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Wells Fargo 13th Annual Energy Symposium
Jenniffer Deckard, President and Chief Executive Officer
Christopher Nagel, Chief Financial Officer
December 10, 2014
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, including our Quarterly Report on Form 10-Q
and our Prospectus filed pursuant to Rule 424(b) under the Securities Act of 1933.
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 Adjusted EBITDA and Adjusted 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 Appendix to this presentation. We
are not able to reconcile our projections to the comparable GAAP measures because we do not predict the future impact of adjustments.
1
Fairmount Santrol Serves Two Major Markets: Oil & Gas and Industrial & Recreation
Oil & Gas – Proppant Solutions Product Lines:
Northern White Frac Sand
Texas Gold Frac Sand (Mined in Voca, TX)
Resin-Coated Frac Sand
Self-Suspending Proppant Technology, Propel
SSP
2
Industrial & Recreation Product Lines:
Foundry
Sports and Recreation
Specialty Products
Building Products
Glass
Water
$0
$200
$400
$600
$800
$1,000
$1,200
1984 1989 1994 1999 2004 2009 LTM Q3 2014
2014 ROIC ~ 20%
($MM) 1890s: Fairmount
Santrol’s predecessor
companies begin
operations
1978: Best Sand
Corporation acquired by
William Conway and
group of investors
1980s: Partnered with
Halliburton and Baker
Hughes to invest in
large-scale proppant
production
2013: Invested capital totaled $560MM and
included 3 acquisitions
We Have a Long History of Investing for Growth
3
1976: Pioneered the
first resin-coated
proppant
REVENUE
Lost time incident rate less than half industry average
Highly engaged workforce with 87% retention rate
14 facilities with zero waste to landfill
Industry-leading integrated logistics network – 49 distribution terminals with over 8,500 rail cars
Unit train capabilities at 3 production facilities and 3 in-basin terminals
State of the art R&D facilities
Phenolic resin manufacturing facility located in Michigan
Proprietary product and process technologies
798 million tons of proven mineral reserves
12 active sand processing facilities with more than 12.3 million tons of annual sand processing capacity
11 coating facilities with annual capacity of 2.4 million tons
Broad and innovative product suite addressing over 90% of the proppant market
API qualified sand
Leading Proppant Solutions Provider
Differentiated in Every Area of the Value Chain
OPERATIONAL
SCALE
PRODUCT PORTFOLIO
DISTRIBUTION
COMMITMENT TO
PEOPLE, PLANET &
PROSPERITY
TECHNOLOGY AND
INNOVATION
4
Our Product Portfolio Addresses Over 90% of the Proppant Market
5
2013 PROPPANT MARKET SHARE (%) (1) FMSA VOLUME MIX (2)
Raw Frac Sand
~80%
Resin Coated Sand
(Including
PowerProp®) (3)
~20%
Delivered In-Basin Pricing: $80 - $120 per ton
RAW FRAC SAND (81%)
Delivered In-Basin Pricing:
$350 - $550 per ton
RESIN COATED SAND (12%)
Delivered In-Basin Pricing: $500 - $900 per ton
CERAMICS (7%)
___________________________
1. Based on The Freedonia Group estimates. Freedonia Group estimates lightweight ceramics represents half of ceramic demand. Other proppant demand of <1% not shown.
2. Breakdown of FMSA volume mix is based on Proppant Solutions segment only and excludes Industrial & Recreational volumes
3. Fairmount Santrol’s PowerProp product competes with lightweight ceramics offered by competitors up to 12,000 psi
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 is 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?
Suite of Product Solutions for Well Environment Complexity
6
TLCP
Q3: Fully
commercialized
Coolset
Resin Provides Unique Solutions to Completion Challenges
PERFORMANCE IMPROVEMENT FROM RESIN COATED SAND
0
1,000
2,000
3,000
4,000
5,000
2 4 6 8 10
Con
duct
ivity
(m
d-F
T)
Closure Pressure (000s psi)
Northern White Frac
Resin Coated Proppant
PowerProp
Allows more
conductivity at
crucial closures vs.
raw sand:
6,000 psi – 59%
8,000 psi – 82%
10,000 psi – 401%
7
CONDUCTIVITY FRAMEWORK
Crush Strength
Flowback Control
Specific Gravity
Fines Encapsulation
Embedment
Chemical Reactions and Scaling
Size, Roundness and Sphericity
Diagenesis
PROVEN ECONOMIC VALUE OF RESIN-COATED PROPPANT
CO
ND
UC
TIV
ITY
F
LO
WB
AC
K FLOWBACK PREVENTION
9.5x payback over a 10-year period
based on 23 vertical wells
Source: Santrol, Copyright 2014, Testing done by 3rd party verification lab from Jan 2012 to Feb 2014
($ IN THOUSANDS) 23 WELLS SINGLE WELL
10% NPV Total Workover Costs $2,770 $120
10% NPV Incremental Production $325 $14
Incremental Cost of Resin ($460) ($20)
Economic Value of Curable Resin $2,635 $114
Santrol, Copyright 2014, Unconventional Resources Technology Conference (URTeC)
DRIVE EFFICIENCIES
& ENHANCE PRODUCTIVITY
Proven History of Innovation as a Proppant Solutions Provider
8
BIOBALLS ENCAPSULATED
CURABLE PROPPANT
DUAL COAT
TECHNOLOGY
SELF-SUSPENDING
PROPPANT
POWERPROP® COOLSET LTNA™
PROCESS INNOVATION
PRODUCT INNOVATION
ZERO WASTE FACILITIES
PROPRIETARY PROCESSING TECHNOLOGIES
INNOVATIVE PEOPLE ENGAGEMENT
(1995) (1997) (2006) (2010) (2014) (2014)
PATENTED
TECHNOLOGIES
Pioneered development of resin coating in 1976
38 years of product and process expertise
Proprietary new products involve patented IP,
especially at high-end of the market
Unique Position in Coated Products with Barriers to Entry
9
0.2
0.3
0.4
0.8
1.5
2.4
TECHNICAL
RELATIONSHIPS
CAPTIVE RESIN
SUPPLY AND
NEW
DEVELOPMENT
RAW FRAC
SAND SUPPLY
Process to gain customer acceptance is lengthy
and technical, but critical
Market to E&Ps to pull through demand
Resin manufacturing allows FMSA to create and
protect unique formulations
Fully-integrated captive sand source
– Secures supply
– Reduces cost
Resin-Coating
Capacity (1)
___________________________
1. Competitor capacity (in million tons) based on PropTester 2013 Proppant Market Report published February 14, 2014
Captive
Sand Source
Captive Resin
Manufacturing
INTEGRATED
DISTRIBUTION
NETWORK
Pee
rs
98% of resin coated product is sold through in-
basin terminals
We Have Leadership Position in the Largest Proppant Categories
10
#2 POSITION IN RAW FRAC SAND CAPACITY
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0.0
0.5
1.0
1.5
2.0
2.5
___________________________
Source: PropTester 2013 Proppant Market Report published February 14, 2014
2013 CAPACITY (MM TONS) 2013 CAPACITY (MM TONS)
#1 POSITION IN RESIN-COATED SAND CAPACITY
Peers
11
Comprehensive Logistics Platform and Vertically Integrated Operations with Access to Every Major U.S. Oil & Gas Basin
Coating Operations (11)
Mining & Processing (12)
Research & Development (2)
Resin Manufacturing (1)
Specialty Products (4)
Basin
Play
Oil & Gas Terminals (49)
Unit Train Destination (3)
Manufacturing Footprint
Logistics Network
International Operations
2H 14: Added 3
terminals and 1
operating facility
The Industry’s Largest Operations and Distribution Footprint
We Are Built on a Foundation of Sustainable Development
_____________________
Source: Company website and corporate filings. 12
Conducted four enterprise wide
Appreciative Inquiry Summits with
>1,300 stakeholders
87% employee retention rate
PEOPLE
14 Zero Waste Facilities
Planted ~370k trees since 2007,
while consistently reducing annual
emissions
PLANET
Saved > $6MM by diverting 1.2MM
lbs. of bulk bags from landfill since
2008
Health & Wellness initiatives pro-
actively result in positive health care
cost trends and presenteeism
PROSPERITY
Q3:
donated over
3,700 paid
volunteer hours in
one day
Q3:
2 newly certified
zero waste to
landfill facilities
We Have Multiple Avenues to Support Long-Term Sustainable Growth
13
Strong Industry Dynamics
Reserves and
Capacity Expansion
Enhanced Logistics
Capabilities
Increased Use of
Resin-Coated Sand
Product and
Process Innovation
Commitment to Sustainable Development
Strong Long-Term Industry Dynamics
PROPORTIONAL
HORIZONTAL RIG COUNT
WELLS PER RIG
LATERAL LENGTH
STAGES PER WELL
RIG COUNT
PROPPANT PER STAGE
Growth in Proppant Demand Continues
14
PROPPANT
DEMAND
Source: Wells Fargo Securities, LLC estimates, November 26, 2014
WELLS FARGO RESEARCH CASES FOR U.S. PROPPANT DEMAND IN 2015 AND 2016
0
10
20
30
40
50
60
70
80
2010 2011 2012 2013 2014E 2015E 2016E
Mill
ions
of T
ons Low case up 9%
High case up 21%
Achievable Near-Term Capacity Expansion
15
Raw Frac Sand
Processing
2.8
8.8 1.0 0.5
3.0
2009 SEPT 2014 Q1 2015 (BREWER)
Q1 2015 (WEDRON)
Q1 2016 (WEDRON)
YE 2016 (+4.5MM TONS)
EXPLORATION & DEVELOPMENT
MM TONS
0.9
2.4
0.8
2009 AUG 2014 3Q 2014 - 2Q 2015 YE 2015 (+0.8MM TONS)
MM TONS
Proppant
Coating
___________________________
1. Refers to the facility expansion that is expected to occur
3.2
200MM+
RESERVES
Under Active
Development
13.3
1 1 1
ACHIEVABLE = PERMITS + RAIL CARS + TERMINAL CAPACITY
Continuing to Enhance Our Logistics and Leading Terminal Network
16
2014 2009 2014 2009
22
49
# of Rail Cars
2014 2009
2,000
8,500
# of Unit Train Shipments
2015* 2014
90
200*
2016*
13,000*
Terminal Capacity # of Terminals
2016* 2016*
* Estimate
Additional Market Trends Support Long-Term Resin Demand
17
RCS
DEMAND
DEEPER WELLS
GEOLOGIES WITH
FLOWBACK CHALLENGES
RIG COUNT
WELLS PER RIG
LATERAL LENGTH
STAGES PER WELL
PROPPANT PER STAGE
PROPPANT
DEMAND
PROPPANT DEMAND DRIVERS
RESIN DEMAND DRIVERS
___________________________
Source: The Freedonia Group (Total Resin Demand)
PROPORTIONAL
HORIZONTAL RIG COUNT
Continued focus on ultimate recovery
CONDUCTIVITY = EURS
(EMBEDMENT, FINES)
Continued Innovation and Launch of Game-Changing Technologies
18
Propel SSP
Continued Successful Field Trials
CoolSet
Commercially Launched in Q3
Reduces well maintenance costs
Prevents proppant flowback at
reservoir temperature of 100°
without activator
Enhances conductivity and
increases hydrocarbon production
Increases hydrocarbon recovery
Simplifies downhole chemistry
Reduces water consumption
CURRENT MARKET
EXPECTATION INDUSTRY
PR
EM
IUM
PR
OD
UC
TS
Flight to quality API spec
Proven and leading
coated technologies
15 – 20% of the
industry is non-API
PR
OD
UC
T B
RE
AD
TH
AN
D S
CA
LE
Products optimally
matched to well
application and job
sizes
Texas Gold (Brady
brown)
Northern White
Resin Coated Proppants
Large-scale capacities
and reserves
No other top 3
supplier of both sand
and coated proppants
IN-B
AS
IN D
EL
IVE
RY
In-basin proppant
solutions
Close proximity to well
49 terminals
Large-scale capacities
98% of RCP and 85% of
Frac Sand sold in basin
50 unit trains shipped per
quarter
+8,500 railcars, 11,000 by
mid 2015 and +13,000 by
mid 2016
~30% of market has
origin only solution
18 – 24 month lead
time for rail cars
Track space
opportunities
tightening
Well-Positioned in All Markets
BENEFITS TO CUSTOMER
Strength and conductivity
Flowback control
Proppant transport
Solutions for wide range of
well environments
Simplified purchasing
function for customer –
reduced number of
suppliers
Long-term stability
Increased availability of
sand at well site
Closest to well site
minimizes customer job
cost and complexity
Reduces capital
investment for customer
19
We Have a Long and Sustained History of Trusted Partnership with Our Customers
20
STRONG, DIVERSE AND BALANCED CUSTOMER BASE LONG-TERM CUSTOMER PARTNERSHIPS
Serving the major Oil Field Service
companies since the late 70’s
Through multiple industry cycles
Unique ability to partner with our customers
as their needs change over time
– Ability to fill “just-in-time” requirements
– Adjust to shifting products and
geographies
Long-term collaboration with both OFSs
and E&Ps on their total proppant-related
needs, including product development
Selected Direct Customers
Selected Shared Ultimate Customers
Strong 2014 Financial Performance
21
$ IN THOUSANDS, EXCEPT PER SHARE DATA
Third Quarter YTD
2014 2013 % Change 2014 2013 % Change
Revenue $373.5 $265.7 40.6% $1,002.7 $713.9 40.5%
EBITDA $107.4 $61.0 76.1% $280.2 $201.3 39.2%
Adj. EBITDA $116.9 $82.1 42.4% $296.9 $228.5 29.9%
Diluted EPS $0.32 $0.15 113.3% $0.80 $0.57 40.4%
Adj. Diluted EPS $0.35 $0.23 52.2% $0.83 $0.66 25.8%
Proppant Volume (tons) 1,945 1,389 40.0% 5,297 3,523 50.4%
THIRD-QUARTER 2014 RESULTS
Remain on track for 2014 EBITDA of $390MM to $395MM, resulting in
22% ― 24% growth over 2013, with leverage down to 3.2x
Prudent Financial Policy and Strengthening Capital Structure
22
Cash and Cash Equivalents $45.1
Debt (net of original issue discount)
Revolving Credit Facility 1.4
Term Loan B-1 320.6
Term Loan B-2 913.0
Other Debt, Including Capital Leases 16.5
Total Long-Term Debt, Including Current
Portions $1,251.5
LTM Adjusted EBITDA $361.0
Debt / LTM Adjusted EBITDA 3.5x
Liquidity
Cash
45.1
Revolver Capacity
113.5
Total Liquidity $158.6
Committed to a strong and stable capitalization profile
–Cash flow generation exceeds capital expenditures and debt service
–Maintain flexibility to pursue growth opportunities and acquisitions
Superior return on invested capital
–Commitment to return metrics for all capital investments
CURRENT CAPITALIZATION AS OF SEPTEMBER 30, 2014
$ M M , U N L E S S O T H E R W I S E N O T E D
The Leading, Fully Integrated Proppant Solutions Producer
23
Leading Proppant Producer; Broadest Product Suite
Industry’s Largest Captive Terminal Footprint and Broadest Logistics Capabilities
Focus on Innovation and New Product Development
Trusted Partner to Our Customers
Multiple Avenues of Growth with a Track Record of Success
Commitment to Sustainability
Questions & Answers
24
Appendix
25
Appendix: Reconciliation of Non-GAAP Financial Measures
26
Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Reconciliation of adjusted EBITDA (in thousands) (in thousands)
Net income attributable to FMSA Holdings, Inc. $ 54,077 $ 24,747 $ 132,537 $ 93,311
Interest expense, net 16,567 16,224 51,045 42,765
Provision for income taxes 21,436 11,032 53,848 40,726
Depreciation, depletion, and amortization 15,270 8,957 42,792 24,510
EBITDA 107,350 60,960 280,222 201,312
Non-cash stock compensation expense(1) 4,361 2,022 8,674 5,731
Management fees & expenses paid to sponsor(2) 285 2,037 826 2,607
Loss on extinguishment of debt(3) - 11,760 - 11,760
(Gain)/loss on disposal of assets(4) 1,921 - 1,921 -
Transaction expenses(5) - 5,354 638 7,053
Initial Public Offering fees & expenses 3,017 - 4,638 -
Adjusted EBITDA $ 116,934 $ 82,133 $ 296,919 $ 228,463
(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. In connection with the IPO, this agreement will be terminated.
(3) Upon entering into new credit facilities, we were required to write-off a portion of the remaining unamortized deferred financing fees.
(4) Includes the loss related to the sale and disposal of certain assets including PP&E, discontinued inventory, and an investment in foreign operations.
(5) Expenses associated with evaluation of potential acquisitions of businesses, some of which were completed.
Appendix: Reconciliation of Non-GAAP Financial Measures
27
September 30 - YTD Fourth Quarter
2014 2013 LTM
Reconciliation of adjusted EBITDA
(in thousands)
Net income attributable to FMSA Holdings, Inc. $132,537 $10,650 $143,187
Interest expense, net 51,045 19,161 70,206
Provision for income taxes 53,848 4,493 58,341
Depreciation, depletion, and amortization 42,792 13,261 56,053
EBITDA 280,222 47,565 327,787
Non-cash stock compensation expense(1) 8,674 4,402 13,076
Management fees & expenses paid to sponsor(2) 826 321 1,147
Loss on extinguishment of debt(3) - - -
(Gain)/loss on disposal of assets(4) 1,921 6,424 8,345
Transaction expenses(5) 638 5,409 6,047
Initial Public Offering fees & expenses 4,638 - 4,638
Adjusted EBITDA $296,919 $64,121 $361,040
(1) Represents stock-based awards issued to our employees attributable to each period presented.
(2) Includes fees and expenses paid to American Securities for consulting and management services pursuant to a management consulting agreement. In connection with the IPO, this agreement will be
terminated.
(3) Upon entering into new credit facilities, we were required to write-off a portion of the remaining unamortized deferred financing fees.
(4) Includes the loss related to the sale and disposal of certain assets including PP&E, discontinued inventory, and an investment in foreign operations.
(5) Expenses associated with evaluation of potential acquisitions or businesses, some of which were completed.
Appendix: Reconciliation of Non-GAAP Financial Measures
28
Three Months Ended September 30, Nine Months Ended September 30,
2014 2013 2014 2013
Reconciliation of adjusted earnings
(in thousands) (in thousands)
Net Income attributable to FMSA Holdings Inc. $ 54,077 $ 24,747 $ 132,537 $ 93,311
After-tax effect of adjustments noted on slide 25* 3,708 13,597 5,696 15,208
Adjusted net income attributable to FMSA Holdings Inc. $ 57,785 $ 38,344 $ 138,233 $ 108,519
*except non-cash stock compensation expense
Earnings per share
Basic $ 0.34 $ 0.16 $ 0.84 $ 0.60
Diluted $ 0.32 $ 0.15 $ 0.80 $ 0.57
Adjusted earnings per share
Basic $ 0.37 $ 0.25 $ 0.88 $ 0.70
Diluted $ 0.35 $ 0.23 $ 0.83 $ 0.66