Fairmount Santrol, which provides sand used in hydraulic fracturing operations, said its proppant operations remained challenged in the second quarter, hampered by a substantial sequential decrease in U.S. rig activity. However, market conditions are improving, the company’s CEO said.

The Ohio-based operator expects to record a quarterly loss of between $91 million (minus 56 cents/share) and $93 million (minus 58 cents), compared with year-ago profits of $14.1 million (8 cents/share). Quarterly results are scheduled to be issued on Aug. 4.

The expected declines are the result of “increased pressures on all proppant volumes — particularly within our coated proppant offerings — and to lower prices across our proppant solutions segment,” management said.

Revenue is forecast to decline to $113-115 million, versus $221.3 million a year ago and $145.5 million in 1Q2016. Overall volumes sold should be 1.9-2.0 million tons, compared with 2.2 million tons a year ago and 2.1 million in 1Q2016.

“While we have continued to improve our efficiencies and reduce our costs, market conditions for our proppant solutions segment remained particularly challenging in the second quarter, including an estimated 25% sequential decrease in quarterly average U.S. rig counts,” CEO Jenniffer Deckard said. “Consequently, we experienced additional pressure on both proppant volumes and pricing.”

However, as the company finalizes its restructuring and moves into the second half of 2016, “we are also encouraged by the early signs of improvement we are seeing in the proppant market.”

She pointed to a “progressive rebalancing of hydrocarbon supply and demand, oil prices in the $45-50/bbl range over a sustained period of time, rig count additions in the latter half of the second quarter, drawdowns on the inventory of drilled but uncompleted wells, the continued trend of increasing proppant volumes per well, and the reviving of well designs using resin-coated proppants.”

Fairmount has “reevaluated its facilities footprint, giving consideration to both market dynamics and to the full impact of the recently implemented capacity expansion at its primary, lower-cost facility in Wedron, IL.” Based on the review, it expects to take about $91 million in impairment charges for “higher-cost idled facilities.”

Between April and June, Fairmount invested in “several areas to further improve our cost structure for the coming quarters, which we estimate will deliver annual cash savings of between $20 million and $25 million,” Deckard said.