding.  The Company adopted this guidance as of January 1, 2017 on a prospective basis, which could impact the comparability of earnings per share between periods presented.  However, the Company was in a loss position for prior periods presented and, accordingly, basic and diluted earnings per share are calculated in the same manner.  

As of June 30, 2017, the amount of outstanding options, restricted stock units (“RSUs”), and performance restricted stock units (“PRSUs”) was 13,697, 1,534, and 581, respectively.

Derivative Instruments
Derivative Instruments

7.

Derivative Instruments

The Company enters into interest rate swap agreements as a means to partially hedge its variable interest rate risk on debt instruments.  The notional value of these swap agreements is $420,000, which represents a total of approximately 54% of term debt outstanding at June 30, 2017 and effectively fixes the variable rate in a range of 2.92%  to 3.12% for the portion of the debt that is hedged.  The interest rate swap agreements mature on September 5, 2019.

The derivative instruments are recorded on the balance sheet at their fair values.  Changes in the fair value of derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship.  For cash flow hedges in which the Company is hedging the variability of cash flows related to a variable-rate liability, the effective portion of the gain or loss on the derivative instrument is reported in other comprehensive income in the periods during which earnings are impacted by the variability of the cash flows of the hedged item.  The ineffective portion of all hedges is recognized in current period earnings.  As interest expense is accrued on the debt obligation, amounts in accumulated other comprehensive income (loss) related to the interest rate swaps are reclassified into income to obtain a net cost on the debt obligation equal to the effective yield of the fixed rate of each swap.  In the event that an interest rate swap is terminated prior to maturity, gains or losses in accumulated other comprehensive income (loss) remain deferred and are reclassified into earnings in the periods in which the hedged forecasted transaction affects earnings.

The Company formally designates and documents instruments at inception that qualify for hedge accounting of underlying exposures in accordance with GAAP.  Both at inception and for each reporting period, the Company assesses whether the financial instruments used in hedging transactions are effective in offsetting changes in cash flows of the related underlying exposure.

The following table summarizes the fair values and the respective classification in the Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016:

 

 

 

 

 

Assets (Liabilities)

 

Interest Rate Swap Agreements

 

Balance Sheet Classification

 

June 30, 2017

 

 

December 31, 2016

 

Designated as cash flow hedges

 

Other long-term liabilities

 

$

(11,957

)

 

$

(14,488

)

Designated as cash flow hedges

 

Other assets

 

 

-

 

 

 

39

 

 

 

 

 

$

(11,957

)

 

$

(14,449

)

 

In order to represent the ineffective portion of interest rate swap agreements designated as hedges, the Company recognized in interest expense the following in the three and six months ended June 30, 2017 and 2016:

 

Derivatives in

 

Location of Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 815-20 Cash Flow

 

Recognized in Income on

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Hedging Relationships

 

Derivative (Ineffective Portion)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Interest rate swap agreements

 

Interest expense (income)

 

$

3

 

 

$

109

 

 

$

(74

)

 

$

199

 

 

 

 

 

$

3

 

 

$

109

 

 

$

(74

)

 

$

199

 

 

The Company expects 6,068 to be reclassified from accumulated other comprehensive income (loss) into interest expense within the next twelve months.

Fair Value Measurements
Fair Value Measurements

8.

Fair Value Measurements

Financial instruments held by the Company include cash equivalents, accounts receivable, accounts payable, long-term debt (including the current portion thereof) and interest rate swaps.  The Company is also liable for contingent consideration from the acquisition of Self-Suspending Proppant LLC (“SSP”) that is subject to fair value measurement.  Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.

Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.  The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.  Financial assets and liabilities at fair value will be classified and disclosed in one of the following three categories:

 

Level 1

Quoted market prices in active markets for identical assets or liabilities

Level 2

Observable market based inputs or unobservable inputs that are corroborated by market data

Level 3

Unobservable inputs that are not corroborated by market data

 

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The carrying value of cash equivalents, accounts receivable and accounts payable are considered to be representative of their fair values because of their short maturities.  The carrying value of the Company’s long-term debt (including the current portion thereof) is recognized at amortized cost.  The fair value of the Extended Term B-1 Loans and the Term B-2 Loans differs from amortized costs and is valued at prices obtained from a readily-available source for trading non-public debt, which represent quoted prices for identical or similar assets in markets that are not active, and therefore is considered Level 2.  The following table presents the fair value as of June 30, 2017 and December 31, 2016 for the Company’s long-term debt:

 

 

 

Quoted Prices

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

in Active

 

 

Observable

 

 

Unobservable

 

 

 

 

 

 

 

Markets

 

 

Inputs

 

 

Inputs

 

 

 

 

 

Long-Term Debt Fair Value Measurements

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term B-2 Loans

 

 

-

 

 

 

639,199

 

 

 

-

 

 

 

639,199

 

Extended Term B-1 Loans

 

 

-

 

 

 

103,321

 

 

 

-

 

 

 

103,321

 

 

 

$

-

 

 

$

742,520

 

 

$

-

 

 

$

742,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term B-2 Loans

 

 

-

 

 

 

699,683

 

 

 

-

 

 

 

699,683

 

Extended Term B-1 Loans

 

 

-

 

 

 

114,308

 

 

 

-

 

 

 

114,308

 

 

 

$

-

 

 

$

813,991

 

 

$

-

 

 

$

813,991

 

 

The following table presents the amounts carried at fair value as of June 30, 2017 and December 31, 2016 for the Company’s other financial instruments.  Fair value of interest rate swap agreements in based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date.  These are determined using Level 2 inputs.

 

 

 

Quoted Prices

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

in Active

 

 

Observable

 

 

Unobservable

 

 

 

 

 

 

 

Markets

 

 

Inputs

 

 

Inputs

 

 

 

 

 

Recurring Fair Value Measurements

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

$

-

 

 

$

(11,957

)

 

$

-

 

 

$

(11,957

)

 

 

$

-

 

 

$

(11,957

)

 

$

-

 

 

$

(11,957

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

$

-

 

 

$

(14,449

)

 

$

-

 

 

$

(14,449

)

 

 

$

-

 

 

$

(14,449

)

 

$

-

 

 

$

(14,449

)

 

Common Stock and Stock-Based Compensation
Common Stock and Stock-Based Compensation

9.

Common Stock and Stock-Based Compensation

The Company granted options to purchase 448 and 1,731 shares of common stock in the six months ended June 30, 2017 and 2016, respectively.  The average grant date fair value was $9.98 and $2.21 for options issued in the six months ended June 30, 2017 and 2016, respectively.  The Company issued RSUs of 369 and 1,020 in the six months ended June 30, 2017 and 2016, respectively.  The Company issued PRSUs of 139 and 481 in the six months ended June 30, 2017 and 2016, respectively.    

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

Performance

 

 

Weighted

 

 

 

 

 

 

 

Average Exercise

 

 

Restricted

 

 

Average Price at

 

 

Restricted

 

 

Average Price at

 

 

 

Options

 

 

Price, Options

 

 

Stock Units

 

 

RSU Issue Date

 

 

Stock Units

 

 

PRSU Issue Date

 

Outstanding at December 31, 2016

 

 

13,598

 

 

$

6.45

 

 

 

1,459

 

 

$

5.10

 

 

 

458

 

 

$

2.28

 

Granted

 

 

448

 

 

 

9.98

 

 

 

369

 

 

 

9.99

 

 

 

139

 

 

 

10.03

 

Exercised

 

 

(155

)

 

 

3.45

 

 

 

(250

)

 

 

2.60

 

 

 

-

 

 

 

-

 

Forfeited

 

 

(181

)

 

 

7.84

 

 

 

(44

)

 

 

6.70

 

 

 

(16

)

 

 

3.54

 

Expired

 

 

(13

)

 

 

15.91

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at June 30, 2017

 

 

13,697

 

 

$

6.57

 

 

 

1,534

 

 

$

6.64

 

 

 

581

 

 

$

4.10

 

 

The Company recorded $5,179 and $5,567 of stock compensation expense related to these options, RSUs, and PRSUs for the six months ended June 30, 2017 and 2016, respectively.  Stock compensation expense in the second quarter of 2016 included approximately $2,135 related to a modification of the retirement provisions of the Company’s Long Term Incentive Plans.  The modification allows retirement-eligible individuals (defined as age 55, plus 10 years of service) to continue to vest in options following retirement and also allows retired participants to exercise options for up to 10 years from grant date.  The modification also accelerates vesting and related expense for awards granted to retirement-eligible individuals.  Stock compensation expense is included in selling, general, and administrative expenses on the Consolidated Statements of Income (Loss) and in additional paid-in capital on the Consolidated Balance Sheets.

Income Taxes
Income Taxes

10.

Income Taxes

The Company computes and applies to ordinary income an estimated annual effective tax rate on a quarterly basis based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws.  The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts.  Ordinary income refers to income (loss) before income tax expense excluding significant, unusual, or infrequently occurring items.  The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of tax.

For the three months ended June 30, 2017, the Company recorded tax expense of $520 on income before income taxes of $11,043 resulting in an effective tax rate of 4.7%, compared to a tax benefit of $63,019 on a loss before income taxes of $150,889 resulting in an effective tax rate of 41.8% for the same period of 2016.  The decrease in the effective tax rate is primarily attributable to the impact of a tax benefit from a loss carryback recorded in 2016 and an increase in depletion applied against forecasted results in 2017 as compared to 2016.  The effective rate differs from the U.S. federal statutory rate due primarily to depletion and the valuation allowance against certain U.S. tax attributes.

For the six months ended June 30, 2017, the Company recorded a tax benefit of $628 on a loss before income taxes of $1,515 resulting in an effective tax rate of 41.5%, compared to a tax benefit of $78,773 on a loss before income taxes of $178,422 resulting in an effective tax rate of 44.1% for the same period of 2016.  The decrease in the effective tax rate is primarily attributable to the impact of a tax benefit from a loss carryback recorded in 2016, partially offset by the increase in depletion applied against forecasted results in 2017, as compared to 2016, and discrete tax benefits related to stock compensation.  The effective rate differs from the U.S. federal statutory rate due primarily to depletion and the valuation allowance against certain U.S. tax attributes.

Defined Benefit Plans
Defined Benefit Plans

11.

Defined Benefit Plans

The Company maintains two defined benefit pension plans, the Wedron pension plan and the Troy Grove pension plan, covering union employees at certain facilities that provide benefits based upon years of service or a combination of employee earnings and length of service.  The benefits under the Wedron plan were frozen effective December 31, 2012 and the benefits under the Troy Grove plan were frozen effective December 31, 2016.

Net periodic benefit cost recognized for other Company defined benefit pension plans for the three and six months ended June 30, 2017 and 2016 is as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

-

 

 

 

21

 

 

$

-

 

 

$

42

 

Interest cost

 

 

89

 

 

 

87

 

 

 

178

 

 

 

174

 

Expected return on plan assets

 

 

(127

)

 

 

(120

)

 

 

(254

)

 

 

(240

)

Amortization of prior service cost

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of net actuarial loss

 

 

61

 

 

 

35

 

 

 

122

 

 

 

109

 

Net periodic benefit cost

 

$

23

 

 

$

23

 

 

$

46

 

 

$

85

 

 

The Company contributed $36 and $42 during the six months ended June 30, 2017 and 2016, respectively.  Total expected employer contributions during the year ending December 31, 2017 are $69.

Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)

12.

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) attributable to Fairmount Santrol Holdings Inc. at June 30, 2017 and December 31, 2016 were as follows:

 

 

 

June 30, 2017

 

 

 

Gross

 

 

Tax Effect

 

 

Net Amount

 

Foreign currency translation

 

$

(10,362

)

 

$

1,387

 

 

$

(8,975

)

Additional pension liability

 

 

(3,467

)

 

 

1,291

 

 

 

(2,176

)

Unrealized gain (loss) on interest rate hedges

 

 

(10,973

)

 

 

3,934

 

 

 

(7,039

)

 

 

$

(24,802

)

 

$

6,612

 

 

$

(18,190

)

 

 

 

December 31, 2016

 

 

 

Gross

 

 

Tax Effect

 

 

Net Amount

 

Foreign currency translation

 

$

(10,804

)

 

$

2,533

 

 

$

(8,271

)

Additional pension liability

 

 

(3,589

)

 

 

1,291

 

 

 

(2,298

)

Unrealized gain (loss) on interest rate hedges

 

 

(13,146

)

 

 

4,713

 

 

 

(8,433

)

 

 

$

(27,539

)

 

$

8,537

 

 

$

(19,002

)

 

The following table presents the changes in accumulated other comprehensive income by component for the six months ended June 30, 2017:

 

 

 

Six Months Ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

Foreign

 

 

Additional

 

 

gain (loss)

 

 

 

 

 

 

 

currency

 

 

pension

 

 

on interest

 

 

 

 

 

 

 

translation

 

 

liability

 

 

rate hedges

 

 

Total

 

Beginning balance

 

$

(8,271

)

 

$

(2,298

)

 

$

(8,433

)

 

$

(19,002

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

before reclassifications

 

 

(704

)

 

 

-

 

 

 

(811

)

 

 

(1,515

)

Amounts reclassified from accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other comprehensive income (loss)

 

 

-

 

 

 

122

 

 

 

2,205

 

 

 

2,327

 

Ending balance

 

$

(8,975

)

 

$

(2,176

)

 

$

(7,039

)

 

$

(18,190

)

 

The following table presents the reclassifications out of accumulated other comprehensive income during the six months ended June 30, 2017:

 

 

 

Amount reclassified

 

 

 

 

 

from accumulated

 

 

 

Details about accumulated other

 

other comprehensive

 

 

Affected line item on

comprehensive income

 

income

 

 

the statement of income

Change in fair value of derivative swap agreements

 

 

 

 

 

 

Interest rate hedging contracts

 

$

3,438

 

 

Interest expense

Tax effect

 

 

(1,233

)

 

Tax expense (benefit)

 

 

$

2,205

 

 

Net of tax

Amortization of pension obligations

 

 

 

 

 

 

Prior service cost

 

$

-

 

 

Cost of sales

Actuarial losses

 

 

122

 

 

Cost of sales

 

 

 

122

 

 

Total before tax

Tax effect

 

 

-

 

 

Tax expense

 

 

 

122

 

 

Net of tax

Total reclassifications for the period

 

$

2,327

 

 

Net of tax

 

Commitments and Contingent Liabilities
Commitments and Contingent Liabilities

13.

Commitments and Contingent Liabilities

The Company has entered into numerous mineral rights agreements, in which payments under the agreements are expensed as incurred.  Certain agreements require annual payments while other agreements require payments based upon annual tons mined and others require a combination thereof.

The Company has entered into agreements with third party terminal operators whereby certain minimum payments are due regardless of terminal utilization.  

The Company leases certain machinery, equipment (including railcars), buildings and office space under operating lease arrangements.  Total rent expense associated with these leases was $27,199 and $35,156 for the six months ended June 30, 2017 and 2016, respectively.

The Company is subject to a contingent consideration arrangement related to the purchase of SSP, which was accounted for as an acquisition of a group of assets.  The contingent consideration is based on a fixed percentage of the cumulative product margin, less certain adjustments, generated by sales of Propel SSP® and other products incorporating the SSP technology for five years commencing on October 1, 2015.  The Company entered into an amendment to the SSP purchase agreement on December 17, 2015.  This amendment (a) extends the period during which the aggregate earnout payments must equal or exceed $45,000 from the two-year period ending October 1, 2017 until the three-year period ending October 1, 2018; and (b) provides that the aggregate earnout payments during the two-year period ending October 1, 2017 must equal or exceed $15,000 and granted the Seller a security interest in 51% of the equity interests in the Company to secure such $15,000.  The amendment does not alter the final threshold earnout amount, which continues to be $195,000 (inclusive of the $45,000 payment, if any) by October 1, 2020.  The contingent consideration is accrued and capitalized as part of the cost of the acquired technology from the SSP acquisition at the time a payment is probable and reasonably estimable.  Based upon current information, the Company accrued and capitalized an additional $964 in the six months ended June 30, 2017.

Certain subsidiaries are defendants in lawsuits in which the alleged injuries are claimed to be silicosis-related and to have resulted, in whole or in part, from exposure to silica-containing products, allegedly including those sold by certain subsidiaries.  In the majority of cases, there are numerous other defendants.  In accordance with its insurance obligations, the defense of these actions has been tendered to and the cases are being defended by the subsidiaries’ insurance carriers.  Management believes that the Company’s substantial level of existing and available insurance coverage combined with various open indemnities is more than sufficient to cover any exposure to silicosis-related expenses.  An estimate of the possible loss, if any, cannot be made at this time.

Segment Reporting
Segment Reporting

15.

Segment Reporting

The Company organizes its business into two reportable segments, Proppant Solutions and Industrial & Recreational Products.  The reportable segments are consistent with how management views the markets served by the Company and the financial information reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.

The chief operating decision maker primarily evaluates an operating segment’s performance based on segment gross profit, which does not include any selling, general, and administrative costs or corporate costs.  

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proppant Solutions

 

$

198,812

 

 

$

82,102

 

 

$

339,805

 

 

$

199,565

 

Industrial & Recreational Products

 

 

34,414

 

 

 

32,147

 

 

 

66,004

 

 

 

60,142

 

Total revenues

 

 

233,226

 

 

 

114,249

 

 

 

405,809

 

 

 

259,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proppant Solutions

 

 

54,373

 

 

 

(13,529

)

 

 

81,719

 

 

 

3,063

 

Industrial & Recreational Products

 

 

15,717

 

 

 

13,649

 

 

 

29,202

 

 

 

24,051

 

Total segment gross profit

 

 

70,090

 

 

 

120

 

 

 

110,921

 

 

 

27,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses excluded from segment gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

 

25,863

 

 

 

25,040

 

 

 

48,333

 

 

 

43,318

 

Depreciation, depletion, and amortization

 

 

19,846

 

 

 

18,056

 

 

 

39,288

 

 

 

36,642

 

Asset impairments

 

 

-

 

 

 

90,578

 

 

 

-

 

 

 

90,654

 

Restructuring charges

 

 

-

 

 

 

1,155

 

 

 

-

 

 

 

1,155

 

Other operating expense (income)

 

 

355

 

 

 

(426

)

 

 

(705

)

 

 

(96

)

Interest expense, net

 

 

12,983

 

 

 

16,606

 

 

 

25,520

 

 

 

33,868

 

Other non-operating income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5

)

Income (loss) before provision (benefit) for income taxes

 

$

11,043

 

 

$

(150,889

)

 

$

(1,515

)

 

$

(178,422

)

 

The Company's three largest customers accounted for 20%, 13%, and 12%, respectively, of consolidated net revenues in the six months ended June 30, 2017.  In the six months ended June 30, 2016, the Company's two largest customers accounted for 34% and 10%, respectively, of consolidated net revenues.  These customers are part of the Company’s Proppant Solutions segment.  

Definite and Indefinite-Lived Intangibles
Definite and Indefinite-Lived Intangibles

16.

Definite and Indefinite-Lived Intangibles

As of June 30, 2017, the balance of Goodwill was $15,301, which represents goodwill related to acquisitions in the Company’s Industrial & Recreational Products segment.  As part of Company policy in its normal course of business, the Company performed a review of qualitative factors and concluded that, as of June 30, 2017, there were no events or changes in circumstances that would more likely than not result in an impairment of the carrying value of its intangible assets, including goodwill.  With the current volatile market conditions in the oil and gas industry, there could be future changes that impact the carrying value of other long-lived intangibles, including the supply agreement with FTS International Services, LLC (“FTSI”) or the value of the acquired technology from the SSP acquisition.  As of June 30, 2017, the balance of the FTSI supply agreement, net of accumulated amortization, was $32,955.    

Beginning in the first quarter of 2017, the Company began selling products using the SSP technology in full commercial protocol.  Accordingly, the Company began to amortize this intangible asset over a 20-year useful life, which is based upon the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company.  Amortization expense of the SSP technology was $1,526 in the six months ended June 30, 2017.  Based on future results of sales of products utilizing the SSP technology, it is possible the fair value of the intangible asset could decline below its cost such that an impairment in carrying value exists.  

 

 

Subsequent Event
Subsequent Event

17.

Subsequent Event

On July 18, 2017, the Company entered into a 40-year lease agreement for approximately 3,250 acres of sand reserves in Winkler County, Texas.  The reserves are estimated to contain approximately 165,000 tons of fine grade 40/70 and 100 mesh proppant sand.  The Company is obligated for a $40,000 leasehold interest payment, as well as royalties based on volumes sold.  Upon signing the lease, $20,000 of the leasehold interest payment was made and is non-refundable.  The remaining $20,000 of the leasehold interest is payable upon the occurrence of future events, such as mine permitting.  

Significant Accounting Policies (Policies)

Basis of Presentation

The unaudited condensed consolidated financial statements of Fairmount Santrol Holdings Inc. and its consolidated subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements.  In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal, recurring nature) and disclosures necessary for a fair statement of the financial position, results of operations, comprehensive income, and cash flows of the reported interim periods.  The condensed consolidated balance sheet as of December 31, 2016 was derived from audited financial statements, but does not include all disclosures required by GAAP.  Interim results are not necessarily indicative of the results to be expected for the full year or any other interim period.  These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements as filed in the 2016 Annual Report on Form 10-K and notes thereto and information included elsewhere in this Quarterly Report on Form 10-Q.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 – Leases (ASC 842), which sets out the principles for the recognition, measurement, presentation, and disclosure of leases for both parties to a contract (i.e. lessees and lessors).  The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.  This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively.  A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification.  Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.  The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases.  The Update is expected to impact the Company’s consolidated financial statements as the Company has certain operating and land lease arrangements for which it is the lessee.  ASC 842 supersedes the previous leases standard, ASC 840 – Leases.  The standard is effective on January 1, 2019, with early adoption permitted.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.

In April and May 2016, the FASB issued ASU No. 2016-10 – Revenue from Contracts with Customers – Identifying Performance Obligations and Licensing, ASU No. 2016-11 – Revenue Recognition and Derivatives and Hedging – Recession of SEC Guidance, ASU No. 2016-12 – Revenue from Contracts with Customers – Narrow-Scope Improvements and Practical Expedients, and ASU No. 2016-20 – Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers.  These ASU’s each affect the guidance of the new revenue recognition standard in ASU No. 2014-09 – Revenue from Contracts with Customers and related subsequent ASUs.  This guidance is effective beginning January 1, 2018.  The Company is in the process of reviewing its various customer contracts in both of its business segments with a combination of applicable sales, legal, and accounting personnel.  The review of a sample of contracts has been completed.  In this review, the Company has identified several indicators of potential variable consideration, including price adjustments in the contracts as well as provisions similar to take-or-pay arrangements that could modify the timing of revenue recognition.  The Company is in the process of further review of these indicators and whether they will result in a change in the timing of revenue recognition.  The Company intends to continue this analysis in the quarter ending September 30, 2017 and then apply this guidance to all contracts in order to be prepared for a January 1, 2018 implementation.  The Company intends to use the modified retrospective method and will record cumulative effect of initially applying the standard as an adjustment to opening retained earnings.  This review is in data-gathering and contract review stages and, therefore, the effect of the new guidance on the Company’s financial statements and disclosures is not yet readily determinable.

In January 2017, the FASB issued ASU 2017-04 – Intangibles – Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment.  The ASU eliminates Step 2 from goodwill impairment testing.  Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  As a result of the ASU, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.  The ASU is effective beginning January 1, 2020, with early adoption permitted, and applied prospectively.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.

In March 2017, the FASB issued ASU 2017-07 – Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.  The ASU requires that an employer report the service cost component in the same line item in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period as well as appropriately described relevant line items.  The ASU also requires only the service cost component to be eligible for capitalization when applicable.  The ASU is effective beginning January 1, 2018 with early adoption permitted.  The income statement components of the ASU should be applied retrospectively while the balance sheet component should be applied prospectively.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.

In May 2017, the FASB issued ASU 2017-09 – Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting.  The ASU provides further guidance on changes to the terms or conditions of a share-based payment award and which changes require the application of modification accounting.  Further, an entity should apply modification accounting unless the following conditions are met:

 

The award’s fair value is the same immediately before and after the original award is modified;

 

The vesting conditions of the modified award are the same immediately before and after the award is modified; and

 

The classification of the modified award, as either an equity instrument or liability instrument, is the same immediately before and after the award is modified.

This guidance is effective beginning January 1, 2018, with early adoption permitted, and should be applied prospectively.  The Company is in the process of evaluating the impact of this new guidance on its financial statements and disclosures.  

Inventories, net (Tables)
Schedule of Inventories

At June 30, 2017 and December 31, 2016, inventories consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Raw materials

 

$

8,447

 

 

$

7,465

 

Work-in-process

 

 

11,162

 

 

 

12,681

 

Finished goods

 

 

42,439

 

 

 

33,760

 

 

 

 

62,048

 

 

 

53,906

 

Less: LIFO reserve

 

 

(1,241

)

 

 

(1,256

)

Inventories, net

 

$

60,807

 

 

$

52,650

 

 

Property, Plant, and Equipment, net (Tables)
Schedule of Property, Plant, and Equipment

At June 30, 2017 and December 31, 2016, property, plant, and equipment consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Land and improvements

 

$

82,408

 

 

$

86,298

 

Mineral reserves and mine development

 

 

255,679

 

 

 

253,766

 

Machinery and equipment

 

 

588,637

 

 

 

596,962

 

Buildings and improvements

 

 

187,619

 

 

 

161,057

 

Furniture, fixtures, and other

 

 

3,456

 

 

 

3,440

 

Construction in progress

 

 

14,062

 

 

 

6,748

 

 

 

 

1,131,861

 

 

 

1,108,271

 

Accumulated depletion and depreciation

 

 

(415,499

)

 

 

(380,536

)

Property, plant, and equipment, net

 

$

716,362

 

 

$

727,735

 

 

Long-Term Debt (Tables)
Schedule of Long-Term Debt

At June 30, 2017 and December 31, 2016, long-term debt consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Term B-2 Loans

 

 

673,316

 

 

 

719,632

 

Extended Term B-1 Loans

 

 

110,048

 

 

 

117,634

 

Industrial Revenue bond

 

 

10,000

 

 

 

10,000

 

Revolving credit facility and other

 

 

72

 

 

 

88

 

Capital leases, net

 

 

8,800

 

 

 

3,634

 

Deferred financing costs, net

 

 

(6,118

)

 

 

(7,975

)

 

 

 

796,118

 

 

 

843,013

 

Less: current portion

 

 

(12,172

)

 

 

(10,707

)

Long-term debt including leases

 

$

783,946

 

 

$

832,306

 

 

Accrued Expenses and Deferred Revenue (Tables)
Summary of Accrued Expenses and Deferred Revenue

At June 30, 2017 and December 31, 2016, accrued expenses and deferred revenue consisted of the following:

 

 

 

June 30, 2017

 

 

December 31, 2016

 

Accrued payroll and fringe benefits

 

$

8,145

 

 

$

7,018

 

Accrued bonus

 

 

14,669

 

 

 

3,536

 

Contingent consideration

 

 

3,220

 

 

 

2,507

 

Accrued income taxes

 

 

347

 

 

 

421

 

Accrued real estate taxes

 

 

3,834

 

 

 

4,821

 

Deferred revenue

 

 

9,316

 

 

 

75

 

Other accrued expenses

 

 

9,381

 

 

 

7,807

 

Accrued expenses and deferred revenue

 

$

48,912

 

 

$

26,185

 

 

Earnings (Loss) per Share (Tables)
Computation of Basic and Diluted Earnings (Loss) per Share

The table below shows the computation of basic and diluted earnings (loss) per share for the three and six months ended June 30, 2017 and 2016, respectively:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Numerator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Fairmount Santrol Holdings Inc.

 

$

10,483

 

 

$

(87,886

)

 

$

(1,105

)

 

$

(99,662

)

Denominator:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

224,015

 

 

 

161,647

 

 

 

223,878

 

 

 

161,547

 

Dilutive effect of employee stock options, RSUs, and PRSUs

 

 

4,169

 

 

 

-

 

 

 

-

 

 

 

-

 

Diluted weighted average shares outstanding

 

 

228,184

 

 

 

161,647

 

 

 

223,878

 

 

 

161,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per common share - basic

 

$

0.05

 

 

$

(0.54

)

 

$

-

 

 

$

(0.62

)

Earnings (loss) per common share - diluted

 

$

0.05

 

 

$

(0.54

)

 

$

-

 

 

$

(0.62

)

 

Derivative Instruments (Tables)

The following table summarizes the fair values and the respective classification in the Condensed Consolidated Balance Sheets as of June 30, 2017 and December 31, 2016:

 

 

 

 

 

Assets (Liabilities)

 

Interest Rate Swap Agreements

 

Balance Sheet Classification

 

June 30, 2017

 

 

December 31, 2016

 

Designated as cash flow hedges

 

Other long-term liabilities

 

$

(11,957

)

 

$

(14,488

)

Designated as cash flow hedges

 

Other assets

 

 

-

 

 

 

39

 

 

 

 

 

$

(11,957

)

 

$

(14,449

)

 

In order to represent the ineffective portion of interest rate swap agreements designated as hedges, the Company recognized in interest expense the following in the three and six months ended June 30, 2017 and 2016:

 

Derivatives in

 

Location of Gain (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASC 815-20 Cash Flow

 

Recognized in Income on

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

Hedging Relationships

 

Derivative (Ineffective Portion)

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Interest rate swap agreements

 

Interest expense (income)

 

$

3

 

 

$

109

 

 

$

(74

)

 

$

199

 

 

 

 

 

$

3

 

 

$

109

 

 

$

(74

)

 

$

199

 

 

Fair Value Measurements (Tables)

The following table presents the fair value as of June 30, 2017 and December 31, 2016 for the Company’s long-term debt:

 

 

 

Quoted Prices

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

in Active

 

 

Observable

 

 

Unobservable

 

 

 

 

 

 

 

Markets

 

 

Inputs

 

 

Inputs

 

 

 

 

 

Long-Term Debt Fair Value Measurements

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term B-2 Loans

 

 

-

 

 

 

639,199

 

 

 

-

 

 

 

639,199

 

Extended Term B-1 Loans

 

 

-

 

 

 

103,321

 

 

 

-

 

 

 

103,321

 

 

 

$

-

 

 

$

742,520

 

 

$

-

 

 

$

742,520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term B-2 Loans

 

 

-

 

 

 

699,683

 

 

 

-

 

 

 

699,683

 

Extended Term B-1 Loans

 

 

-

 

 

 

114,308

 

 

 

-

 

 

 

114,308

 

 

 

$

-

 

 

$

813,991

 

 

$

-

 

 

$

813,991

 

 

The following table presents the amounts carried at fair value as of June 30, 2017 and December 31, 2016 for the Company’s other financial instruments.  Fair value of interest rate swap agreements in based on the present value of the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date.  These are determined using Level 2 inputs.

 

 

 

Quoted Prices

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

in Active

 

 

Observable

 

 

Unobservable

 

 

 

 

 

 

 

Markets

 

 

Inputs

 

 

Inputs

 

 

 

 

 

Recurring Fair Value Measurements

 

(Level 1)

 

 

(Level 2)

 

 

(Level 3)

 

 

Total

 

June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

$

-

 

 

$

(11,957

)

 

$

-

 

 

$

(11,957

)

 

 

$

-

 

 

$

(11,957

)

 

$

-

 

 

$

(11,957

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap agreements

 

$

-

 

 

$

(14,449

)

 

$

-

 

 

$

(14,449

)

 

 

$

-

 

 

$

(14,449

)

 

$

-

 

 

$

(14,449

)

 

Common Stock and Stock-Based Compensation (Tables)
Summary of Share Based Compensation Activity of Option and Non-option Instruments

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

Performance

 

 

Weighted

 

 

 

 

 

 

 

Average Exercise

 

 

Restricted

 

 

Average Price at

 

 

Restricted

 

 

Average Price at

 

 

 

Options

 

 

Price, Options

 

 

Stock Units

 

 

RSU Issue Date

 

 

Stock Units

 

 

PRSU Issue Date

 

Outstanding at December 31, 2016

 

 

13,598

 

 

$

6.45

 

 

 

1,459

 

 

$

5.10

 

 

 

458

 

 

$

2.28

 

Granted

 

 

448

 

 

 

9.98

 

 

 

369

 

 

 

9.99

 

 

 

139

 

 

 

10.03

 

Exercised

 

 

(155

)

 

 

3.45

 

 

 

(250

)

 

 

2.60

 

 

 

-

 

 

 

-

 

Forfeited

 

 

(181

)

 

 

7.84

 

 

 

(44

)

 

 

6.70

 

 

 

(16

)

 

 

3.54

 

Expired

 

 

(13

)

 

 

15.91

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Outstanding at June 30, 2017

 

 

13,697

 

 

$

6.57

 

 

 

1,534

 

 

$

6.64

 

 

 

581

 

 

$

4.10

 

 

Defined Benefit Plans (Tables) (Net Periodic Benefit Cost [Member])
Summary of Defined Benefit Plans

Net periodic benefit cost recognized for other Company defined benefit pension plans for the three and six months ended June 30, 2017 and 2016 is as follows:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

-

 

 

 

21

 

 

$

-

 

 

$

42

 

Interest cost

 

 

89

 

 

 

87

 

 

 

178

 

 

 

174

 

Expected return on plan assets

 

 

(127

)

 

 

(120

)

 

 

(254

)

 

 

(240

)

Amortization of prior service cost

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Amortization of net actuarial loss

 

 

61

 

 

 

35

 

 

 

122

 

 

 

109

 

Net periodic benefit cost

 

$

23

 

 

$

23

 

 

$

46

 

 

$

85

 

 

Accumulated Other Comprehensive Income (Loss) (Tables)

The components of accumulated other comprehensive income (loss) attributable to Fairmount Santrol Holdings Inc. at June 30, 2017 and December 31, 2016 were as follows:

 

 

 

June 30, 2017

 

 

 

Gross

 

 

Tax Effect

 

 

Net Amount

 

Foreign currency translation

 

$

(10,362

)

 

$

1,387

 

 

$

(8,975

)

Additional pension liability

 

 

(3,467

)

 

 

1,291

 

 

 

(2,176

)

Unrealized gain (loss) on interest rate hedges

 

 

(10,973

)

 

 

3,934

 

 

 

(7,039

)

 

 

$

(24,802

)

 

$

6,612

 

 

$

(18,190

)

 

 

 

December 31, 2016

 

 

 

Gross

 

 

Tax Effect

 

 

Net Amount

 

Foreign currency translation

 

$

(10,804

)

 

$

2,533

 

 

$

(8,271

)

Additional pension liability

 

 

(3,589

)

 

 

1,291

 

 

 

(2,298

)

Unrealized gain (loss) on interest rate hedges

 

 

(13,146

)

 

 

4,713

 

 

 

(8,433

)

 

 

$

(27,539

)

 

$

8,537

 

 

$

(19,002

)

 

The following table presents the changes in accumulated other comprehensive income by component for the six months ended June 30, 2017:

 

 

 

Six Months Ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

 

 

 

 

 

Foreign

 

 

Additional

 

 

gain (loss)

 

 

 

 

 

 

 

currency

 

 

pension

 

 

on interest

 

 

 

 

 

 

 

translation

 

 

liability

 

 

rate hedges

 

 

Total

 

Beginning balance

 

$

(8,271

)

 

$

(2,298

)

 

$

(8,433

)

 

$

(19,002

)

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

before reclassifications

 

 

(704

)

 

 

-

 

 

 

(811

)

 

 

(1,515

)

Amounts reclassified from accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other comprehensive income (loss)

 

 

-

 

 

 

122

 

 

 

2,205

 

 

 

2,327

 

Ending balance

 

$

(8,975

)

 

$

(2,176

)

 

$

(7,039

)

 

$

(18,190

)

 

The following table presents the reclassifications out of accumulated other comprehensive income during the six months ended June 30, 2017:

 

 

 

Amount reclassified

 

 

 

 

 

from accumulated

 

 

 

Details about accumulated other

 

other comprehensive

 

 

Affected line item on

comprehensive income

 

income

 

 

the statement of income

Change in fair value of derivative swap agreements

 

 

 

 

 

 

Interest rate hedging contracts

 

$

3,438

 

 

Interest expense

Tax effect

 

 

(1,233

)

 

Tax expense (benefit)

 

 

$

2,205

 

 

Net of tax

Amortization of pension obligations

 

 

 

 

 

 

Prior service cost

 

$

-

 

 

Cost of sales

Actuarial losses

 

 

122

 

 

Cost of sales

 

 

 

122

 

 

Total before tax

Tax effect

 

 

-

 

 

Tax expense

 

 

 

122

 

 

Net of tax

Total reclassifications for the period

 

$

2,327

 

 

Net of tax

 

Segment Reporting (Tables)
Summarized Financial Information for Reportable Segments

The chief operating decision maker primarily evaluates an operating segment’s performance based on segment gross profit, which does not include any selling, general, and administrative costs or corporate costs.  

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proppant Solutions

 

$

198,812

 

 

$

82,102

 

 

$

339,805

 

 

$

199,565

 

Industrial & Recreational Products

 

 

34,414

 

 

 

32,147

 

 

 

66,004

 

 

 

60,142

 

Total revenues

 

 

233,226

 

 

 

114,249

 

 

 

405,809

 

 

 

259,707

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proppant Solutions

 

 

54,373

 

 

 

(13,529

)

 

 

81,719

 

 

 

3,063

 

Industrial & Recreational Products

 

 

15,717

 

 

 

13,649

 

 

 

29,202

 

 

 

24,051

 

Total segment gross profit

 

 

70,090

 

 

 

120

 

 

 

110,921

 

 

 

27,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses excluded from segment gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general, and administrative

 

 

25,863

 

 

 

25,040

 

 

 

48,333

 

 

 

43,318

 

Depreciation, depletion, and amortization

 

 

19,846

 

 

 

18,056

 

 

 

39,288

 

 

 

36,642

 

Asset impairments

 

 

-

 

 

 

90,578

 

 

 

-

 

 

 

90,654

 

Restructuring charges

 

 

-

 

 

 

1,155

 

 

 

-

 

 

 

1,155

 

Other operating expense (income)

 

 

355

 

 

 

(426

)

 

 

(705

)

 

 

(96

)

Interest expense, net

 

 

12,983

 

 

 

16,606

 

 

 

25,520

 

 

 

33,868

 

Other non-operating income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5

)

Income (loss) before provision (benefit) for income taxes

 

$

11,043

 

 

$

(150,889

)

 

$

(1,515

)

 

$

(178,422

)

 

Inventories, net - Schedule of Inventories (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Inventory Disclosure [Abstract]
 
 
Raw materials
$ 8,447 
$ 7,465 
Work-in-process
11,162 
12,681 
Finished goods
42,439 
33,760 
Inventory gross
62,048 
53,906 
Less: LIFO reserve
(1,241)
(1,256)
Inventories, net
$ 60,807 
$ 52,650 
Property, Plant, and Equipment, net - Schedule of Property, Plant, and Equipment (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
$ 1,131,861 
$ 1,108,271 
Accumulated depletion and depreciation
(415,499)
(380,536)
Property, plant, and equipment, net
716,362 
727,735 
Land and Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
82,408 
86,298 
Mineral Reserves and Mine Development [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
255,679 
253,766 
Machinery and Equipment [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
588,637 
596,962 
Buildings and Improvements [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
187,619 
161,057 
Furniture, Fixtures and Other [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
3,456 
3,440 
Construction in Progress [Member]
 
 
Property, Plant and Equipment [Line Items]
 
 
Property, plant and equipment gross
$ 14,062 
$ 6,748 
Property, Plant, and Equipment, net - Additional Information (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Property Plant And Equipment Capitalized Interest Costs [Abstract]
 
 
 
Asset impairments
$ 90,578,000 
$ 0 
$ 90,654,000 
Long-Term Debt - Schedule of Long-Term Debt (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Debt Instrument [Line Items]
 
 
Industrial Revenue bond
$ 10,000 
$ 10,000 
Revolving credit facility and other
72 
88 
Capital leases, net
8,800 
3,634 
Long term debt
796,118 
843,013 
Less: current portion
(12,172)
(10,707)
Long-term debt including leases
783,946 
832,306 
Term B-2 Loans [Member]
 
 
Debt Instrument [Line Items]
 
 
Term Loans
673,316 
719,632 
Extended Term B-1 Loans [Member]
 
 
Debt Instrument [Line Items]
 
 
Term Loans
110,048 
117,634 
Term Loans [Member]
 
 
Debt Instrument [Line Items]
 
 
Deferred financing costs, net
$ (6,118)
$ (7,975)
Long-Term Debt - Additional Information (Detail) (USD $)
0 Months Ended 2 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 6 Months Ended 0 Months Ended 0 Months Ended
Jun. 27, 2017
Apr. 28, 2016
Nov. 30, 2016
Jun. 30, 2017
Dec. 31, 2016
Nov. 29, 2016
Jun. 30, 2017
Revolving Credit Facility [Member]
Jun. 30, 2017
Revolving Credit Facility [Member]
Borrowings [Member]
Jun. 30, 2017
3/17/2017 [Member]
Jun. 30, 2017
First Quarter of 2017 [Member]
Revolving Credit Facility [Member]
Jun. 30, 2017
First Quarter of 2017 [Member]
Revolving Credit Facility [Member]
Maximum [Member]
Jun. 30, 2017
Fourth Quarter of 2017 [Member]
Revolving Credit Facility [Member]
Maximum [Member]
Nov. 17, 2016
2016 Extended Term Loans [Member]
Apr. 28, 2016
2016 Extended Term Loans [Member]
Jun. 27, 2017
Extended Term B-1 Loans [Member]
Nov. 29, 2016
Extended Term B-1 Loans [Member]
Oct. 17, 2016
Extended Term B-1 Loans [Member]
Jun. 30, 2017
Extended Term B-1 Loans [Member]
Revolving Credit Facility [Member]
Nov. 17, 2016
Term B-1 Loans [Member]
March 2017 [Member]
Jun. 27, 2017
Term B-2 Loans [Member]
Nov. 29, 2016
Term B-2 Loans [Member]
Jun. 30, 2017
Term B-2 Loans [Member]
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prepayment of principal amount
$ 50,000,000 
$ 69,580,000 
 
 
 
 
 
 
 
 
 
 
$ 69,580,000 
 
$ 7,021,000 
 
 
 
$ 16,766,000 
$ 42,979,000 
 
 
Prepayment of accrued interest
 
227,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt instrument borrowings, maturity date
 
 
 
Sep. 01, 2027 
 
 
 
 
Mar. 17, 2017 
 
 
 
 
Jul. 15, 2018 
 
 
 
 
 
 
 
 
Outstanding term loans
 
 
 
72,000 
88,000 
 
 
 
16,723,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchases of term loans
 
 
 
 
 
213,000,000 
 
 
 
 
 
 
 
 
 
37,867,000 
3,000,000 
 
 
 
175,133,000 
 
Repurchased term loan as percentage of par
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
91.50% 
 
 
 
 
 
Repurchased term loan as average percentage of par
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
96.30% 
 
 
 
 
96.30% 
 
Net gain on repurchases of debt
 
 
5,110,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Write-off of unamortized capitalized debt issuance costs
389,000 
 
 
389,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate of borrowings
 
 
 
 
 
 
 
4.30% 
 
 
 
 
 
 
 
 
 
4.80% 
 
 
 
4.80% 
Total Revolving Credit Facility
 
 
 
 
 
 
 
 
 
100,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Leverage ratio
 
 
 
 
 
 
 
 
 
 
650.00% 
475.00% 
 
 
 
 
 
 
 
 
 
 
Revolving Credit Facility termination date
 
 
 
 
 
 
Sep. 06, 2018 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Available capacity remaining on the revolving credit facility
 
 
 
 
 
 
15,980,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding letters of credit
 
 
 
15,270,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Industrial revenue bond outstanding
 
 
 
10,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Applicable margin on interest rate
 
 
 
0.91% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Letter of credit
 
 
 
$ 10,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued Expenses and Deferred Revenue - Summary of Accrued Expenses and Deferred Revenue (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Payables And Accruals [Abstract]
 
 
Accrued payroll and fringe benefits
$ 8,145 
$ 7,018 
Accrued bonus
14,669 
3,536 
Contingent consideration
3,220 
2,507 
Accrued income taxes
347 
421 
Accrued real estate taxes
3,834 
4,821 
Deferred revenue
9,316 
75 
Other accrued expenses
9,381 
7,807 
Accrued expenses and deferred revenue
$ 48,912 
$ 26,185 
Earnings (Loss) per Share - Computation of Basic and Diluted Earnings (Loss) per Share (Detail) (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Numerator:
 
 
 
 
Net income (loss) attributable to Fairmount Santrol Holdings Inc.
$ 10,483 
$ (87,886)
$ (1,105)
$ (99,662)
Denominator:
 
 
 
 
Basic weighted average shares outstanding
224,015,000 
161,647,000 
223,878,000 
161,547,000 
Dilutive effect of employee stock options, RSUs, and PRSUs
4,169,000 
Diluted weighted average shares outstanding
228,184,000 
161,647,000 
223,878,000 
161,547,000 
Earnings (loss) per common share - basic
$ 0.05 
$ (0.54)
 
$ (0.62)
Earnings (loss) per common share - diluted
$ 0.05 
$ (0.54)
 
$ (0.62)
Earnings (Loss) per Share - Additional Information (Detail)
In Thousands, unless otherwise specified
3 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Earnings Per Share Basic [Line Items]
 
 
Securities excluded from computation of earning per share
6,858 
 
Outstanding options
13,697 
13,598 
Restricted Stock Units (RSUs) [Member]
 
 
Earnings Per Share Basic [Line Items]
 
 
Performance restricted stock units, outstanding
1,534 
1,459 
Performance Restricted Stock Units (PRSUs) [Member]
 
 
Earnings Per Share Basic [Line Items]
 
 
Performance restricted stock units, outstanding
581 
458 
Derivative Instruments - Additional Information (Detail) (Interest Rate Swap Agreements [Member], USD $)
6 Months Ended 12 Months Ended
Jun. 30, 2017
Jun. 30, 2018
Scenario, Forecast [Member]
Interest Expense [Member]
Jun. 30, 2017
Minimum [Member]
Jun. 30, 2017
Maximum [Member]
Derivative [Line Items]
 
 
 
 
Notional amount of swap agreements
$ 420,000,000 
 
 
 
Notional amount as percent of term debt outstanding
54.00% 
 
 
 
Derivative variable interest rate
 
 
2.92% 
3.12% 
Interest rate swap agreement, maturity date
Sep. 05, 2019 
 
 
 
Reclassification from Accumulated other comprehensive income (loss)
 
$ 6,068,000 
 
 
Derivative Instruments - Fair Values of Derivative Instrument and Respective Classification in Condensed Consolidated Balance Sheets (Detail) (Interest Rate Swap Agreements [Member], USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Derivatives Fair Value [Line Items]
 
 
Derivative, fair value
$ (11,957)
$ (14,449)
Designated as Cash Flow Hedges [Member] |
Other Long-Term Liabilities [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Derivative liabilities
(11,957)
(14,488)
Designated as Cash Flow Hedges [Member] |
Other Assets [Member]
 
 
Derivatives Fair Value [Line Items]
 
 
Derivative assets
 
$ 39 
Derivative Instruments - Schedule of Interest Expense Derivatives (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Derivatives Fair Value [Line Items]
 
 
 
 
Interest expense (income)
$ (12,983)
$ (16,606)
$ (25,520)
$ (33,868)
Interest Rate Swap Agreements [Member] |
Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest [Member]
 
 
 
 
Derivatives Fair Value [Line Items]
 
 
 
 
Interest expense (income)
109 
(74)
199 
Interest Rate Swap Agreements [Member] |
Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest [Member] |
Interest Income Expense [Member]
 
 
 
 
Derivatives Fair Value [Line Items]
 
 
 
 
Interest expense (income)
$ 3 
$ 109 
$ (74)
$ 199 
Fair Value Measurements - Schedule of Fair Value for Long-term Debt (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of long term debt
$ 742,520 
$ 813,991 
Term B-2 Loans [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of long term debt
639,199 
699,683 
Extended Term B-1 Loans [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of long term debt
103,321 
114,308 
Other Observable Inputs (Level 2) [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of long term debt
742,520 
813,991 
Other Observable Inputs (Level 2) [Member] |
Term B-2 Loans [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of long term debt
639,199 
699,683 
Other Observable Inputs (Level 2) [Member] |
Extended Term B-1 Loans [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair value of long term debt
$ 103,321 
$ 114,308 
Fair Value Measurements - Financial Instruments Carried at Fair Value (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Interest Rate Swap Agreements [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap agreements
$ (11,957)
$ (14,449)
Recurring Fair Value Measurements [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair Value, Net Asset (Liability)
(11,957)
(14,449)
Recurring Fair Value Measurements [Member] |
Interest Rate Swap Agreements [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap agreements
(11,957)
(14,449)
Other Observable Inputs (Level 2) [Member] |
Recurring Fair Value Measurements [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Fair Value, Net Asset (Liability)
(11,957)
(14,449)
Other Observable Inputs (Level 2) [Member] |
Recurring Fair Value Measurements [Member] |
Interest Rate Swap Agreements [Member]
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
Interest rate swap agreements
$ (11,957)
$ (14,449)
Common Stock and Stock Based Compensation - Additional Information (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2017
Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Number of shares granted to purchase
 
448 
1,731 
Average grant date fair value of options issued
 
$ 9.98 
$ 2.21 
Stock compensation expense
$ 2,135 
$ 5,179 
$ 5,567 
Modification of retirement provision, description
 
The modification allows retirement-eligible individuals (defined as age 55, plus 10 years of service) to continue to vest in options following retirement and also allows retired participants to exercise options for up to 10 years from grant date. 
 
Retired participants options exercise period from grant date
 
10 years 
 
Restricted Stock Units (RSUs) [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock units issued
 
369 
1,020 
Performance Restricted Stock Units [Member]
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Stock units issued
 
139 
481 
Common Stock and Stock Based Compensation - Summary of Share Based Compensation Activity of Option and Non-option Instruments (Detail) (USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Options, Outstanding Beginning Balance
13,598 
 
Options, Granted
448 
1,731 
Options, Exercised
(155)
 
Options, Forfeited
(181)
 
Options, Expired
(13)
 
Options, Outstanding Ending Balance
13,697 
 
Weighted Average Exercise Price, Options, Outstanding Beginning Balance
$ 6.45 
 
Weighted Average Exercise Price, Options, Granted
$ 9.98 
 
Weighted Average Exercise Price, Options, Exercised
$ 3.45 
 
Weighted Average Exercise Price, Options, Forfeited
$ 7.84 
 
Weighted Average Exercise Price, Options, Expired
$ 15.91 
 
Weighted Average Exercise Price, Options, Outstanding Ending Balance
$ 6.57 
 
Restricted Stock Units (RSUs) [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Outstanding Beginning Balance
1,459 
 
Granted
369 
 
Exercised
(250)
 
Forfeited
(44)
 
Outstanding Ending Balance
1,534 
 
Weighted Average Price at Issue Date, Outstanding Beginning Balance
$ 5.10 
 
Weighted Average Price at Issue Date, Granted
$ 9.99 
 
Weighted Average Price at Issue Date, Exercised
$ 2.60 
 
Weighted Average Price at Issue Date, Forfeited
$ 6.70 
 
Weighted Average Price at Issue Date, Outstanding Ending Balance
$ 6.64 
 
Performance Restricted Stock Units (PRSUs) [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Outstanding Beginning Balance
458 
 
Granted
139 
 
Forfeited
(16)
 
Outstanding Ending Balance
581 
 
Weighted Average Price at Issue Date, Outstanding Beginning Balance
$ 2.28 
 
Weighted Average Price at Issue Date, Granted
$ 10.03 
 
Weighted Average Price at Issue Date, Forfeited
$ 3.54 
 
Weighted Average Price at Issue Date, Outstanding Ending Balance
$ 4.10 
 
Income Taxes - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Income Tax Disclosure [Abstract]
 
 
 
 
Provision (benefit) for income taxes
$ 520 
$ (63,019)
$ (628)
$ (78,773)
Income (Loss) before income taxes
$ 11,043 
$ (150,889)
$ (1,515)
$ (178,422)
Effective income tax rate
4.70% 
41.80% 
41.50% 
44.10% 
Defined Benefit Plans - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Pension_Plan
Jun. 30, 2016
Dec. 31, 2017
Scenario, Forecast [Member]
Defined Benefit Plan Disclosure [Line Items]
 
 
 
Number of defined benefit pension plans
 
 
Pension and postretirement contributions
$ 36 
$ 42 
 
Expected contribution for pension plan remaining fiscal year
 
 
$ 69 
Defined Benefit Plans - Summary of Defined Benefit Plans (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Compensation And Retirement Disclosure [Abstract]
 
 
 
 
Service cost
 
$ 21 
 
$ 42 
Interest cost
89 
87 
178 
174 
Expected return on plan assets
(127)
(120)
(254)
(240)
Amortization of net actuarial loss
61 
35 
122 
109 
Net periodic benefit cost
$ 23 
$ 23 
$ 46 
$ 85 
Accumulated Other Comprehensive Income (Loss) - Components of Accumulated Other Comprehensive Income (Loss) (Detail) (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2017
Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Accumulated other comprehensive income (loss), Gross
$ (24,802)
$ (27,539)
Accumulated other comprehensive income (loss), Tax Effect
6,612 
8,537 
Accumulated other comprehensive income (loss)
(18,190)
(19,002)
Foreign Currency Translation [Member]
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Accumulated other comprehensive income (loss), Gross
(10,362)
(10,804)
Accumulated other comprehensive income (loss), Tax Effect
1,387 
2,533 
Accumulated other comprehensive income (loss)
(8,975)
(8,271)
Additional Pension Liability [Member]
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Accumulated other comprehensive income (loss), Gross
(3,467)
(3,589)
Accumulated other comprehensive income (loss), Tax Effect
1,291 
1,291 
Accumulated other comprehensive income (loss)
(2,176)
(2,298)
Unrealized Gain (Loss) on Interest Rate Hedges [Member]
 
 
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
Accumulated other comprehensive income (loss), Gross
(10,973)
(13,146)
Accumulated other comprehensive income (loss), Tax Effect
3,934 
4,713 
Accumulated other comprehensive income (loss)
$ (7,039)
$ (8,433)
Accumulated Other Comprehensive Income (Loss) - Changes in Accumulated Other Comprehensive Income by Component (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Dec. 31, 2015
Jun. 30, 2017
Foreign Currency Translation [Member]
Jun. 30, 2017
Additional Pension Liability [Member]
Jun. 30, 2017
Unrealized Gain (Loss) on Interest Rate Hedges [Member]
Jun. 30, 2017
Accumulated Other Comprehensive Income (Loss) [Member]
Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Member]
Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Member]
Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
 
 
 
 
 
 
 
 
 
 
Beginning balances
$ 251,120 
$ (159,597)
$ (60,368)
$ (8,271)
$ (2,298)
$ (8,433)
$ (18,190)
$ (19,002)
$ (22,999)
$ (17,693)
Other comprehensive income (loss) before reclassifications
(1,515)
 
 
(704)
 
(811)
 
 
 
 
Amounts reclassified from accumulated other comprehensive income (loss)
2,327 
 
 
 
122 
2,205 
 
 
 
 
Ending balances
$ 257,005 
$ (159,597)
$ (60,368)
$ (8,975)
$ (2,176)
$ (7,039)
$ (18,190)
$ (19,002)
$ (22,999)
$ (17,693)
Accumulated Other Comprehensive Income (Loss) - Reclassifications out of Accumulated Other Comprehensive Income (Detail) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Interest expense
$ 12,983 
$ 16,606 
$ 25,520 
$ 33,868 
Income (loss) before provision (benefit) for income taxes
11,043 
(150,889)
(1,515)
(178,422)
Tax expense (benefit)
520 
(63,019)
(628)
(78,773)
Net income (loss)
10,523 
(87,870)
(887)
(99,649)
Cost of sales
163,136 
114,129 
294,888 
232,593 
Reclassification Out of Accumulated Other Comprehensive Income [Member]
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Net income (loss)
 
 
2,327 
 
Reclassification Out of Accumulated Other Comprehensive Income [Member] |
Unrealized Gain (Loss) on Interest Rate Hedges [Member]
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Interest expense
 
 
3,438 
 
Tax expense (benefit)
 
 
(1,233)
 
Net income (loss)
 
 
2,205 
 
Reclassification Out of Accumulated Other Comprehensive Income [Member] |
Accumulated Defined Benefit Plans Adjustment, Net Unamortized Gain (Loss) [Member]
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Cost of sales
 
 
122 
 
Reclassification Out of Accumulated Other Comprehensive Income [Member] |
Additional Pension Liability [Member]
 
 
 
 
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
 
 
 
 
Income (loss) before provision (benefit) for income taxes
 
 
122 
 
Net income (loss)
 
 
$ 122 
 
Commitments and Contingent Liabilities - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 0 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Dec. 17, 2015
Self-Suspending Proppant LLC [Member]
Jun. 30, 2017
Self-Suspending Proppant LLC [Member]
Commitments and Contingencies [Line Items]
 
 
 
 
Rent expense for lease
$ 27,199 
$ 35,156 
 
 
Commitment period of sales
 
 
 
5 years 
Commitment commencing date
 
 
 
Oct. 01, 2015 
Aggregate earnout payment from the two-year period ending October 1, 2017 until the three-year period ending October 1, 2018
 
 
45,000 
 
Aggregate earnout payment during the two-year period ending October 1, 2017
 
 
15,000 
 
Security interest percentage of equity in contingent consideration
 
 
51.00% 
 
Contingent consideration
 
 
195,000 
 
Additional contingent consideration accrued and capitalized
 
 
 
$ 964 
Segment Reporting - Additional Information (Detail)
6 Months Ended
Jun. 30, 2017
Customer
Segment
Jun. 30, 2016
Customer
Segment Reporting Information [Line Items]
 
 
Number of reportable segments
 
Number of customers
Customer Concentration Risk [Member] |
Net Revenues [Member] |
Customer One [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Consolidated net revenues
20.00% 
34.00% 
Customer Concentration Risk [Member] |
Net Revenues [Member] |
Customer Two [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Consolidated net revenues
13.00% 
10.00% 
Customer Concentration Risk [Member] |
Net Revenues [Member] |
Customer Three [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Consolidated net revenues
12.00% 
 
Segment Reporting - Summarized Financial Information for Reportable Segments (Detail) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2017
Jun. 30, 2016
Revenues
 
 
 
 
Revenues
$ 233,226,000 
$ 114,249,000 
$ 405,809,000 
$ 259,707,000 
Segment gross profit
 
 
 
 
Segment gross profit
70,090,000 
120,000 
110,921,000 
27,114,000 
Operating expenses excluded from segment gross profit
 
 
 
 
Selling, general, and administrative
25,863,000 
25,040,000 
48,333,000 
43,318,000 
Depreciation, depletion, and amortization
19,846,000 
18,056,000 
39,288,000 
36,642,000 
Asset impairments
 
90,578,000 
90,654,000 
Restructuring charges
 
1,155,000 
 
1,155,000 
Other operating expense (income)
355,000 
(426,000)
(705,000)
(96,000)
Interest expense, net
12,983,000 
16,606,000 
25,520,000 
33,868,000 
Other non-operating income
 
 
 
(5,000)
Income (loss) before provision (benefit) for income taxes
11,043,000 
(150,889,000)
(1,515,000)
(178,422,000)
Proppant Solutions [Member]
 
 
 
 
Revenues
 
 
 
 
Revenues
198,812,000 
82,102,000 
339,805,000 
199,565,000 
Segment gross profit
 
 
 
 
Segment gross profit
54,373,000 
(13,529,000)
81,719,000 
3,063,000 
Industrial & Recreational Products [Member]
 
 
 
 
Revenues
 
 
 
 
Revenues
34,414,000 
32,147,000 
66,004,000 
60,142,000 
Segment gross profit
 
 
 
 
Segment gross profit
$ 15,717,000 
$ 13,649,000 
$ 29,202,000 
$ 24,051,000 
Definite and Indefinite-Lived Intangibles - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2017
Dec. 31, 2016
Jun. 30, 2017
Industrial & Recreational Products [Member]
Jun. 30, 2017
FTSI Supply Agreement [Member]
Jun. 30, 2017
SSP Technology [Member]
Goodwill [Line Items]
 
 
 
 
 
Goodwill
$ 15,301 
$ 15,301 
$ 15,301 
 
 
Supply agreement, net of accumulated amortization
 
 
 
32,955 
 
Useful life of intangible asset
 
 
 
 
20 years 
Amortization expense of intangible asset
 
 
 
 
$ 1,526 
Subsequent Event - Additional Information (Detail) (Subsequent Event [Member], USD $)
In Thousands, unless otherwise specified
0 Months Ended
Jul. 18, 2017
Ton
acre
Subsequent Event [Member]
 
Subsequent Event [Line Items]
 
Term of lease agreement
40 years 
Area of sand reserves under lease agreement
3,250 
Estimated tons of sand in reserves
165,000,000 
Grades of mesh proppant sand
40/70 and 100 
Leasehold interest obligated for payment
$ 40,000 
Non-Refundable Leasehold interest Payments
20,000 
Contingent leasehold Interest payments
$ 20,000