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Emerge Energy Services News

Emerge Energy Services LP Announces Fourth Quarter and Year End 2013 Results

Southlake, Texas – March 13, 2014 – Emerge Energy Services LP (“Emerge Energy”) today announced fourth quarter and year end 2013 financial and operating results.

Highlights

  • Adjusted EBITDA of $24.6 million for the three months ended December 31, 2013.
  • Distributable cash flow of $22.1 million for the three months ended December 31, 2013.
  • Cash available for distribution of $23.2 million, or $1.00 per unit, for the three months ended December 31, 2013.
  • Full quarter sales of 765,000 tons of sand, 98% of which was Northern White Sand.
  • Average utilization of over 65% of capacity at our Barron facility.

Overview

Emerge Energy reported net income of $14.0 million, or $0.58 per diluted unit for the three months ended December 31, 2013.  For that same period, Emerge Energy reported Adjusted EBITDA of $24.6 million and distributable cash flow of $22.1 million.  Net income and Adjusted EBITDA for the three months ended December 31, 2012, were $2.9 million and $8.9 million, respectively.  For the year ended December 31, 2013, Emerge Energy reported net income, net income per diluted unit, and Adjusted EBITDA of $35.2 million, $0.92, and $85.2 million, respectively.  Net income and Adjusted EBITDA for the year ended December 31, 2012, were $17.2 million and $38.6 million, respectively.  Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge Energy uses to assess its performance on an ongoing basis.

Previously, Emerge Energy declared a distribution of $1.00 per unit for the fourth quarter of 2013, which includes $0.05 of distributable cash flow that was reserved in the third quarter. This total distribution represents a 16% increase over the third quarter distribution of $0.86 per unit.

“We at Emerge Energy are very proud of our results in our first year as a public company,” said Ted W. Beneski, Chairman of the Board of Directors of the general partner of Emerge Energy.  “Our fourth quarter distribution was extremely strong, with $1.00 per unit representing a 61% increase over the initial $0.62 per quarter distribution in our prospectus and is 43% higher than our $2.80 run rate that we had anticipated for the fourth quarter.  Barron has exceeded our expectations, New Auburn remains sold out, and our fuel division has been able to have one of its best years thanks to stronger margins in our wholesale business.  Our mantra of high-quality assets, customer-focused services, continuous operational improvement, and efficient use of personnel and capital continues to pay dividends for Emerge Energy and its investors.”

“Our Wisconsin sand operations are performing very well,” added Rick Shearer, CEO of Emerge Energy.  “This year we will be bringing two new mine and wet plant complexes online, which should reduce our per unit operating costs and further allow us to maintain the high quality of our product.  On the sales side, while our two anchor customers are collectively ordering well in excess of their combined volumes at the time of our IPO, we have expanded to a total of 25 regularly ordering customers, and have more than doubled the percentage of sales outside our original anchor customers.  In order to meet the overwhelming demand for our sand, we are well down the road in permitting two new sites in Wisconsin that will potentially put us on a third Class One railway as early as the fourth quarter of this year.  Our logistics offerings continue to grow, as we are currently putting into place three new transload sites, bringing us to a total of 15; and, over the next twelve months, we expect to have doubled our railcar fleet as we accept delivery of nearly 3,000 additional cars under lease this year.  While we did experience some slowdowns in sales during the year’s severe winter storms and their aftermath, this was due wholly to waiting on deliveries of railcars.  Our fully enclosed dry plants were able to operate in the coldest of conditions this winter, and we did not experience any weather-related service interruptions in our operations.

“Our fuel segment ended with a stellar quarter and turned in an Adjusted EBITDA well in excess of our expectations.  Despite lower RINs pricing, wholesale margins continue to be very robust thanks to the efforts of our teams in Euless and Birmingham.  Our terminalling operations continue to improve as well, and we have taken delivery of the first several shipments of refined products on the Colonial pipeline, which means that we can retain additional margin that we would normally pay other shippers.  While we believe that the fuel segment should continue to have more normalized Adjusted EBITDA in the future, so far this year, it continues to perform extremely well and we anticipate another strong quarter when we report to you again in May.”

Conference Call

Emerge Energy will host its 2013 fourth quarter and year-end results conference call later today, Thursday, March 13, 2014 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) 515-2910(866) 515-2910 or (617) 399-5124(617) 399-5124 and entering pass code 20031865. An audio webcast of the call will be available at www.emergelp.com within the Investor Relations portion of the website under the Presentations section. A replay will be available by audio webcast and teleconference from 7:00 p.m. CDT on March 13 through 10:59 p.m. CDT on April 10, 2014. The replay teleconference will be available by dialing (888) 286-8010(888) 286-8010 or (617) 801-6888(617) 801-6888 and the reservation number 90355677.

Operating Results

The following table summarizes our unaudited consolidated operating results for the three and twelve months ended December 31, 2013 and 2012 (in thousands).

 

For the Three Months
Ended December 31,

For the Twelve Months
Ended December 31,

 

 

2013

2012

2013

 

2012

 

 

 

 

 

 

 

 

REVENUES

 

$        246,030

 

$         171,664

 

$        873,255

 

$         624,096

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

214,927

 

160,199

 

767,911

 

575,408

 

Depreciation, depletion and amortization

 

6,362

 

2,561

 

20,828

 

9,119

 

Selling, general and administrative expenses

 

9,439

 

2,578

 

26,835

 

10,256

 

IPO transaction-related costs

 

 

 

10,966

 

 

Total operating expenses

 

230,728

 

165,338

 

826,540

 

594,783

 

Income from operations

 

15,302

 

6,326

 

46,715

 

29,313

 

OTHER EXPENSE (INCOME)

 

 

 

 

 

 

 

 

 

Interest expense

 

1,525

 

2,792

 

10,833

 

11,055

 

Loss on early extinguishment of debt

 

 

 

907

 

377

 

Other

 

(304)

 

643

 

(581)

 

605

 

Total other expense

 

1,221

 

3,435

 

11,159

 

12,037

 

Income before provision for taxes

 

14,081

 

2,891

 

35,556

 

17,276

 

Provision for taxes

90

 

20

386

 

81

 

NET INCOME

 

$         13,991

 

$            2,871

 

$         35,170

 

$           17,195

 

ADJUSTED EBITDA (a)

 

$         24,626

 

$           8,949

 

$         85,191

 

$           38,574

 

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

Sand

 

For the Three Months
Ended December 31,

For the Twelve Months
Ended December 31,

 

 

2013

2012

2013

 

2012

 

 

 

 

 

 

 

REVENUES

 

$          53,796

 

$           18,966

 

$        167,768

 

$           66,697

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

30,224

 

9,127

 

91,416

 

27,405

 

Depreciation, depletion and amortization

 

2,786

 

1,853

 

10,458

 

6,377

 

Selling, general and administrative expenses

 

3,652

 

1,290

 

10,556

 

5,531

 

Segment income

 

$          17,134

 

$             6,696

 

$          55,338

 

$           27,384

 

Volume of sand sold (tons in thousands):

 

 

 

 

 

 

 

 

 

Barron, Wisconsin facility

 

384

 

12

 

1,205

 

12

 

New Auburn, Wisconsin facility

 

364

 

328

 

1,331

 

1,061

 

Kosse, Texas facility

 

17

 

13

 

115

 

149

 

Total volume of sand sold

 

765

 

353

 

2,651

 

1,222

 

For the quarter ended December 31, 2013, Emerge Energy sold 765,000 tons of sand, 748,000 of which were sold from its Wisconsin facilities.  The New Auburn facility sold 364,000 tons, compared to 328,000 tons for the same period in 2012, while the Barron facility sold 384,000 tons, compared to 12,000 tons for the same period in 2012.  The Barron facility did not commence operations until the latter half of December 2012.  Sand segment income was $17.1 million for the fourth quarter 2013, compared to $6.7 million for the same quarter in 2012.  This 155% increase in segment income was due to the significant ramp up of sales at our Barron facility and an increase of sales from our transload facilities, offset by increased costs at our Barron facility and segment selling, general and administrative costs.

Fuel Segment

 

For the Three Months
Ended December 31,

For the Twelve Months
Ended December 31,

 

 

2013

2012

2013

 

2012

 

 

 

 

 

 

 

 

REVENUES

 

$        192,234

 

$         152,698

 

$        705,487

 

$         557,399

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

184,703

 

151,072

 

676,495

 

548,003

 

Depreciation, depletion and amortization

 

3,575

 

708

 

10,369

 

2,742

 

Selling, general and administrative expenses

 

1,767

 

1,203

 

6,057

 

4,643

 

Segment income (loss)

 

$           2,189

 

$             (285)

 

$          12,566

 

$             2,011

 

Volume of refined fuels sold (gallons in thousands)

 

63,413

 

48,645

 

224,484

 

176,451

 

Volume of terminal throughput (gallons in thousands)

 

55,851

 

42,351

 

207,280

 

182,573

 

Volume of transmix refined (gallons in thousands)

 

32,421

 

5,617

 

91,813

 

23,992

 

Refined transmix as a percent of total refined fuels sold

 

51.1%

 

11.5%

 

40.9%

 

13.6%

 

For the quarter ended December 31, 2013, Emerge Energy sold 63 million gallons of refined fuel, compared to 49 million gallons for the same period last year, and had additional third-party volume of 56 million gallons pass through its terminals, compared to 42 million gallons for the same period last year.  Emerge Energy refined 32 million gallons of transmix for the three months ended December 31, 2013, compared to 6 million gallons for the same period last year.  The increase in volumes was primarily due to the acquisition of Direct Fuels, which Emerge Energy acquired at the close of its IPO on May 14, 2013.  Segment income for Fuel was $2.2 million for the fourth quarter, compared to a segment loss of $0.3 million for the comparable quarter in 2012.  This increase in segment income was due, in part, to the acquisition of Direct Fuels, general improvement in fuel-rated margins, and negative effects from Hurricane Sandy in 2012 that did not repeat in 2013.

Capital Expenditures

For the three months ended December 31, 2013, our capital expenditures totaled $2.8 million.  This includes approximately $0.9 million of maintenance capital expenditures.

Distributable Cash Flow

For the three months ended December 31, 2013, Emerge Energy generated $22.1 million in Distributable Cash Flow.  Our Board of Directors released $1.2 million of the $3.5 million of distributable cash flow from a reserve established in the third quarter.  On January 25, 2014, we announced the distribution of $1.00 per unit, which was paid on February 14, 2014 to common unitholders of record on February 6, 2014.

About Emerge Energy Services LP

Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the businesses of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and gas wells.  Emerge Energy also processes transmix, distributes refined motor fuels and biodiesel, operates bulk motor fuel storage terminals, and provides complementary services.

Forward-Looking Statements

This release contains certain statements that are “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” or “estimate.” These forward-looking statements involve risks and uncertainties, and there can be no assurance that actual results will not differ materially from those expected by management of Emerge Energy Services LP.   When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the registration statement filed with the SEC in connection with our initial public offering. The risk factors and other factors noted in the registration statement could cause our actual results to differ materially from those contained in any forward-looking statement.  Except as required by law, Emerge Energy Services LP does not undertake any obligation to update or revise such forward-looking statements to reflect events or circumstances that occur after the date hereof.


PRESS CONTACT
Robert Lane
(817) 865-2541(817) 865-2541

 

 

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