Sales for the second quarter increased due to the sequential increase in sales volumes, combined with generally higher pricing. Reflecting the change in mix in customer demand, approximately 64% of the volumes were sold in-basin for the second quarter of 2017, a decrease from 69% in the first quarter of 2017 and an increase from 49% in the second quarter of 2016.
Average sales price was $64 per ton in the second quarter of 2017, compared to $60 per ton in the first quarter of 2017 and $45 per ton in the second quarter of 2016, due to continued tightness in frac sand supply and demand.
Contribution margin was $16.73 per ton in the second quarter of 2017, compared to $8.15 per ton in the first quarter of 2017. The increase in contribution margin per ton was primarily the result of the pricing increases realized during the first and second quarters of 2017. In addition, production costs improved by $1.60 per ton due to increased production volumes and fixed costs absorption.
"Our second quarter performance was marked by a more than 50% increase in the volume of frac sand sold, in the range of the outlook provided earlier in May," said Laura C. Fulton, Chief Financial Officer of Hi-Crush. "Significantly higher sales volumes, coupled with generally higher pricing, particularly for fine mesh sand, resulted in a sequential increase in revenues of more than 60% and quarterly Adjusted EBITDA of $26.5 million. Contribution margin for the second quarter more than doubled, resulting from continued price increases throughout the quarter and greater fixed cost absorption associated with operating our facilities at higher utilization rates."
The Partnership reiterated its intention to resume distributions to unitholders as cash flow from operations continues to improve to levels supportive of a long-term, sustainable distribution, in the latter part of 2017.
Looking into the third quarter, the company expects sales volumes to increase to 2.4 -2.6 million tons. Pricing is also expected to increase sequentially, driven by tightness in frac sand supply and demand, particularly for fine mesh sand.