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Inside Fairmount Santrol’s Free Cash Flow

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Fairmount Santrol’s operating cash flow and capex

In this article, we’ll see how Fairmount Santrol Holdings’ (FMSA) operating cash flow has trended over the past few quarters. We’ll also discuss how its free cash flow (or FCF) was affected by its capital expenditure (capex).

Fairmount Santrol’s cash from operating activities (or CFO) depleted to a negative in the first nine months of 2016, compared to a healthy $217 million a year ago. Lower revenue and a deterioration in its working capital over the past year primarily led to FMSA’s CFO fall. Earlier, FMSA’s CFO rose 15% in 2015 compared to 2014.

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Fairmount Santrol’s free cash flow

Fairmount Santrol’s capex fell significantly in the first nine months of 2016. However, lower capex couldn’t offset the company’s CFO fall, leading to its FCF turning negative in the period compared to a year earlier. In the same period, FMSA’s FCF was -$40 million. FMSA generated positive FCF from 2013 to 2015.

National Oilwell Varco (NOV), Fairmount Santrol’s larger market cap peer, generated $586 million in FCF in the first nine months of 2016. You can read more about NOV in Market Realist’s Does NOV’s Balance Sheet Support Its Valuation? Fairmount Santrol makes up 0.02% of the Vanguard Energy ETF (VDE). The oil and gas equipment and services sector makes up 15.5% of VDE.

Did lower FCF affect FMSA’s market performance? Let’s find out in the next article.

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