Hi-Crush tops Q3 expectations; sand sales hit high end of guidance

Hi-Crush (NYSE:HCR) +8.8% after-hours after posting a smaller than expected Q3 loss and slightly better than forecast revenues, as total frac sand sales of 2.69M tons roughly equaled Q2's 2.66M tons and came in at the high end of the company's 2.4M-2.7M guidance range.

Q3 average sales price for sand was $43/ton compared to $47/ton in Q2, driven by customer mix and continued pricing pressure.

HCR recorded total asset impairments of $346.4M, driven primarily by $215.5M for the write-down of the Augusta and Whitehall facilities to their estimated fair value, $76.3M for railcar operating lease right-of-use assets, and $48.6M for goodwill and certain intangible assets.

Free cash flow was negative $5.1M for Q3 and negative $23M for the nine months ended Sept. 30, but HCR continues to forecast being free cash flow positive in 2020, "as we remain disciplined in our capital spending and strive to structurally reduce our cost profile."

The company expects Q4 sand sales volumes, contribution margin per ton, and adjusted EBITDA to decline from Q3, driven by the impacts of E&P budget exhaustion and other seasonal factors on demand for frac sand and logistics services.