barclays ceo energy-power...

Jenniffer Deckard, President and Chief Executive Officer

Christopher Nagel, Chief Financial Officer

Sharon Van Zeeland, VP Investor Relations and Business Development

Barclays CEO Energy-Power Conference

September 10, 2015

Forward-Looking Statements and Non-GAAP Financial Measures

This presentation contains forward-looking statements. These statements can be identified by the use of forward-looking terminology including “will,”

“may,” “believe,” “expect,” “anticipate,” “estimate,” “continue,” or other similar words. These statements discuss future expectations including company

growth expectations, demand for our products, capacity expansion plans, market trends, commercial product launches and research and development

plans and may contain projections of financial condition or of results of operations, or state other “forward-looking” information. These forward-looking

statements involve risks and uncertainties. Many of these risks are beyond management’s control. When considering these forward-looking

statements, you should keep in mind the risk factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and

other cautionary statements in the company’s SEC filings. Forward-looking statements are not guarantees of future performance or an assurance that

our current assumptions or projections are valid. Our actual results and plans could differ materially from those expressed in any forward-looking

statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information or future events,

except as required by law.

This presentation includes certain non-GAAP financial measures, including EBITDA, Adjusted EBITDA and Adjusted EPS, and Adjusted Diluted EPS.

These non-GAAP financial measures are used as supplemental financial measures by our management to evaluate our operating performance and

compare the results of our operations from period to period without regard to the impact of our financing methods, capital structure or non-operating

income and expenses. Adjusted EBITDA is also used by our lenders to evaluate our compliance with covenants. We believe that these measures are

meaningful to our investors to enhance their understanding of our financial performance. These measures should be considered supplemental to and

not a substitute for financial information prepared in accordance with GAAP and may differ from similarly titled measures used by other companies. For

a reconciliation of such measures to the most directly comparable GAAP term, please see the slides 21- 23 of this presentation.

2

Two Complementary Business Segments

Oil & Gas – Proppant Solutions Product Lines Include:

Northern White Frac Sand

Texas Gold Frac Sand (mined in Voca, TX)

Resin-Coated Frac Sand

Self-Suspending Proppant Technology, Propel SSPTM

Activators

Water-Soluble Ball Sealers (Bioballs)

Industrial & Recreational End Markets Include:

Foundry

Glass

Building Products

Sports and Recreation

Specialty Products

Water

Product Lines Include:

High-Purity Silica Sand

Custom-Blended

Materials

Resin-Coated Sand

Resin

3

Market Update: Proppant Intensity Continues to Increase

Wells per Rig

Lateral Length

Stages per Foot

Proppant per Stage

Proppant

Intensity Proppant Intensity Still Rising with Increased Proppant per Well

Proppant Per Well (000 Tons)

___________________________

Source: Internal estimates and order flow analysis

Eagle Ford: Illustrative of both liquids rich and dry gas portion

Permian: Illustrative of Wolfcamp C & D, and Cline Shale

Marcellus: Illustrative of both dry gas in PA and liquids rich portion in WV

PacWest Consulting Partners The Freedonia Group

2.7

1.7

3.9

10.0

3.6 2.7

4.4 4.2

3.0

4.7

6.5 6.0

5.5

Eagle Ford Permian Marcellus Leading-Edge Experimental

2013 2014 2015 Avg. Leading-Edge Operators

4

Average Number of Land Rigs for Quarter

Declining Rig Counts Partially Offset by Increasing Proppant Intensity

Rig count tracked by Baker Hughes

*As of 8/28/15

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Proppant Market

@ 1,000 Rig Decline

(~50%)

Proppant Decline (~20% - 25%)

Rig Count Vs. Proppant Demand

Rig Count

5

1,705 1,781 1,828 1,843

1,345

872 843*

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 8/28/2015

___________________________

Source: Internal estimates and the Freedonia Group

Industry-leading integrated logistics network – with approximately 40 terminals

serving the oil and gas market

Unit train capabilities – 2 sand facilities, 1 resin facility/sand distribution and 4

destination terminals

State-of-the-art R&D facilities

Phenolic resin manufacturing facility

Proprietary product and process technologies

More than 800 million tons of proven mineral reserves

9 active sand processing facilities with 13.4 million tons of annual sand stated processing capacity

8 active coating facilities with 2.1 million tons of annual stated coating capacity

Broad/innovative product suite including Northern White sand, Texas Gold sand and variety of resin-coated sand offerings

Addresses over 95% of proppant market

Fairmount Santrol Positioned to Compete in All Market Cycles – A Leading Solutions Provider Differentiated in Every Area of the Value Chain

OPERATIONAL

SCALE

PRODUCT PORTFOLIO

TECHNOLOGY AND

INNOVATION

COMMITMENT TO

PEOPLE, PLANET &

PROSPERITY

DISTRIBUTION

6

We Are Built on a Foundation of Sustainable Development

7

_____________________

Source: Company website and corporate filings

20,000 hours: 2014 Company

sponsored volunteer time

contributed

Empower U

– 17 new courses since

2012 - from Welding to

Financial Wellness

– > 75% employee

participation in 2014

PEOPLE

25 zero waste facilities

90% reduction of waste sent to

landfills since 2009

2015: Received Wisconsin

Partners for Clean Air Award

2015: Accepted into Wisc

Green Tier program

PLANET

Prosperity for internal and

external stakeholders

– 2014 SD Pays of $5.6M

– $3.9M invested back into

communities in 2014

PROSPERITY

The Industry’s Most Comprehensive Operations and Logistics Footprint – Providing Scale and Distribution Reach

Comprehensive Logistics Platform and Vertically Integrated Operations with Access to Every Major U.S. Oil & Gas Basin

Coating Operations 10 (8 active)

Mining & Processing (11) (9 active)

Research & Development (2)

Resin Manufacturing (1)

Specialty Products (4)

Basin

Play

Oil & Gas Terminals (38)

Unit Train Destination (4)

Manufacturing Footprint

Logistics Network

International Operations

Industrial & Recreational

Terminals (10)

2 Terminals in the same city

Administrative Offices (6)

8

2015 - Consolidating Sand Operations into a More Cost-Efficient Footprint

Idled higher cost sand facilities in Brewer, MO and Shakopee, MN; permanently closed facility

in Readfield, WI and announced closing of Wexford, MI

From December 2014 to June 2015, lowered overall weighted average cost per ton of

Northern White sand by 11%

These consolidation actions are expected to further reduce average cost per ton in Q3 2015

9

Wedron

Wedron

Wedron

-

2.0

4.0

6.0

8.0

10.0

12.0

January 2015 August 2015 1H 2016

Pro

pp

ant

So

luti

on

s E

ffec

tive

San

d C

apac

ity

(M

illio

n T

on

s)

9.8

7.7

10.7

Terminal Placement Closer to Well Sites & Unit Train Capabilities Reduce our Customer’s Total Delivered Cost

FMSA Terminal

Active Drilling Rigs

Rail, Unit Train,

Barge

Optimized Cost In-Basin

14 Origins 42+

Terminals

Lower Cost per BOE Reduced

Last-Mile Trucking

Costs

42+ Terminals

FMSA Mining & Processing

Industry-Leading

Unit Train Capabilities

3 Facilities & 4 Terminals

45 Q2 Unit Train Shipments

~15% increase over Q1

10

1,543

1,998

1,233

1,482 1,387

1,224

861

1,190

0

500

1,000

1,500

2,000

2,500

Fairmount Santrol Peer A Peer B Peer C

Raw

Fra

c S

an

d T

on

s

(000’s)

Q4 2014

Q2 2015

Our Comprehensive Proppant Solutions Have Allowed Us to Take 2015 Frac Sand Share in a Down Market

Versus overall proppant market decline estimate of approximately -30%

11

*Study was performed on vertical wells with single-stage fracs in August 2014

A 23-well study proves proppant flowback reduces cost by

$115,000 per frac stage* in addition to delivering increased production

as compared to raw frac sand

Resin coated sand increases well NPV by:

– Adding strength

– Eliminating flowback (curable)

• Reduces operating costs

• Proppant remains in place = Enhancing both IP and EUR

Focus on Further Reducing Cost per Barrel of Oil Equivalent (BOE) through the Industry’s Broadest Product Portfolio

Continued Product Innovation to Meet Industry’s Evolving Needs

CoolSet®: Our newest curable resin-coated proppant is ideally suited for today’s market

Prevents proppant flowback at reservoir temperature of 100° without activator

Momentum continues to build since 2014 introduction

12

Super LCC

CoolsetC

OptiProp G2C

PowerPropP

HyperpropC

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Closure Pressure (000s psi)

THSP

Super DCC

FAIRMOUNT SANTROL PROPPANTS VS. CLOSURE PRESSURE (1)

_____________________

C = curable product; P = pre-cured

1. Pressure performance data are specific to 20/40 mesh. TLC, THS and PowerProp provide a degree of proppant flowback resistance. SLC, SDC, OptiProp specifically

address proppant flowback prevention.

Recommended range for each product based on optimal crush, conductivity, and price tradeoffs.

API-Spec Northern White Frac Sand

Texas Gold API-Spec Frac Sand

Raw Sand Resin-Coated Sand Resin-Coated Ceramic

ADDED VALUE

Eliminate

Flowback?

Reduce

Fines? Embedment?

Broad Suite of Product Solutions Designed to Address the Wide Range of Complexities Across All Well Environments

13

TLCP

Resin-Coated Proppants Face Greater Pressures in Down Markets

14

Resin coated proppants continued to decline sequentially from Q1 2015 to Q2 2015

– Customers making short-term trade-offs to reduce completion costs

– More shallow well depths in 2015

– Well production is choked back, temporarily reducing hydrocarbon flow rates and flowback pressures

As well economics recover, depths increase and production flows are more fully released, demand for value-added strength and flow back capabilities offered by resin coated proppants is expected to increase

2015 cost focus: consolidating resin-coating operations into a more cost-efficient footprint

– Closed 1 facility, Idled 1 facility, and scaled back operations at 2 facilities

– From December 2014 to June 2015, reduced cost per ton to produce resin coated products by 20%

Further Reducing Cost per BOE with an Innovative Proppant Transport Solution

ENHANCED WELL PERFORMANCE

Reduces proppant settling

Stacks & fills entire fracture – more exposed surface area

No damage to Proppant pack or formation

Increases Production

HANDLING

Flows like sand utilizing existing equipment

Eliminates viscosifiers and friction reducers

OPERATIONAL EFFICIENCIES IN WELL COMPLETION

Fewer Chemical additions

Less Water

Less Horsepower

Eliminates Sweeps

Reduces operational cost of heating water in winter

Propel SSP™: A Self-Suspending Proppant Transport Solution


Slickwater


Propel SSP

15

Mississippi Lime, our initial and longest-producing well:

continues to outperform the direct offset with 45% increase

in cumulative production at 18 months

Current Bakken Project: Increased 30-day IP by >50%

Greater than 50% improvement in daily production in each of their 6 actively producing wells in the Bakken

Based on these initial results, increased their overall capital spending budget in order to complete eight additional wells in 2015

Estimated to complete 14 wells in the Bakken using Propel SSP by year-end 2015

South Texas, Escondido Formation: 55% Increase in

cumulative production at 60 days

Propel SSP Success Stories

16

Successful Trials Continue & Validate the Value Proposition

Total Propel SSP Wells > 50

Total Stages > 1,200

E&P 15

OFS 13

Plays/Formations 16

YTD Volume ~70k tons

Even at today’s low oil prices, payback is

significant:

• generated quickly through increased IP

• and continually reducing the decline

curve and enhancing long-term EURs

17

Focusing on Improving Liquidity Position

Substantial free cash flows in the first half of 2015

15% reduction in annual SG&A

30% reduction inventory since 12/31/14

Increased cash balance to $175 million as of

June 30, 2015

Capital expenditures expected to be $95 – $100 million

in 2015

Approximately $25 million below plan

Includes expansion of low cost Wedron facility by

3 million tons for Q1 2016

Maintenance Cap Ex range of $10 to $15 million

Extended $161.1 million of Term B-1 Loans to mature

with Term B-2 Loans in September 2019

2014 H1 2015 YTD

Cash Flow From Ops. $205.3 $173.6

Capital Expenditures (143.5) (61.4)

Free Cash Flows $61.8 $112.2

Cash Balance $76.9 $175.5

Term B-1 Loan $319.9 $156.6

Extended Term B-1 Loan 161.1

Term B-2 Loan 911.1 909.9

Other Debt 21.6 22.9

TOTAL DEBT $1,252.6 $1,250.5

Adj. LTM EBITDA $397.3 $329.0

Leverage Ratio 3.15x 3.79x

18

Near-Term Fairmount Santrol Focus

Continue to improve efficiencies and reduce costs

Leverage our differentiated capabilities and collaborative pricing approach to be the

most cost-effective solutions provider and to continue to gain market share

Invest in innovation and fully commercialize new product technologies

– Propel SSPTM

and other new products

Maintain focus on liquidity and balance sheet

– Build cash position and improve liquidity by managing working capital and

capital expenditures while investing prudently to be in a strong position for

recovery

19

Thank You & Questions

20

www. fairmountsantrol.com

Reconciliation of Non-GAAP Financial Measures

21

Fairmount Santrol

Non-GAAP Financial Measures

(unaudited)

2015 2014 2015 2014

Reconciliation of adjusted EBITDA

Net income attributable to Fairmount Santrol Holdings Inc. 14,137$ 43,921$ 44,896$ 78,460$

Interest expense, net 14,894 16,572 30,202 34,478

Provision for income taxes (26,677) 18,146 (16,060) 32,412

Depreciation, depletion, and amortization expense 16,276 14,584 32,499 27,522

EBITDA 18,630 93,223 91,537 172,872

Non-cash stock compensation expense(1)

2,618 2,219 4,501 4,313

Management fees & expenses paid to sponsor(2)

- 250 - 541

Transaction expenses(3)

- 538 - 637

Restructuring charges(4)

14,824 - 15,148 -

Other non-recurring charges(5)

465 - 465 -

Initial Public Offering fees & expenses - 1,621 - 1,621

Adjusted EBITDA 36,537$ 97,851$ 111,651$ 179,984$

__________

(1) Represents stock- based awards issued to our employees.

(3) Represents expenses associated with evaluation of potential acquisitions of businesses, some of which were completed.

(5) Represents expenses associated with an audit of our Employee Stock Bonus Plan.

(2) Includes fees and expenses paid to American Securities for consulting and management services pursuant to a management consulting agreement.

The agreement was terminated upon the Initial Public Offering in October 2014.

(4) Represents expenses associated with severance payments, pension withdrawal liability, land reclamation liability, and impairment of property, plant,

and equipment.

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except per share

amounts)


amounts)


22

Fairmount Santrol

Non-GAAP Financial Measures

(unaudited)

2015 2014 2015 2014

Reconciliation of adjusted earnings

Net income attributable to Fairmount Santrol Holdings Inc. 14,137$ 43,921$ 44,896$ 78,460$

After-tax effect of adjustments noted above* 9,173 1,445 9,368 1,679

Non-recurring tax benefit (20,420) - - -

Adjusted Net income attributable to Fairmount Santrol Holdings Inc. 2,890$ 45,366$ 54,264$ 80,139$

Earnings per share

Basic 0.09$ 0.28$ 0.28$ 0.50$

Diluted 0.08$ 0.27$ 0.27$ 0.47$

Adjusted earnings per share

Basic 0.02$ 0.29$ 0.34$ 0.51$

Diluted 0.02$ 0.27$ 0.33$ 0.48$

Weighted average number of shares outstanding

Basic 161,368,468 156,684,036 161,160,994 156,573,196

Diluted 166,866,817 165,642,288 166,631,841 165,585,168


amounts)

*Excludes non-cash stock compensation expense and uses a

marginal tax rate of 40%

Three Months Ended June 30, Six Months Ended June 30,


amounts)


23

Quarter 4

2014 2014 2013

Reconciliation of adjusted EBITDA

Net income attributable to FMSA Holdings Inc. 37,913$ 170,450$ 103,961$

Interest expense, net 9,797 60,842 61,926

Provision for income taxes 23,565 77,413 45,219

Depreciation, depletion, and amortization expense 16,587 59,379 37,771

EBITDA 87,862 368,084 248,877

Non-cash stock compensation expense(1)

7,897 16,571 10,133

Management fees & expenses paid to sponsor(2)

38 864 2,928

Loss on extinguishment of debt(3)

- - 11,760

Loss on disposal of assets(4)

- 1,921 6,424

Transaction expenses(5)

- 638 12,462

Initial Public Offering fees & expenses 4,575 9,213 -

Adjusted EBITDA 100,372$ 397,291$ 292,584$

__________

(5) Expenses associated with evaluation of potential acquisitions of businesses, some of which were completed.

(4) Includes the loss related to the sale and disposal of certain assets, including property, plant and equipment,

discontinued inventory and an investment in foreign operations.

(in thousands, except

per share amounts)


amounts)

Year Ended December 31,

(3) Represents write-off of a portion of the remaining unamortized deferred financing fees upon entering into a new

credit facility.

(1) Represents stock-based awards issued to our employees, including one-time adjustment in Q3 2014 for

modification to certain outstanding options.

(2) Includes fees and expenses paid to American Securities for consulting and management services pursuant to a

management consulting agreement. The agreement was terminated upon the Initial Public Offering in October 2014.

(unaudited)

Fairmount Santrol

Non – GAAP Financial Measures

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