Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Hi-Crush Inc. | q32013earningsrelease8k.htm |
| EX-99.2 - EXHIBIT - Hi-Crush Inc. | hicrushnovember2013prese.htm |
Exhibit 99.1
News Release
Hi-Crush Partners LP Reports Third Quarter 2013 Results
Houston, Texas, November 6, 2013 - Hi-Crush Partners LP (NYSE: HCLP), “Hi-Crush” or the “Partnership”, today reported third quarter results. Net income was $15.0 million, or $0.52 per limited partner unit, for the third quarter of 2013 and $40.5 million, or $1.45 per limited partner unit, for the nine months ended September 30, 2013.
The Partnership reported earnings before interest, taxes and depreciation and amortization (“EBITDA”) of $19.2 million for the third quarter of 2013 and $47.0 million for the nine months ended September 30, 2013. EBITDA was impacted by an estimated $1.5 million due to delays in volumes taken by contract customers at the end of the quarter, as well as $1.1 million of litigation costs and non-cash inventory costs related to the D&I acquisition that are not expected to reoccur in the fourth quarter.
The Partnership’s distributable cash flow for the third quarter of 2013 of $17.6 million corresponds to distribution coverage of 1.24 times the total $14.1 million in total distributions to be paid on November 15, 2013.
“We are seeing the benefits of the D&I acquisition flow through our results as we sold over 530,000 tons of frac sand in the third quarter and increased the number of customers we are serving to more than 25. We were also excited to announce the amicable settlement of the Baker Hughes litigation in early October and, in connection with the settlement, the entry into a six-year supply agreement with Baker Hughes.” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “During the quarter, our Wyeville plant operated at close to nameplate capacity and began producing 100-mesh sand. With our distribution network, we see many opportunities ahead to increase volumes across our consolidated company.”
Revenues for the quarter ended September 30, 2013 totaled $43.5 million on sales of 533,239 tons of frac sand and transload services. The average selling price of frac sand, reflecting the mix between pricing for delivery at the production facility and at the destination, was $73 per ton.
“New technology continues to drive demand for high quality proppant ever higher.” said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. “With our low-cost operations, strategic niche in the Marcellus and Utica, and broad logistics capabilities, we are well-positioned to continue to increase our market share.” Production cost for sand produced and delivered from the Wyeville facility was $13.10 per ton during the quarter.
On October 17, 2013, Hi-Crush declared its third quarter cash distribution of $0.49 per unit for all common and subordinated units, or $1.96 on an annualized basis. This amount corresponds to a 3% increase from the minimum quarterly cash distribution of $0.475 per unit, and will be paid on November 15, 2013 to all common and subordinated unitholders of record on November 1, 2013.
Conference Call
A conference call for investors will be held on Wednesday, November 6, 2013 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss Hi-Crush’s third quarter results and forward outlook. Hosting the call will be Robert E. Rasmus, Co-Chief Executive Officer, James M. Whipkey, Co-Chief Executive Officer and Laura C. Fulton, Chief Financial Officer.
The call can be accessed live over the telephone by dialing (877) 407-3982, or for international callers, (201) 493-6780. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers (858) 384-5517. The passcode for the replay is 10000594. The replay will be available until November 20, 2013.
Interested parties may also listen to a simultaneous webcast of the conference call by logging onto Hi-Crush’s website at www.hicrushpartners.com in the Investors-Event Calendar and Presentations section. A replay of the webcast will also be available for approximately 30 days following the call.
The slide presentation to be referenced on the call will also be on Hi-Crush’s website at www.hicrushpartners.com in the Investors-Event Calendar and Presentations section.
Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP financial measure of EBITDA, Distributable Cash Flow and Production Costs, which may be used periodically by management when discussing our financial results with investors and analysts. The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”). EBITDA, Distributable Cash Flow and Production Costs are presented as management believes the data provides a measure of operating performance that is unaffected by historical cost basis and provides additional information and metrics relative to the performance of our business.
About Hi-Crush
Hi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline and, a specialized mineral that is used as a "proppant" (frac sand) to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wyeville, Wisconsin, consist of "Northern White" sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America. For more information, visit www.hicrushpartners.com.
Forward-Looking Statements
Some of the information in this news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as “may,” “assume,” “forecast,” “position,” “predict,” “strategy,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “could,” “believe,” “project,” “budget,” “potential,” or “continue,” and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush’s reports filed with the Securities and Exchange Commission (“SEC”), including those described under 1A of Hi-Crush’s Form 10-K for the year ended December 31, 2012 and any subsequently filed 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any pending litigation; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush’s forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Investor contact:
Investor Relations
ir@hicrushpartners.com
(713) 960-4811
Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)
Period from | Period from | ||||||||||
Three Months | August 16 | July 1 | |||||||||
Ended | Through | Through | |||||||||
September 30, 2013 | September 30, 2012 | August 15, 2012 | |||||||||
Successor | Successor | Predecessor | |||||||||
Revenues | $ | 43,515 | $ | 12,643 | $ | 12,601 | |||||
Cost of goods sold (including depreciation, depletion and amortization) | 25,958 | 2,832 | 3,065 | ||||||||
Gross profit | 17,557 | 9,811 | 9,536 | ||||||||
Operating costs and expenses: | |||||||||||
General and administrative | 5,030 | 592 | 1,494 | ||||||||
Exploration expense | — | 27 | 120 | ||||||||
Accretion of asset retirement obligation | 29 | 3 | 4 | ||||||||
Income from operations | 12,498 | 9,189 | 7,918 | ||||||||
Other income (expense): | |||||||||||
Income from preferred interest in Hi-Crush Augusta LLC | 3,750 | — | — | ||||||||
Other income | — | — | 6 | ||||||||
Interest expense | (1,208 | ) | (80 | ) | (855 | ) | |||||
Net income | $ | 15,040 | $ | 9,109 | $ | 7,069 | |||||
Net income per limited partner unit: | |||||||||||
Common units – basic and diluted | $ | 0.52 | $ | 0.33 | |||||||
Subordinated units – basic and diluted | $ | 0.52 | $ | 0.33 | |||||||
Weighted average limited partner units outstanding: | |||||||||||
Common units – basic and diluted | 15,224,820 | 13,640,351 | |||||||||
Subordinated units – basic and diluted | 13,640,351 | 13,640,351 | |||||||||
Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)
Period from | Period from | ||||||||||
Nine Months | August 16 | January 1 | |||||||||
Ended | Through | Through | |||||||||
September 30, 2013 | September 30, 2012 | August 15, 2012 | |||||||||
Successor | Successor | Predecessor | |||||||||
Revenues | $ | 90,244 | $ | 12,643 | $ | 46,776 | |||||
Cost of goods sold (including depreciation, depletion and amortization) | 43,325 | 2,832 | 13,336 | ||||||||
Gross profit | 46,919 | 9,811 | 33,440 | ||||||||
Operating costs and expenses: | |||||||||||
General and administrative | 11,596 | 592 | 4,631 | ||||||||
Exploration expense | 46 | 27 | 539 | ||||||||
Accretion of asset retirement obligation | 88 | 3 | 16 | ||||||||
Income from operations | 35,189 | 9,189 | 28,254 | ||||||||
Other income (expense): | |||||||||||
Income from preferred interest in Hi-Crush Augusta LLC | 7,500 | — | — | ||||||||
Other income | — | — | 6 | ||||||||
Interest expense | (2,185 | ) | (80 | ) | (3,240 | ) | |||||
Net income | $ | 40,504 | $ | 9,109 | $ | 25,020 | |||||
Net income per limited partner unit: | |||||||||||
Common units – basic and diluted | $ | 1.45 | $ | 0.33 | |||||||
Subordinated units – basic and diluted | $ | 1.45 | $ | 0.33 | |||||||
Weighted average limited partner units outstanding: | |||||||||||
Common units – basic and diluted | 14,293,060 | 13,640,351 | |||||||||
Subordinated units – basic and diluted | 13,640,351 | 13,640,351 | |||||||||
Unaudited EBITDA and Distributable Cash Flow
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
Period from | Period from | Period from | Period from | ||||||||||||||||||||
Three months | July 1 | August 16 | Nine months | January 1 | August 16 | ||||||||||||||||||
ended | through | through | ended | through | through | ||||||||||||||||||
September 30 | August 15 | September 30 | September 30 | August 15 | September 30 | ||||||||||||||||||
(in thousands) | Successor | Predecessor | Successor | Successor | Predecessor | Successor | |||||||||||||||||
Reconciliation of distributable cash flow to net income: | |||||||||||||||||||||||
Net income | $ | 15,040 | $ | 7,069 | $ | 9,109 | $ | 40,504 | $ | 25,020 | $ | 9,109 | |||||||||||
Depreciation and depletion expense | 1,322 | 421 | 395 | 2,317 | 1,089 | 395 | |||||||||||||||||
Amortization expense | 1,662 | — | — | 2,025 | — | — | |||||||||||||||||
Interest expense | 1,208 | 855 | 80 | 2,185 | 3,240 | 80 | |||||||||||||||||
EBITDA | $ | 19,232 | $ | 8,345 | $ | 9,584 | $ | 47,031 | $ | 29,349 | $ | 9,584 | |||||||||||
Less: Cash interest paid | (1,119 | ) | (43 | ) | (1,744 | ) | (43 | ) | |||||||||||||||
Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) | (541 | ) | (258 | ) | (1,447 | ) | (258 | ) | |||||||||||||||
Add: Accretion of asset retirement obligation | 29 | 3 | 88 | 3 | |||||||||||||||||||
Add: Quarterly distribution from preferred interest in Augusta (2) | — | — | 3,750 | — | |||||||||||||||||||
Distributable cash flow | $ | 17,601 | $ | 9,286 | $ | 47,678 | $ | 9,286 | |||||||||||||||
(1) | Maintenance and replacement capital expenditures, including accrual for reserve replacement, were determined based on an estimated reserve replacement cost of $1.35 per ton sold during the period. Such expenditures include those associated with the replacement of equipment and sand reserves, to the extent that such expenditures are made to maintain our long-term operating capacity. The amount presented does not represent an actual reserve account or requirement to spend the capital. |
(2) | The amount pertains to the third quarter performance of Augusta, on which we are entitled to receive a preferred distribution of $3,750. We have included this amount in our distributable cash flow for the first nine months of 2013 as we will receive this distribution on November 11, 2013, in advance of our third quarter 2013 cash distributions to our common and subordinated unitholders, which will be paid on November 15, 2013. The amount is not reflected in our GAAP net income during the first nine months of 2013 because our investment in Augusta is accounted for under the cost method. In accordance with that method, any distributions earned under our preferred interest are not recognized as income until the cash is actually received by the Partnership. |
Unaudited Condensed Consolidated Cash Flow Information
(Amounts in thousands)
Period from | Period from | ||||||||||
Nine months | August 16 | January 1 | |||||||||
ended | through | through | |||||||||
September 30, 2013 | September 30, 2012 | August 15, 2012 | |||||||||
Successor | Successor | Predecessor | |||||||||
Depreciation, depletion and amortization | $ | 4,342 | $ | 395 | $ | 1,089 | |||||
Operating activities | 43,728 | 6,691 | 16,660 | ||||||||
Investing activities | (137,631 | ) | (100 | ) | (80,045 | ) | |||||
Financing activities | 103,427 | (5,131 | ) | 61,048 | |||||||
Net increase (decrease) in cash | 9,524 | 1,460 | (2,337 | ) | |||||||
Unaudited Condensed Consolidated Balance Sheet
(Amounts in thousands)
September 30, 2013 | December 31, 2012 | ||||||
Successor | Successor | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 20,022 | $ | 10,498 | |||
Restricted cash | 689 | — | |||||
Accounts receivable | 23,127 | 8,199 | |||||
Inventories | 15,230 | 3,541 | |||||
Due from Sponsor | — | 5,615 | |||||
Prepaid expenses and other current assets | 1,615 | 393 | |||||
Total current assets | 60,683 | 28,246 | |||||
Property, plant and equipment, net | 112,290 | 72,844 | |||||
Goodwill and intangible assets, net | 73,598 | — | |||||
Preferred interest in Hi-Crush Augusta LLC | 47,043 | — | |||||
Other assets | 2,926 | 1,095 | |||||
Total assets | $ | 296,540 | $ | 102,185 | |||
Liabilities and Partners’ Capital | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 8,011 | $ | 1,977 | |||
Accrued and other current liabilities | 4,369 | 1,755 | |||||
Due to Sponsor | 1,212 | — | |||||
Deferred revenue | — | 1,715 | |||||
Total current liabilities | 13,592 | 5,447 | |||||
Long-term debt | 138,250 | — | |||||
Asset retirement obligation | 1,643 | 1,555 | |||||
Total liabilities | 153,485 | 7,002 | |||||
Commitments and contingencies | — | — | |||||
Partners’ capital: | |||||||
General partner interest | — | — | |||||
Limited partner interests, 28,865,171 and 27,280,702 units outstanding, respectively | 133,512 | 95,183 | |||||
Class B units, 3,750,000 and zero units outstanding, respectively | 9,543 | — | |||||
Total partners’ capital | 143,055 | 95,183 | |||||
Total liabilities and partners’ capital | $ | 296,540 | $ | 102,185 | |||
Unaudited Production Cost per Ton
Period from | Period from | ||||||||||
Three months | August 16 | July 1 | |||||||||
ended | through | through | |||||||||
September 30, 2013 | September 30, 2012 | August 15, 2012 | |||||||||
Successor | Successor | Predecessor | |||||||||
Sand produced and delivered (tons) | 400,814 | 191,446 | 186,957 | ||||||||
Production costs ($ in thousands) | $ | 5,250 | $ | 2,437 | $ | 2,644 | |||||
Production costs per ton | $ | 13.10 | $ | 12.73 | $ | 14.14 | |||||
Period from | Period from | ||||||||||
Nine months | August 16 | January 1 | |||||||||
ended | through | through | |||||||||
September 30, 2013 | September 30, 2012 | August 15, 2012 | |||||||||
Successor | Successor | Predecessor | |||||||||
Sand produced and delivered (tons) | 1,071,706 | 191,446 | 726,213 | ||||||||
Production costs ($ in thousands) | $ | 15,517 | $ | 2,437 | $ | 12,247 | |||||
Production costs per ton | $ | 14.48 | $ | 12.73 | $ | 16.86 | |||||