Hi-Crush Inc.: Turning A Corner

Aug. 09, 2019 8:22 PM ETHi-Crush Inc. (HCRSQ)80 Comments


  • The picture for Hi-Crush, in its latest earnings release, was rather mixed, with poor pricing and an expectation of falling volumes impacting the firm.
  • However, the big story appears to be that the firm should be cash flow positive next year, plus it is seeing some contribution margin improvements today.
  • Add to this the firm's progress on its buyback and it makes for a compelling long-term prospect to consider.
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Hands down, one of the most attractive prospects in the energy space today, especially if you exclude E&P (exploration and production) firms from the list, is Hi-Crush Inc. (HCR), a provider of frac sand and related services. After completing its conversion into a C-Corp from being a pass-through entity earlier this year, there was some uncertainty, driven in part by a weakening in the energy space, regarding what kind of prospects the company will offer to investors. But in its latest earnings release, the management team at the business provided some data that illustrates why the firm might still make a lot of sense for energy bulls to own.

The good and the bad

In the volatile energy space, there are few companies that have only good news to report, and Hi-Crush is not one of them. According to management, for instance, one piece of news that was not at all great related to revenue. During the latest quarter, Hi-Crush reported revenue of $178 million, down materially from the $248.52 million the firm reported the same period last year. Even so, there are bright spots within the firm. One such example is the company’s Last Mile program, where it seeks to deliver its offerings directly to E&P firms in places like the Permian Basin. During the quarter, Last Mile loads were up 36% compared to just one quarter earlier, and total volumes sold directly to E&P firms constituted 66% of the firm’s overall volumes for the quarter, up from 63% three months earlier.

Due to weak revenue, some of Hi-Crush’s bottom line results also managed to suffer. According to management, for instance, EBITDA during the quarter came out to $24.06 million. This represents a roughly three-quarters slash over the $81.64 million seen the same quarter last year, even though it was higher than the $17.22 million seen in the

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This article was written by

Daniel Jones profile picture
Robust cash flow analyses of oil and gas companies

Daniel is an avid and active professional investor. He runs Crude Value Insights, a value-oriented newsletter aimed at analyzing the cash flows and assessing the value of companies in the oil and gas space. His primary focus is on finding businesses that are trading at a significant discount to their intrinsic value by employing a combination of Benjamin Graham's investment philosophy and a contrarian approach to the market and the securities therein.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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