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Emerge Energy Services News

Emerge Energy Services Announces Third Quarter 2013 Results

Southlake, Texas – November 14, 2013 – Emerge Energy Services LP (“Emerge”) today announced third quarter 2013 financial and operating results.

Highlights

• Adjusted EBITDA of $26.0 million for the three months ended September 30, 2013.
• Distributable cash flow of $23.4 million for the three months ended September 30, 2013.
• Cash available for distribution of $19.9 million, or $0.86 per unit, for the three months ended September 30, 2013.
• Full quarter sales of 734,000 tons of sand, 96% of which was Northern White Sand.
• Average utilization of over 57% of capacity at our Barron facility.

Overview

Emerge reported net income of $15.4 million, or $0.64 per diluted unit for the three months ended September 30, 2013.  For that same period, Emerge reported Adjusted EBITDA of $26.0 million and distributable cash flow of $23.4 million.  Net income and Adjusted EBITDA for the three months ended September 30, 2012, were $4.7 million and $10.0 million, respectively.  Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge uses to assess its performance on an ongoing basis.

Previously, Emerge declared a distribution of $0.86 per unit for the quarter ended September 30, 2013.  This represents a 23% increase over the pro-rated second quarter distribution of $0.70 per unit.

“Emerge is proud to deliver another quarter of record performance,” said Ted Beneski, Chairman of the Board of Directors of the general partner of Emerge.  “Our distribution continues to exceed the forecast contained in our prospectus, thanks to our high-quality products, customer-focused services, and continued focus on operational improvements.  Further, we expect that the fourth quarter will once again exceed our projections contained in our IPO Prospectus, and are pleased to announce preliminary distribution guidance of $3.80 – $4.00 per unit for 2014.”

“Our Barron plant continues to exceed our expectations, as capacity utilization continues to proceed ahead of schedule,” added Rick Shearer, CEO of Emerge.  “The addition of another screen deck at our New Auburn operation brings that plant up to full utilization of its air permit.  We continue to broaden our customer base, including the addition of five new major customers over the past quarter, and we are happy to announce the execution of a major new multi-year supply contract at our New Auburn facility.  Our customers are demanding product quality, reliable delivery and superior customer service, and Emerge is working daily to meet those needs.  Our dramatic growth is proof that we are delivering on these high customer expectations. Our substantially increased sales to the Western Canadian Sedimentary Basin, as well as the Marcellus and Utica sales, have validated our strategy of having access to two Class One railroads.

“Our fuel segment continues to outperform our expectations, thanks in part to the incremental benefit of the Direct Fuels acquisition, solid third quarter margins, increased fuel volumes, and a temporary spike in RIN prices.  We are particularly pleased that our fuel segment recently added a major refiner to its terminal throughput customer list, and a business unit within our fuel segment obtained ‘shipper status’ on a major common carrier pipeline.  We believe both of these events will have a positive impact on our fuel segment results in the future.  Even though we benefited from high RIN prices in third quarter, we expect RIN pricing to return to its long-term average in the fourth quarter or early next year.  We continue to pursue fundamental improvements in fuel segment operations with an emphasis on lowering costs, new customer contracts, and advantageous purchasing arrangements.”

Conference Call

Emerge will host its 2013 second quarter conference call later today, Thursday, November 14, 2013 at 3 p.m. CDT. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (866) 318-8614 or (617) 399-5133 and entering pass code 72026576. An audio webcast of the call will be available at www.emergelp.com within the Investor Relations portion of the website. A replay will be available by audio webcast and teleconference from 7:00 p.m. CDT on November 14 through 11:59 p.m. CDT on December 14, 2013. The replay teleconference will be available by dialing (888) 286-8010 or (617) 801-6888 and the reservation number 66647937.

Operating Results

The following table summarizes our unaudited consolidated operating results for the three and nine months ended September 30, 2013 and 2012 (in thousands).

 

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

 
 

2013

2012

2013

 

2012

 
             
REVENUES                  
Revenues from fuel sales  

$       221,227

 

$       157,705

 

$       508,860

 

$       400,751

 
Revenues from sand sales  

36,613

 

16,941

 

95,822

 

47,007

 
Other revenues  

12,401

 

1,356

 

22,543

 

4,674

 
Total revenues  

270,241

 

176,002

 

627,225

 

452,432

 
OPERATING EXPENSES                  
Cost of product  

221,073

 

159,041

 

515,254

 

402,558

 
Operations and maintenance  

17,663

 

4,509

 

37,730

 

12,651

 
Depreciation, depletion and amortization  

6,390

 

2,234

 

14,466

 

6,558

 
Selling, general and administrative expenses  

5,673

 

2,475

 

13,879

 

7,681

 
IPO transaction-related costs  

44

 

 

10,966

 

 
Equity-based compensation expense  

2,300

 

 

3,521

 

 
Gain on disposal of equipment  

(4)

 

(8)

 

(4)

 

(3)

 
Total operating expenses  

253,139

 

168,251

 

595,812

 

429,445

 
Income from operations  

17,102

 

7,751

 

31,413

 

22,987

 
OTHER EXPENSE (INCOME)                  
Interest expense  

1,645

 

2,350

 

9,308

 

7,966

 
Loss from debt restructuring, net  

 

674

 

 

674

 
Loss on early extinguishment of debt  

 

 

907

 

 
Other  

(118)

 

(22)

 

(277)

 

(38)

 
Total other expense  

1,527

 

3,002

 

9,938

 

8,602

 
Income before provision for taxes  

15,575

 

4,749

 

21,475

 

14,385

 
Provision for taxes  

171

 

20

 

296

 

61

 
NET INCOME  

$        15,404

 

$        4,729

 

$        21,179

 

$        14,324

 
ADJUSTED EBITDA (a)  

$        25,967

 

$        10,007

 

$        60,565

 

$        29,625

 

(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP-based net income.

 

 

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