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| 8-K - 8-K - Emerge Energy Services LP | er161231-q4.htm |
Exhibit 99.1
Emerge Energy Services Announces Fourth Quarter 2016 Results
Fort Worth, Texas — February 27, 2017 — Emerge Energy Services LP (“Emerge Energy”) today announced fourth quarter 2016 financial and operating results.
Highlights
• | Net loss of $(20.8) million and Adjusted EBITDA of $(10.6) million for the three months ended December 31, 2016. |
• | Full quarter sales of 825,699 tons of sand. |
• | Completed a public offering and received net proceeds of $36.9 million. |
Overview
Emerge Energy reported net loss of $(20.8) million, or $(0.77) per diluted unit, for the three months ended December 31, 2016. For that same period, Emerge Energy reported Adjusted EBITDA of $(10.6) million and Distributable Cash Flow of $(15.2) million. Net loss, net loss per diluted unit and Adjusted EBITDA for the three months ended December 31, 2015, were $(9.9) million, $(0.41) per diluted unit and $3.9 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.
The results of operations of the Fuel business have been classified as discontinued operations for all periods presented and we now operate our continuing business in a single sand segment. Net loss and net loss per diluted unit for continuing operations for the three months ended December 31, 2016 were $(20.7) million and $(0.77) per diluted unit, respectively, compared to net loss and net loss per diluted unit for continuing operations for the three months ended December 31, 2015 of $(9.8) million and $(0.41) per diluted unit, respectively.
In November 2016, we completed a public offering of 3,400,000 of our common units at a price of $10.00 per unit and granted the underwriters an option to purchase up to an additional 510,000 common units, which the underwriter exercised in full. The offering closed on November 23, 2016. We received proceeds (net of underwriting discounts and offering expenses) from the offering of approximately $36.9 million. The net proceeds from this offering were used to repay outstanding borrowings under our revolving credit agreement.
We will not make a cash distribution on our common units for the three months ended December 31, 2016 as we are restricted from making distributions to our common unitholders under our amended credit agreement and we did not generate available cash to distribute for the three months ended December 31, 2016.
“The recovery in the oil and gas markets gained momentum in the fourth quarter and has accelerated in the early parts of the first quarter,” said Ted W. Beneski, Chairman of the Board of Directors of the general partner of Emerge Energy. “The fourth quarter was our first full quarter without the fuel business, so we are now a pure-play frac sand company. Our sand volumes increased by 68% sequentially to 825,699 tons, and our continuing operations Adjusted EBITDA improved by $0.3 million sequentially. Small price increases started to take effect near the end of the quarter, but we are now realizing significant upward pricing movements to start 2017. We further strengthened our balance sheet with a $36.9 million net equity raise, which lowered our bank loan balance to approximately $141 million at December 31, 2016, and we are now well positioned to take advantage of the current upswing in the North American shale markets as frac sand demand has rebounded significantly with higher drilling and completion activity.”
Conference Call
Emerge Energy will host its 2016 fourth quarter results conference call later today, Monday, February 27, 2017 at 2:00 p.m. CT. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (855) 850-4275 or (720) 634-2898 and entering pass code 66364861. An audio webcast of the call will be available at www.emergelp.com within the Investor Relations portion of the website under the Webcasts & Presentations section. A replay will be available by audio webcast and teleconference for seven days following the conclusion of the call. The replay teleconference will be available by dialing (855) 859-2056 or (404) 537-3406 and the reservation number 66364861.
Operating Results
The following table summarizes Emerge Energy’s consolidated operating results for the three and twelve months ended December 31, 2016 and 2015 and three months ended September 30, 2016.
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Three months ended | Twelve Months Ended December 31, | |||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | 2016 | 2015 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
REVENUES | $ | 42,619 | $ | 31,285 | $ | 44,502 | $ | 128,399 | $ | 269,518 | ||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of goods sold | 51,263 | 40,500 | 38,988 | 173,907 | 209,161 | |||||||||||||||
Depreciation, depletion and amortization | 4,662 | 4,687 | 4,478 | 19,126 | 17,897 | |||||||||||||||
Selling, general and administrative expenses | 5,020 | 4,697 | 6,410 | 20,951 | 27,551 | |||||||||||||||
Contract and project terminations | — | (25 | ) | 1,308 | 4,011 | 10,652 | ||||||||||||||
Total operating expenses | 60,945 | 49,859 | 51,184 | 217,995 | 265,261 | |||||||||||||||
Operating income (loss) | (18,326 | ) | (18,574 | ) | (6,682 | ) | (89,596 | ) | 4,257 | |||||||||||
OTHER EXPENSE (INCOME) | ||||||||||||||||||||
Interest expense, net | 3,448 | 8,014 | 3,126 | 21,339 | 11,216 | |||||||||||||||
Other expense (income) | (885 | ) | 3,359 | (1 | ) | 2,471 | (34 | ) | ||||||||||||
Total other expense | 2,563 | 11,373 | 3,125 | 23,810 | 11,182 | |||||||||||||||
Income (loss) before provision for income taxes | (20,889 | ) | (29,947 | ) | (9,807 | ) | (113,406 | ) | (6,925 | ) | ||||||||||
Provision (benefit) for income taxes | (220 | ) | 8 | (28 | ) | (191 | ) | 258 | ||||||||||||
Net income (loss) from continuing operations | (20,669 | ) | (29,955 | ) | (9,779 | ) | (113,215 | ) | (7,183 | ) | ||||||||||
Discontinued Operations | ||||||||||||||||||||
Income (loss) from discontinued operations, net of taxes | (106 | ) | 3,373 | (109 | ) | 8,746 | (2,228 | ) | ||||||||||||
Gain on sale of discontinued operations | — | 31,699 | — | 31,699 | — | |||||||||||||||
Total income (loss) from discontinued operations, net of tax | (106 | ) | 35,072 | (109 | ) | 40,445 | (2,228 | ) | ||||||||||||
NET INCOME (LOSS) | $ | (20,775 | ) | $ | 5,117 | $ | (9,888 | ) | $ | (72,770 | ) | $ | (9,411 | ) | ||||||
ADJUSTED EBITDA (a) | $ | (10,648 | ) | $ | (8,113 | ) | $ | 3,853 | $ | (37,354 | ) | $ | 50,704 | |||||||
(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP net income and cash flows.
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Continuing operations
Three months ended | Twelve Months Ended December 31 | |||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | 2016 | 2015 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
REVENUES | $ | 42,619 | $ | 31,285 | $ | 44,502 | $ | 128,399 | $ | 269,518 | ||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
Cost of goods sold | 51,263 | 40,500 | 38,988 | 173,907 | 209,161 | |||||||||||||||
Depreciation, depletion and amortization | 4,662 | 4,687 | 4,478 | 19,126 | 17,897 | |||||||||||||||
Selling, general and administrative expenses | 5,020 | 4,697 | 6,410 | 20,951 | 27,551 | |||||||||||||||
Contract and project terminations | — | (25 | ) | 1,308 | 4,011 | 10,652 | ||||||||||||||
Operating income (loss) | $ | (18,326 | ) | $ | (18,574 | ) | $ | (6,682 | ) | $ | (89,596 | ) | $ | 4,257 | ||||||
Net income (loss) from continuing operations | $ | (20,669 | ) | $ | (29,955 | ) | $ | (9,779 | ) | $ | (113,215 | ) | $ | (7,183 | ) | |||||
Adjusted EBITDA (a) | $ | (10,543 | ) | $ | (10,872 | ) | $ | 665 | $ | (50,425 | ) | $ | 39,717 | |||||||
Volume of sand sold (tons in thousands) | 826 | 493 | 581 | 2,157 | 3,392 | |||||||||||||||
Volume of sand produced (tons in thousands): | ||||||||||||||||||||
Arland, Wisconsin facility | 165 | 21 | 165 | 186 | 1,064 | |||||||||||||||
Barron, Wisconsin facility | 494 | 383 | 297 | 1,588 | 1,536 | |||||||||||||||
New Auburn, Wisconsin facility | 162 | 10 | 43 | 352 | 604 | |||||||||||||||
Kosse, Texas facility | 53 | 44 | 62 | 140 | 277 | |||||||||||||||
Total volume of sand produced | 874 | 458 | 567 | 2,266 | 3,481 | |||||||||||||||
(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP net income and cash flows.
Net loss and Adjusted EBITDA from continuing operations improved in the fourth quarter compared to the third quarter of 2016. This improvement was due to an increase in total volumes sold and lower sand production costs on a per ton basis, offset by $1.1 million of expense incurred to pull approximately 1,000 railcars out of storage and a $1.0 million write-down of SandMaxX™ inventory in the fourth quarter of 2016. Our SandMaxX™ inventory included a batch of off-spec, early generation material that does not meet our standards of quality.
In addition, Net loss also improved in the fourth quarter of 2016 due to; a $3.3 million write-off of deferred financing costs in the third quarter of 2016 for total aggregate commitment reductions under the Credit Agreement; a $3.0 million charge to other expense for a non-cash mark-to-market adjustment on the warrant issued in August 2016; versus a $0.9 million mark up on the warrant in the fourth quarter of 2016.
Net loss and Adjusted EBITDA worsened for continuing operations for the fourth quarter of 2016, compared to same quarter in 2015 mainly due lower realized pricing for FOB plant sales and in-basin sales, and higher logistics costs.
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Discontinued operations
Three months ended | Twelve Months Ended December 31 | |||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | 2016 | 2015 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Revenues | $ | — | $ | 67,095 | $ | 86,004 | $ | 249,558 | $ | 442,121 | ||||||||||
Cost of goods sold (excluding depreciation, depletion and amortization) | — | 63,481 | 81,809 | 233,025 | 426,664 | |||||||||||||||
Depreciation and amortization | — | — | 2,638 | 2,354 | 10,544 | |||||||||||||||
Selling, general and administrative expenses | 106 | (211 | ) | 1,234 | 3,687 | 5,568 | ||||||||||||||
Interest expense, net | — | 444 | 402 | 1,727 | 1,338 | |||||||||||||||
Other | — | — | (1 | ) | — | (11 | ) | |||||||||||||
Income (loss) from discontinued operations before provision for income taxes | (106 | ) | 3,381 | (78 | ) | 8,765 | (1,982 | ) | ||||||||||||
Provision for income taxes | — | 8 | 31 | 19 | 246 | |||||||||||||||
Income (loss) from discontinued operations, net of taxes | (106 | ) | 3,373 | (109 | ) | 8,746 | (2,228 | ) | ||||||||||||
Gain on sale of discontinued operations | — | 31,699 | — | 31,699 | — | |||||||||||||||
Total income (loss) from discontinued operations, net of taxes | $ | (106 | ) | $ | 35,072 | $ | (109 | ) | $ | 40,445 | $ | (2,228 | ) | |||||||
Adjusted EBITDA (a) | $ | (105 | ) | $ | 2,759 | $ | 3,188 | $ | 13,071 | $ | 10,987 | |||||||||
Volume of refined fuels sold (gallons in thousands) | — | 41,651 | 55,768 | 165,422 | 240,132 | |||||||||||||||
Volume of terminal throughput (gallons in thousands) | — | 24,963 | 16,038 | 82,387 | 123,180 | |||||||||||||||
Volume of transmix refined (gallons in thousands) | — | 18,942 | 22,021 | 68,326 | 93,128 | |||||||||||||||
Refined transmix as a percent of total refined fuels sold | — | 45.5 | % | 39.5 | % | 41.3 | % | 38.8 | % | |||||||||||
(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP net income and cash flows.
Discontinued operations comprises what we previously classified as our fuel segment along with certain allocated corporate costs such as interest, taxes and equity-based compensation. We closed the sale of the Fuel business on August 31, 2016, thus the quarter ended December 31, 2016 does not have any operations. We recognized a gain on the sale of the Fuel business of $31.7 million.
Capital Expenditures
For the three months ended December 31, 2016, Emerge Energy’s capital expenditures totaled $1.3 million. This includes approximately $1.2 million of maintenance capital expenditures.
About Emerge Energy Services LP
Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the businesses of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells. Emerge Energy operates its sand business through its subsidiary Superior Silica Sands LLC. Emerge Energy also processed transmix, distributed refined motor fuels, operated bulk motor fuel storage terminals, and provided complementary fuel services through its fuel division which was sold on August 31, 2016.
Forward-Looking Statements
This release contains certain statements that are “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” or “estimate.” These forward-looking statements involve risks and uncertainties, and there can be no assurance that actual results will not differ materially from those expected by management of Emerge Energy Services LP. When considering these forward-looking statements, you should keep
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in mind the risk factors and other cautionary statements in Emerge Energy’s Annual Report on Form 10-K filed with the SEC. The risk factors and other factors noted in the Annual Report could cause actual results to differ materially from those contained in any forward-looking statement. Except as required by law, Emerge Energy Services LP does not undertake any obligation to update or revise such forward-looking statements to reflect events or circumstances that occur after the date hereof.
PRESS CONTACT
Investor Relations
(817) 618-4020
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EMERGE ENERGY SERVICES LP
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per unit data)
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
REVENUES | $ | 42,619 | $ | 44,502 | $ | 128,399 | $ | 269,518 | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Cost of goods sold | 51,263 | 38,988 | 173,907 | 209,161 | ||||||||||||
Depreciation, depletion and amortization | 4,662 | 4,478 | 19,126 | 17,897 | ||||||||||||
Selling, general and administrative expenses | 5,020 | 6,410 | 20,951 | 27,551 | ||||||||||||
Contract and project terminations | — | 1,308 | 4,011 | 10,652 | ||||||||||||
Total operating expenses | 60,945 | 51,184 | 217,995 | 265,261 | ||||||||||||
Operating income (loss) | (18,326 | ) | (6,682 | ) | (89,596 | ) | 4,257 | |||||||||
OTHER EXPENSE (INCOME) | ||||||||||||||||
Interest expense, net | 3,448 | 3,126 | 21,339 | 11,216 | ||||||||||||
Other expense (income) | (885 | ) | (1 | ) | 2,471 | (34 | ) | |||||||||
Total other expense | 2,563 | 3,125 | 23,810 | 11,182 | ||||||||||||
Income (loss) before provision for income taxes | (20,889 | ) | (9,807 | ) | (113,406 | ) | (6,925 | ) | ||||||||
Provision (benefit) for income taxes | (220 | ) | (28 | ) | (191 | ) | 258 | |||||||||
Net income (loss) from continuing operations | (20,669 | ) | (9,779 | ) | (113,215 | ) | (7,183 | ) | ||||||||
Discontinued Operations | ||||||||||||||||
Income (loss) from discontinued operations, net of taxes | (106 | ) | (109 | ) | 8,746 | (2,228 | ) | |||||||||
Gain on sale of discontinued operations | — | — | 31,699 | — | ||||||||||||
Total income (loss) from discontinued operations, net of tax | (106 | ) | (109 | ) | 40,445 | (2,228 | ) | |||||||||
NET INCOME (LOSS) | $ | (20,775 | ) | $ | (9,888 | ) | $ | (72,770 | ) | $ | (9,411 | ) | ||||
Earnings (loss) per common unit | ||||||||||||||||
Basic: | ||||||||||||||||
Earnings (loss) per common unit from continuing operations | $ | (0.77 | ) | $ | (0.41 | ) | $ | (4.55 | ) | $ | (0.30 | ) | ||||
Earnings (loss) per common unit from discontinued operations | — | — | 1.63 | (0.09 | ) | |||||||||||
Basic earnings (loss) per common unit | $ | (0.77 | ) | $ | (0.41 | ) | $ | (2.92 | ) | $ | (0.39 | ) | ||||
Diluted: | ||||||||||||||||
Earnings (loss) per common unit from continuing operations | $ | (0.77 | ) | $ | (0.41 | ) | $ | (4.55 | ) | $ | (0.30 | ) | ||||
Earnings (loss) per common unit from discontinued operations | — | — | 1.63 | (0.09 | ) | |||||||||||
Diluted earnings (loss) per common unit | $ | (0.77 | ) | $ | (0.41 | ) | $ | (2.92 | ) | $ | (0.39 | ) | ||||
Weighted average number of common units outstanding including participating securities (basic) | 27,055,160 | 24,119,972 | 24,870,258 | 23,973,850 | ||||||||||||
Weighted average number of common units outstanding (diluted) | 27,055,160 | 24,119,972 | 24,870,258 | 23,973,850 | ||||||||||||
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Adjusted EBITDA and Distributable Cash Flow
We calculate Adjusted EBITDA, a non-GAAP measure, in accordance with our current Credit Agreement as: net income (loss) plus consolidated interest expense (net of interest income), income tax expense, depreciation, depletion and amortization expense, non-cash charges and losses that are unusual or non-recurring less income tax benefits and gains that are unusual or non-recurring and other adjustments allowable under our existing credit agreement. We report Adjusted EBITDA to our lenders under our revolving credit facility in determining our compliance with certain financial covenants. Adjusted EBITDA should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP. Moreover, our Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies. The following tables reconcile net income (loss) to Adjusted EBITDA for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015.
Three Months Ended December 31, | Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2016 | 2016 | ||||||||||||||||||||||||||||
Continuing | Discontinued | Consolidated (a) | Continuing | Discontinued | Consolidated (a) | |||||||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (20,669 | ) | $ | (9,779 | ) | $ | (106 | ) | $ | (109 | ) | $ | (20,775 | ) | $ | (9,888 | ) | $ | (29,955 | ) | $ | 35,072 | $ | 5,117 | |||||||||||
Interest expense, net | 3,448 | 3,126 | — | 402 | 3,448 | 3,528 | 8,014 | 444 | 8,458 | |||||||||||||||||||||||||||
Depreciation, depletion and amortization | 4,662 | 4,478 | — | 2,638 | 4,662 | 7,116 | 4,687 | — | 4,687 | |||||||||||||||||||||||||||
Provision for income taxes | (220 | ) | (28 | ) | — | 31 | (220 | ) | 3 | 8 | 8 | 16 | ||||||||||||||||||||||||
EBITDA | (12,779 | ) | (2,203 | ) | (106 | ) | 2,962 | (12,885 | ) | 759 | (17,246 | ) | 35,524 | 18,278 | ||||||||||||||||||||||
Equity-based compensation expense | 251 | (167 | ) | — | 104 | 251 | (63 | ) | 235 | 97 | 332 | |||||||||||||||||||||||||
Contract and project terminations | — | 1,308 | — | — | — | 1,308 | (25 | ) | — | (25 | ) | |||||||||||||||||||||||||
Provision for doubtful accounts | 4 | 922 | — | 38 | 4 | 960 | 8 | (543 | ) | (535 | ) | |||||||||||||||||||||||||
Accretion expense | 30 | 30 | — | — | 30 | 30 | 30 | — | 30 | |||||||||||||||||||||||||||
Retirement of assets | 350 | 36 | — | — | 350 | 36 | 209 | — | 209 | |||||||||||||||||||||||||||
Reduction in workforce | — | 362 | — | — | — | 362 | — | (679 | ) | (679 | ) | |||||||||||||||||||||||||
Other state and local taxes | 389 | 377 | 1 | 84 | 390 | 461 | 483 | 59 | 542 | |||||||||||||||||||||||||||
Non-cash deferred lease expense | 2,079 | — | — | — | 2,079 | — | 2,072 | — | 2,072 | |||||||||||||||||||||||||||
Unrealized loss (gain) on fair value of warrants | (885 | ) | — | — | — | (885 | ) | — | 2,975 | — | 2,975 | |||||||||||||||||||||||||
Non-capitalized cost of private placement | 17 | — | — | — | 17 | — | 387 | — | 387 | |||||||||||||||||||||||||||
Gain on sale of discontinued operations, net of tax | — | — | — | — | — | — | — | (31,699 | ) | (31,699 | ) | |||||||||||||||||||||||||
Other adjustments allowable under our existing credit agreement | 1 | — | — | — | 1 | — | — | — | — | |||||||||||||||||||||||||||
Adjusted EBITDA | $ | (10,543 | ) | $ | 665 | $ | (105 | ) | $ | 3,188 | $ | (10,648 | ) | $ | 3,853 | $ | (10,872 | ) | $ | 2,759 | $ | (8,113 | ) | |||||||||||||
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The following tables reconcile net income (loss) to Adjusted EBITDA for the twelve months ended December 31, 2016 and 2015.
Year Ended December 31, | ||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Continuing | Discontinued | Consolidated (a) | ||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Net income (loss) | $ | (113,215 | ) | $ | (7,183 | ) | $ | 40,445 | $ | (2,228 | ) | $ | (72,770 | ) | $ | (9,411 | ) | |||||||
Interest expense, net | 21,339 | 11,216 | 1,727 | 1,338 | 23,066 | 12,554 | ||||||||||||||||||
Depreciation, depletion and amortization | 19,126 | 17,897 | 2,354 | 10,544 | 21,480 | 28,441 | ||||||||||||||||||
Provision for income taxes | (191 | ) | 258 | 19 | 246 | (172 | ) | 504 | ||||||||||||||||
EBITDA | (72,941 | ) | 22,188 | 44,545 | 9,900 | (28,396 | ) | 32,088 | ||||||||||||||||
Equity-based compensation expense | 388 | 2,935 | 331 | 597 | 719 | 3,532 | ||||||||||||||||||
Write-down of sand inventory | 5,394 | — | — | 5,394 | — | |||||||||||||||||||
Contract and project terminations | 4,011 | 10,652 | — | — | 4,011 | 10,652 | ||||||||||||||||||
Provision for doubtful accounts | 1,684 | 1,391 | (469 | ) | 150 | 1,215 | 1,541 | |||||||||||||||||
Accretion expense | 119 | 110 | — | — | 119 | 110 | ||||||||||||||||||
Retirement of assets | 559 | 138 | 67 | 8 | 626 | 146 | ||||||||||||||||||
Reduction in force | 76 | 362 | — | — | 76 | 362 | ||||||||||||||||||
Other state and local taxes | 1,824 | 1,941 | 296 | 332 | 2,120 | 2,273 | ||||||||||||||||||
Non-cash deferred lease expense | 5,758 | — | — | — | 5,758 | — | ||||||||||||||||||
Unrealized loss on fair value of warrants | 2,090 | — | — | — | 2,090 | — | ||||||||||||||||||
Non-capitalized cost of private placement | 404 | — | — | — | 404 | — | ||||||||||||||||||
Gain on sale of discontinued operations, net of tax | — | — | (31,699 | ) | — | (31,699 | ) | — | ||||||||||||||||
Other adjustments allowable under our existing credit agreement | 209 | — | — | — | 209 | — | ||||||||||||||||||
Adjusted EBITDA | $ | (50,425 | ) | $ | 39,717 | $ | 13,071 | $ | 10,987 | $ | (37,354 | ) | $ | 50,704 | ||||||||||
(a) Consolidated numbers for Interest expense, net, Provision for income taxes, Depreciation, depletion and amortization, Equity-based compensation expense, Provision for doubtful accounts and Loss (gain) on disposal of assets include discontinued operations.
The following table reconciles Consolidated Adjusted EBITDA to our operating cash flows for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 and years ended December 31, 2016 and 2015:
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Three Months Ended, | Year Ended December 31, | |||||||||||||||||||
December 31, 2016 | September 30, 2016 | December 31, 2015 | 2016 | 2015 | ||||||||||||||||
($ in thousands) | ||||||||||||||||||||
Adjusted EBITDA | $ | (10,648 | ) | $ | (8,113 | ) | $ | 3,853 | $ | (37,354 | ) | $ | 50,704 | |||||||
Non-cash interest expense, net | (3,001 | ) | (4,682 | ) | (4,094 | ) | (16,672 | ) | (11,729 | ) | ||||||||||
Non-cash income tax expense | (170 | ) | (558 | ) | (464 | ) | (1,948 | ) | (2,777 | ) | ||||||||||
Contract and project terminations - non-cash | (3 | ) | 25 | 353 | (3 | ) | (307 | ) | ||||||||||||
Reduction in workforce | — | — | (362 | ) | (76 | ) | (362 | ) | ||||||||||||
Write-down of sand inventory | — | — | — | (5,394 | ) | — | ||||||||||||||
Other adjustments allowable under our existing credit agreement | (1 | ) | — | — | (209 | ) | — | |||||||||||||
Fuel division selling expenses | — | 679 | — | — | — | |||||||||||||||
Cost to retire assets | — | — | — | 9 | — | |||||||||||||||
Non-cash deferred lease expense | (2,079 | ) | (2,072 | ) | — | (5,758 | ) | — | ||||||||||||
Change in other operating assets and liabilities | (3,589 | ) | (82 | ) | 5,476 | 20,079 | 11,796 | |||||||||||||
Cash flows from operating activities: | $ | (19,491 | ) | $ | (14,803 | ) | $ | 4,762 | $ | (47,326 | ) | $ | 47,325 | |||||||
Cash flows from investing activities: | $ | (1,263 | ) | $ | 152,816 | $ | (10,946 | ) | $ | 140,541 | $ | (33,674 | ) | |||||||
Cash flows from financing activities: | $ | (20,753 | ) | $ | (141,166 | ) | $ | 21,166 | $ | (114,081 | ) | $ | 343 | |||||||
We define Distributable Cash Flow generally as net income plus (i) non-cash net interest expense, (ii) depreciation, depletion and amortization expense, (iii) non-cash charges, and (iv) selected losses that are unusual or non-recurring; less (v) selected principal repayments, (vi) selected gains that are unusual or non-recurring, and (vii) maintenance capital expenditures. In addition, our Board of Directors utilizes reserves for future capital expenditures, compliance with law or debt agreements, and to provide funds for distributions to unitholders in respect to any one or more of the next four quarters. Distributable Cash Flow does not reflect changes in working capital balances. The following table (in thousands) reconciles net income to Distributable Cash Flow:
Three months ended December 31, 2016 | |||||
Net income (loss) | $ | (20,775 | ) | ||
Add (less) reconciling items: | |||||
Add depreciation, depletion and amortization expense | 4,662 | ||||
Add non-cash deferred lease expense | 2,079 | ||||
Add amortization of deferred financing costs | 678 | ||||
Add loss on disposal of assets | 350 | ||||
Add equity-based compensation expense | 251 | ||||
Add accretion | 30 | ||||
Add provision for doubtful accounts | 4 | ||||
Less income taxes accrued, net of payments | (220 | ) | |||
Less unrealized gain on fair value of interest rate swaps | (232 | ) | |||
Less unrealized loss on fair value of warrants | (885 | ) | |||
Less maintenance capital expenditures | (1,174 | ) | |||
Distributable cash flow | $ | (15,232 | ) | ||
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