Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Hi-Crush Inc. | a93014-earningsrelease8xk.htm |
| EX-99.2 - EXHIBIT - Hi-Crush Inc. | hicrushq3earningsrelease.htm |
Exhibit 99.1
News Release
Hi-Crush Partners LP Reports Record Revenues, Volumes and Earnings For Third Quarter 2014 Results
• | 3Q14 Revenues of $102 million vs. $53 million in 3Q13 |
• | 3Q14 EBITDA of $44 million vs. $20 million in 3Q13 |
• | $1.00 earnings per unit before allocations of income to IDRs; $0.86 basic earnings per unit |
• | Sponsor commenced shipments from its Whitehall, Wisconsin facility |
Houston, Texas, November 4, 2014 - Hi-Crush Partners LP (NYSE: HCLP), “Hi-Crush” or the “Partnership”, today reported third quarter results. Net income for the quarter was $37.3 million. The limited partners' interest in net income of $37.0 million for the third quarter of 2014 represents earnings of $1.00 per basic weighted average common and subordinated unit outstanding during the period. For purposes of calculating earnings per unit, $6.9 million of limited partners' interest in net income was allocated to the holder of incentive distribution rights, resulting in reported basic earnings per unit of $0.86 per common and subordinated unit.
The Partnership reported earnings before interest, taxes and depreciation and amortization (“EBITDA”) of $43.9 million for the third quarter of 2014. Distributable cash flow of $32.3 million attributable to the common and subordinated unitholders for the third quarter of 2014 corresponds to distribution coverage of 1.40 times the $23.1 million in distributions to be paid to common and subordinated unitholders on November 14, 2014.
“The third quarter was filled with important milestones, as we set records for revenues, sales volumes, EBITDA, earnings and we added production capacity, contracted more committed volumes and expanded silo storage in our distribution network,” said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. “Our premium raw white sand, coupled with our extensive logistics offering, continues to drive customers to Hi-Crush as we have positioned ourselves to capture the growth in demand through our Sponsor’s Whitehall facility and its development of a fourth production facility.”
Revenues for the quarter ended September 30, 2014 totaled $102 million on sales of 1.2 million tons of frac sand, which includes volumes sold at production facilities and distribution facilities. Approximately 91% of the volumes sold were under long-term fixed price contracts.
“The third quarter was another quarter of strong operational performance,” said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. “We shipped the first unit train of sand from our Sponsor's Whitehall facility and announced that our Sponsor is in the permitting process for the development of a fourth Northern White frac sand production facility. We have 6.6 million tons of sand already contracted for 2015, and our operating costs remain the lowest in the sector. Demand for our Northern White sand remains robust and we continue to position ourselves to fulfill the growing needs of our customers.”
Production cost for sand produced and delivered from the Wyeville and Augusta facilities was $13.89 per ton during the quarter. Of the 1.2 million tons sold, approximately 1.0 million tons were produced and delivered from the Partnership's facilities, with the remainder being purchased from the Sponsor's Whitehall facility or from third parties.
On October 16, 2014, Hi-Crush declared its third quarter cash distribution of $0.625 per unit for all common and subordinated units, or $2.50 on an annualized basis. This amount corresponds to a 32% increase from the minimum quarterly cash distribution of $0.475 per unit and a 9% increase over the previous quarter’s distribution. The distribution will be paid on November 14, 2014 to all common and subordinated unitholders of record on October 31, 2014.
Conference Call
A conference call for investors will be held on Tuesday, November 4, 2014 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 13593784. The replay will be available until November 18, 2014.
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 sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in 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, 2013 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)
Three Months | |||||||
Ended September 30, | |||||||
2014 | 2013(a) | ||||||
Revenues | $ | 102,316 | $ | 53,158 | |||
Cost of goods sold (including depreciation, depletion and amortization) | 55,640 | 31,868 | |||||
Gross profit | 46,676 | 21,290 | |||||
Operating costs and expenses: | |||||||
General and administrative expenses | 6,183 | 5,543 | |||||
Exploration expense | — | — | |||||
Accretion of asset retirement obligation | 61 | 57 | |||||
Income from operations | 40,432 | 15,690 | |||||
Other income (expense): | |||||||
Interest expense | (3,111 | ) | (1,273 | ) | |||
Net income | 37,321 | 14,417 | |||||
Income attributable to non-controlling interest | (292 | ) | (62 | ) | |||
Net income attributable to Hi-Crush Partners LP | $ | 37,029 | $ | 14,355 | |||
Earnings per unit: | |||||||
Common and subordinated units - basic | $ | 0.86 | $ | 0.52 | |||
Common and subordinated units - diluted | $ | 0.83 | $ | 0.52 | |||
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. | |||||||
Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)
Nine Months | |||||||
Ended September 30, | |||||||
2014(a) | 2013(a) | ||||||
Revenues | $ | 255,618 | $ | 114,995 | |||
Cost of goods sold (including depreciation, depletion and amortization) | 143,665 | 58,613 | |||||
Gross profit | 111,953 | 56,382 | |||||
Operating costs and expenses: | |||||||
General and administrative expenses | 19,287 | 13,322 | |||||
Exploration expense | — | 56 | |||||
Accretion of asset retirement obligation | 184 | 172 | |||||
Income from operations | 92,482 | 42,832 | |||||
Other income (expense): | |||||||
Interest expense | (6,836 | ) | (2,301 | ) | |||
Net income | 85,646 | 40,531 | |||||
Income attributable to non-controlling interest | (704 | ) | (150 | ) | |||
Net income attributable to Hi-Crush Partners LP | $ | 84,942 | $ | 40,381 | |||
Earnings per unit: | |||||||
Common and subordinated units - basic | $ | 2.24 | $ | 1.45 | |||
Common and subordinated units - diluted | $ | 2.15 | $ | 1.45 | |||
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. | |||||||
Unaudited EBITDA and Distributable Cash Flow
Three Months | |||||||
Ended September 30, | |||||||
(in thousands) | 2014 | 2013 | |||||
Reconciliation of distributable cash flow to net income: | |||||||
Net income | $ | 37,321 | $ | 14,417 | |||
Depreciation and depletion expense | 2,677 | 2,189 | |||||
Amortization expense | 781 | 1,662 | |||||
Interest expense | 3,111 | 1,273 | |||||
EBITDA | $ | 43,890 | $ | 19,541 | |||
Less: Cash interest paid | (2,702 | ) | (1,178 | ) | |||
Less: Income attributable to non-controlling interest | (292 | ) | (62 | ) | |||
Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) | (1,387 | ) | (807 | ) | |||
Add: Accretion of asset retirement obligation | 61 | 57 | |||||
Add: Unit based compensation | 569 | — | |||||
Distributable cash flow | $ | 40,139 | $ | 17,551 | |||
Adjusted for: Distributable cash flow attributable to Hi-Crush Augusta LLC, net of intercompany eliminations, prior to the Augusta Contribution (2) | — | 50 | |||||
Distributable cash flow attributable to Hi-Crush Partners LP | 40,139 | 17,601 | |||||
Less: Distributable cash flow attributable to holders of incentive distribution rights | (7,791 | ) | — | ||||
Distributable cash flow attributable to common and subordinated unitholders | $ | 32,348 | $ | 17,601 | |||
(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 produced and delivered 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 Partnership's historical financial information has been recast to consolidate Augusta for all periods presented. For purposes of calculating distributable cash flow attributable to Hi-Crush Partners LP, the Partnership excludes the incremental amount of recasted distributable cash flow earned during the periods prior to the acquisition by the Partnership on April 28, 2014 of substantially all of the remaining equity interests in Hi-Crush Augusta LLC (the "Augusta Contribution"). |
Unaudited EBITDA and Distributable Cash Flow
Nine Months | |||||||
Ended September 30, | |||||||
(in thousands) | 2014 | 2013 | |||||
Reconciliation of distributable cash flow to net income: | |||||||
Net income | $ | 85,646 | $ | 40,531 | |||
Depreciation and depletion expense | 6,581 | 4,259 | |||||
Amortization expense | 4,385 | 2,025 | |||||
Interest expense | 6,836 | 2,301 | |||||
EBITDA | $ | 103,448 | $ | 49,116 | |||
Less: Cash interest paid | (5,984 | ) | (1,854 | ) | |||
Less: Income attributable to non-controlling interest | (704 | ) | (150 | ) | |||
Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) | (3,644 | ) | (2,117 | ) | |||
Add: Accretion of asset retirement obligation | 184 | 172 | |||||
Add: Unit based compensation | 922 | — | |||||
Distributable cash flow | $ | 94,222 | $ | 45,167 | |||
Adjusted for: Distributable cash flow attributable to Hi-Crush Augusta LLC, net of intercompany eliminations, prior to the Augusta Contribution (2) | (7,199 | ) | 2,511 | ||||
Distributable cash flow attributable to Hi-Crush Partners LP | 87,023 | 47,678 | |||||
Less: Distributable cash flow attributable to holders of incentive distribution rights | (10,244 | ) | — | ||||
Distributable cash flow attributable to common and subordinated unitholders | $ | 76,779 | $ | 47,678 | |||
(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 produced and delivered 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 Partnership's historical financial information has been recast to consolidate Augusta for all periods presented. For purposes of calculating distributable cash flow attributable to Hi-Crush Partners LP, the Partnership excludes the incremental amount of recasted distributable cash flow earned during the periods prior to the Augusta Contribution. |
Unaudited Condensed Consolidated Cash Flow Information
(Amounts in thousands)
Nine Months | Nine Months | ||||||
Ended | Ended | ||||||
September 30, | September 30, | ||||||
2014(a) | 2013(a) | ||||||
Operating activities | $ | 77,838 | $ | 52,279 | |||
Investing activities | (246,571 | ) | (104,163 | ) | |||
Financing activities | 168,750 | 65,540 | |||||
Net increase in cash | $ | 17 | $ | 13,656 | |||
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. | |||||||
Unaudited Condensed Consolidated Balance Sheet
(Amounts in thousands)
September 30, | December 31, | ||||||
2014 | 2013(a) | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 20,625 | $ | 20,608 | |||
Restricted cash | 690 | 690 | |||||
Accounts receivable | 58,949 | 37,442 | |||||
Inventories | 22,385 | 22,418 | |||||
Prepaid expenses and other current assets | 2,600 | 1,625 | |||||
Total current assets | 105,249 | 82,783 | |||||
Property, plant and equipment, net | 217,324 | 195,834 | |||||
Goodwill and intangible assets, net | 67,551 | 71,936 | |||||
Other assets | 12,596 | 3,808 | |||||
Total assets | $ | 402,720 | $ | 354,361 | |||
Liabilities, Equity and Partners’ Capital | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 15,850 | $ | 10,108 | |||
Accrued and other current liabilities | 14,800 | 7,669 | |||||
Due to sponsor | 6,712 | 10,352 | |||||
Current portion of long-term debt | 2,000 | — | |||||
Total current liabilities | 39,362 | 28,129 | |||||
Long-term debt | 195,118 | 138,250 | |||||
Asset retirement obligation | 4,812 | 4,628 | |||||
Total liabilities | 239,292 | 171,007 | |||||
Commitments and contingencies | — | — | |||||
Equity and Partners’ capital: | |||||||
General partner interest | — | — | |||||
Limited partner interests, 36,952,426 and 28,865,171 units outstanding, respectively | 161,200 | 138,580 | |||||
Class B units, zero and 3,750,000 units outstanding, respectively | — | 9,543 | |||||
Total partners’ capital | 161,200 | 148,123 | |||||
Non-controlling interest | 2,228 | 35,231 | |||||
Total equity and partners' capital | 163,428 | 183,354 | |||||
Total liabilities, equity and partners’ capital | $ | 402,720 | $ | 354,361 | |||
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. | |||||||
Unaudited Per Ton Operating Activity
Three Months | Nine Months | ||||||||||||||
Ended September 30, | Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Sand sold (in tons) | 1,180,602 | 709,488 | 3,102,897 | 1,706,025 | |||||||||||
Sand produced and delivered (in tons) | 1,027,611 | 597,656 | 2,699,138 | 1,537,720 | |||||||||||
Production costs ($ in thousands) | $ | 14,274 | $ | 11,411 | $ | 42,644 | $ | 29,981 | |||||||
Production costs per ton | $ | 13.89 | $ | 19.09 | $ | 15.80 | $ | 19.50 | |||||||
Unaudited Net Income per Limited Partner Unit
(Amounts in thousands, except units and per unit amounts)
Three Months | Nine Months | ||||||||||
Ended September 30, | Ended September 30, | ||||||||||
Weighted average limited partner units outstanding: | 2014 | 2013 | 2014 | 2013 | |||||||
Common units - basic | 21,437,176 | 15,224,820 | 18,522,412 | 14,293,060 | |||||||
Subordinated units - basic | 13,640,351 | 13,640,351 | 13,640,351 | 13,640,351 | |||||||
Common units - diluted | 23,393,608 | 15,224,820 | 21,721,976 | 14,293,060 | |||||||
Subordinated units - diluted | 13,640,351 | 13,640,351 | 13,640,351 | 13,640,351 | |||||||
Reconciliation of net income and the assumed allocation of net income under the two-class method for purposes of computing earnings per unit:
For the Three Months Ended September 30, 2014 | |||||||||||||||||||
General Partner and IDRs | Common Units | Subordinated Units | Class B Units | Total | |||||||||||||||
Declared distribution | $ | 695 | $ | 14,570 | $ | 8,525 | $ | — | $ | 23,790 | |||||||||
Assumed allocation of undistributed net income attributable to the Partnership | 6,164 | 3,868 | 3,207 | — | 13,239 | ||||||||||||||
Limited partners’ interest in net income | $ | 6,859 | $ | 18,438 | $ | 11,732 | $ | — | $ | 37,029 | |||||||||
Earnings per unit - basic | $ | 0.86 | $ | 0.86 | |||||||||||||||
Earnings per unit - diluted (1) | $ | 0.83 | $ | 0.83 | |||||||||||||||
For the Nine Months Ended September 30, 2014 | |||||||||||||||||||
General Partner and IDRs | Common Units | Subordinated Units | Class B Units | Total | |||||||||||||||
Declared distribution | $ | 863 | $ | 36,049 | $ | 23,529 | $ | 2,156 | $ | 62,597 | |||||||||
Assumed allocation of undistributed net income attributable to the Partnership | 6,906 | 5,351 | 6,959 | — | 19,216 | ||||||||||||||
Limited partners’ interest in net income | $ | 7,769 | $ | 41,400 | $ | 30,488 | $ | 2,156 | $ | 81,813 | |||||||||
Recast adjustments to include the results of operations of Hi-Crush Augusta LLC and income attributable to non-controlling interest | 3,129 | ||||||||||||||||||
Net income attributable to Hi-Crush Partners LP | $ | 84,942 | |||||||||||||||||
Earnings per unit - basic | $ | 2.24 | $ | 2.24 | |||||||||||||||
Earnings per unit - diluted (1) | $ | 2.15 | $ | 2.15 | |||||||||||||||
(1) Diluted earnings per unit includes the impact of income allocations attributable to a conversion of the Class B units into common units. | |||||||||||||||||||