•
4Q 2017 revenues of $216.5 million vs. $167.6 million in 3Q
2017 and $67.3 million in 4Q 2016•
4Q 2017 net
income of $43.2 million vs. $29.8 million in 3Q 2017 and net loss
of $(8.1) million in 4Q 2016•
4Q 2017 Adjusted
EBITDA of $59.0 million vs. $41.7 million in 3Q 2017 and $(0.3)
million in 4Q 2016•
4Q 2017
distributable cash flow attributable to the limited partner
unitholders of $52.6 million vs. $37.5 million in 3Q 2017 and
$(4.4) million in 4Q 2016•
Completed $20 million of unit repurchases
in 4Q 2017; increased quarterly distribution to $0.20 per
unit •
Successfully refinanced Term Loan and Revolving Credit
Agreement provide flexibility for continuation of unit repurchase
program and extend maturity profile
Hi-Crush Partners LP (NYSE:HCLP), "Hi-Crush" or the
"Partnership", today reported fourth quarter and full year 2017
results. Revenues for the fourth quarter of 2017 totaled
$216.5 million on sales of 2,985,115 tons of frac sand. This
compares to $167.6 million of revenues on sales of 2,456,195 tons
of frac sand in the third quarter of 2017. The limited
partners' interest in net income was $43.2 million for the fourth
quarter of 2017, resulting in $0.48 basic and $0.47 diluted
earnings per limited partner unit.
Earnings before interest, taxes, depreciation
and amortization ("EBITDA") for the fourth quarter of 2017 was
$54.9 million, compared to $41.8 million for the third quarter of
2017. EBITDA adjusted for earnings from equity method
investments and a loss on extinguishment of debt ("Adjusted
EBITDA") was $59.0 million in the fourth quarter of 2017, compared
to $41.7 million for the third quarter of 2017. Distributable
cash flow attributable to the limited partners for the fourth
quarter of 2017 was $52.6 million compared to $37.5 million for the
third quarter of 2017.
"Hi-Crush’s performance in the fourth quarter is
the result of a year of strategic planning and focused execution,"
said Robert E. Rasmus, Chief Executive Officer of Hi-Crush.
"We acted quickly, proactively, and also took advantage of an
improved environment in the frac sand space. From the first
quarter, with our purchase of Whitehall and the development of our
Permian Basin Kermit facility, to the fourth quarter, when we
achieved full utilization at our Kermit facility, while placing
into service our Pecos terminal and our tenth PropStreamTM crew,
our team worked tirelessly to get us where we are today. I am
confident that with our asset base, personnel, and financial
strength, we are best positioned for sustainable success in 2018
and over the long-term."
Fourth Quarter 2017 Results
Revenues for the fourth quarter of 2017 of
$216.5 million increased by 29% sequentially, driven by improvement
in sales volumes, combined with generally higher pricing.
Average sales price was $71 per ton in the fourth quarter of 2017,
compared to $68 per ton in the third quarter of 2017 and $49 per
ton in the fourth quarter of 2016, as sales prices generally
improved due to continued increases in frac sand demand in excess
of available supply, particularly for fine mesh sand.
Approximately 42% of sales volumes for the fourth quarter of 2017
were sold at the mine, 43% of the volumes were sold at the
terminals and 15% of the volumes were sold at the wellsite.
Approximately 39% of sales volumes for the third quarter of 2017
were sold at the mine, 51% of the volumes were sold at the
terminals and 10% of the volumes were sold at the wellsite.
The percentage of volumes sold at each delivery point varies
quarter to quarter due to customer mix; however, the percentage of
volumes sold at the terminal or the wellsite is expected generally
to increase over time as customers prefer landing sand closer to,
or at, the wellsite.
Contribution margin was $23.46 per ton in the
fourth quarter of 2017, compared to $19.39 per ton in the third
quarter of 2017. The 21% improvement in contribution margin
per ton was primarily the result of higher pricing as well as
increased volumes sold from the Kermit facility.
Volumes and contribution margin per ton for the
fourth quarter of 2017 included temporary negative impacts from
Class-1 rail issues and winter weather. These factors
resulted in lower sales volumes in the final weeks of the fourth
quarter of 2017 and extended into 2018. Weather issues
impacting industry-wide completions activity abated in mid-January
2018, while rail issues impacting the industry remain ongoing, but
continue to be addressed proactively by Hi-Crush. The
Partnership expects these rail issues gradually to improve through
the remainder of the quarter and be largely resolved by the end of
the first quarter of 2018. Impacts to our customers in the
Permian are somewhat mitigated by supply from the Kermit
facility.
"During the fourth quarter, we benefited from
continued growth in pricing and contribution margin, full
utilization at our Permian Basin Kermit facility since mid-October,
and ongoing strength in demand for Northern White frac sand, offset
somewhat by operational issues experienced by Class-1 railroads,"
said Laura C. Fulton, Chief Financial Officer of Hi-Crush.
"Sales volumes grew by more than 20% sequentially, which, combined
with pricing gains and per ton margin expansion, drove increases in
our Adjusted EBITDA and distributable cash flow by approximately
40%. Our strong financial performance in the fourth quarter
and throughout 2017 was the direct result of successful execution
of our Mine. Move. Manage. operating strategy. This includes
a focus on efficient production across a diversity of mesh sizes
and mine locations, and industry-leading logistics through our
owned and operated terminal network, supplemented with our unique
last mile capabilities."
Full Year 2017 Results
For the full year 2017, the limited partners'
interest in net income was $84.0 million, resulting in $0.97 basic
and $0.96 diluted earnings per limited partner unit. EBITDA
for the full year 2017 was $124.9 million, compared to $(52.1)
million for the full year 2016. Adjusted EBITDA for the full
year 2017 was $129.2 million, compared to $(18.4) million for the
full year 2016. Distributable cash flow attributable to the
limited partners for 2017 was $113.0 million.
Revenues for the year ended December 31, 2017
totaled $602.6 million on sales of 8,938,713 tons of frac sand,
compared to revenues of $204.4 million on sales of 4,253,746 tons
of frac sand for the year ended December 31, 2016.
Contribution margin averaged $18.38 per ton for the full year 2017,
compared to $3.79 per ton for the full year 2016. The volume
increase for the full year 2017 compared to 2016 is a result of
dramatically improved market conditions, in addition to increased
production capacity availability following the resumption of
operations at the Whitehall facility in March 2017 and commencement
of operations at the Kermit facility in July 2017. For the
years ended December 31, 2017 and 2016, volumes sold at the mine
were 38% and 46%, respectively, while volumes sold at the wellsite
grew to 11% in 2017 from 1% in 2016.
Average sales price per ton was $67 and $48 for
the years ended December 31, 2017 and 2016, respectively. The
increase in average sales price experienced in 2017 was driven by
changes in industry market conditions, including generally short
supply of frac sand and increasing demand in 2017 compared to
excess supply of frac sand with declining demand in 2016, and the
resulting sales price trends, as well as the impact of the mix in
pricing of volumes sold at the mine, at the terminal or at the
wellsite.
Operational Update
Hi-Crush commenced operations at its Permian
Basin Kermit production facility in July 2017. Kermit
completed its utilization ramp in mid-October 2017, achieving full
utilization on its annualized run rate of 3.0 million tons per
year. Kermit has contracted approximately 90% of its
nameplate capacity under long-term, fixed-price arrangements with
high-quality customers, including large E&P companies.
In October 2017, Hi-Crush commenced operations
at its Pecos terminal, the industry’s first unit train capable
terminal with silo storage in the Southern Delaware Basin.
The facility includes 20,000 tons of vertical storage, is unit
train capable and offers direct access to Class-1 rail.
At the end of 2017, Hi-Crush had 10 PropStream
crews in the Permian Basin and Marcellus and Utica plays.
"We are proud to be the industry’s first mover
in the Permian, expanding our service offerings to customers
through the start-up of our Kermit facility and Pecos terminal, as
well as growth in PropStream crews," said Mr. Rasmus. "Since
commencing operations at Kermit in July 2017, more than two months
ahead of schedule, our team successfully and efficiently ramped
production to full utilization in October, adding attractive
contribution margin and representing 22% of our total volumes sold
during the fourth quarter. Feedback on the industry’s first
Permian sand from our Kermit facility has been positive. Our
customers appreciate the value, quality, and effectiveness of the
product we are delivering. Also, we are pleased to have
completed our Pecos terminal, which complements our Kermit
facility, and allows us to deliver Northern White volumes
efficiently and cost-effectively to where they are most
demanded.
"Our PropStream last mile logistics service adds
safe and efficient wellsite delivery capabilities and further
enhances the value and optionality we offer customers by
controlling the supply chain from the mine to the blender
hopper. The investments we have made to date, in addition to
our plans for future growth and our expertise, will continue to
benefit us throughout 2018 and over the long-term. Along with
our leading portfolio of Northern White mines and our owned and
operated terminals, we provide the full range of products and
services that our customers desire, where and when they need
them."
Liquidity and Capital
Expenditures
In December 2017, the Partnership entered into a
new seven-year $200 million Senior Secured Term Loan Credit
Facility ("Term Loan"), and a new five-year Revolving Credit
Agreement. The new $200 million Term Loan replaces
the Partnership’s previous $200 million Term Loan Credit
Facility, extending maturity to December 2024. The new
five-year $125 million Revolving Credit Agreement
replaces the company’s previous $75 million revolving
credit agreement, extending the maturity to December
2022. The new Term Loan and Revolving Credit Agreement
provide the financial flexibility in return of capital, including
unit repurchases, sought by the Partnership.
As of December 31, 2017, the Partnership
had $197.4 million of long-term debt outstanding, and was in
compliance with the covenants defined in its Revolving Credit
Agreement. As of December 31, 2017, Hi-Crush had $110.0
million in cash and available capacity under its Revolving Credit
Agreement.
Capital expenditures for the year ended
December 31, 2017, totaled $122.0 million related to costs
associated with the construction of the Kermit facility, the Pecos
terminal facility, additional equipment to support PropStream
growth, and overburden removal, among other projects.
The Partnership previously announced total
capital expenditures for 2018 are expected to be in the range of
$35 to $45 million, related to continued investment in equipment
for PropStream, normal maintenance capital expenditures, including
overburden removal, and discretionary investments in logistics
assets.
Distribution and Unit Buyback
Program
On January 17, 2018, Hi-Crush declared a
quarterly cash distribution of $0.20 per unit on all common units,
or $0.80 on an annualized basis, for the fourth quarter of
2017. The distribution was paid on February 13, 2018 to
unitholders of record on February 1, 2018. Hi-Crush
expects to increase the quarterly cash distribution by
approximately 10% per quarter for the foreseeable future, subject
to periodic review and market conditions.
During the fourth quarter of 2017, Hi-Crush
repurchased 2,030,163 common units for a total cost of $20.0
million under the authorized $100 million unit buyback
program. The Partnership's new Term Loan and Revolving Credit
Agreement allow for unlimited repurchases of our common units, and
the Partnership remains committed to executing up to the remaining
$80 million of repurchases allowed under the program. The
repurchase program does not obligate the Partnership to repurchase
any specific dollar amount or number of units and may be suspended,
modified or discontinued by the Board of Directors at any time, in
its sole discretion and without notice.
Outlook
For the first quarter of 2018, the Partnership
expects total sales volumes to be 2.7 to 2.9 million tons.
The sequential decline in forecasted volumes is the result of the
temporary impacts from extreme winter weather and ongoing Class-1
railroad service issues. These issues have escalated in
February, reflecting the broader challenges faced by the national
rail network, which today are impacting all railroads and all
sectors that transport goods by rail. The Partnership
currently expects Class-1 railroad service to improve gradually
through the remainder of the quarter and be largely resolved by the
end of the first quarter of 2018. Pricing has continued to
improve in the first quarter of 2018 and is expected to further
increase over the coming months, driven by ongoing tightness in
frac sand supply and demand, particularly for fine mesh sand.
"The successes Hi-Crush achieved in 2017 were
the result of executing our plan and moving proactively, decisively
and quickly as the industry evolved," said Mr. Rasmus. "We
set company records in volumes produced, and pushed pricing and
margins consistently higher over the course of the year. Our
execution, major project development and positioning over the last
year reflect our successful anticipation of structural market
shifts and serve as a springboard for growth and profitability in
2018 and beyond. We are engaged with our partners to help
them resolve the Class-1 railroad issues, while actively working on
other creative solutions to limit the impact on our customers and
our business. Looking ahead, we expect frac sand demand to
continue to rise throughout 2018, totaling approximately 100
million tons. This level of demand, coupled with potential
ongoing bottlenecks and dislocations will amplify the importance of
investments we have made in the production, logistics and last mile
components of our service offering."
Conference Call
On Tuesday, February 20, 2018, Hi-Crush
will hold a conference call for investors at 7:30 a.m. Central Time
(8:30 a.m. Eastern Time) to discuss Hi-Crush’s fourth quarter and
full year 2017 results. Hosting the call will be Robert E.
Rasmus, Chief Executive Officer and Laura C. Fulton, Chief
Financial Officer. The call can be accessed live over the
telephone by dialing (877) 407-0789, or for international callers,
(201) 689-8562. A replay will be available shortly after the
call and can be accessed by dialing (844) 512-2921, or for
international callers (412) 317-6671. The passcode for the
replay is 13675274. The replay will be available until
March 6, 2018.
Interested parties may also listen to a
simultaneous webcast of the conference call by logging onto
Hi-Crush’s website at www.hicrush.com under the Investors
Relations-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.hicrush.com under the Investors Relations-Event Calendar
and Presentations section.
Hi-Crush Partners LP filed with the Securities
and Exchange Commission (the "SEC") its Annual Report on Form 10-K
for the fiscal year ended December 31, 2017 (the "Form 10-K")
on February 20, 2018. An electronic copy of the Form
10-K (including these financial statements) is available on
Hi-Crush’s website at www.hicrush.com under the "Investors
Relations" section, and also may be obtained through the SEC’s
website at www.sec.gov. Interested parties also may receive a
hard copy of the Form 10-K and these financial statements free of
charge upon request to the secretary of our general partner at our
principal executive offices. Our principal executive offices
are located at 1330 Post Oak Blvd, Suite 600, Houston, Texas 77056,
and our telephone number is (713) 980-6200.
Non-GAAP Financial Measures
This news release and the accompanying schedules
include the non-GAAP financial measure of EBITDA, Adjusted EBITDA,
distributable cash flow, adjusted earnings per limited partner unit
and contribution margin, 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").
We define EBITDA as net income plus
depreciation, depletion and amortization and interest expense, net
of interest income. We define Adjusted EBITDA as EBITDA,
adjusted for any non-cash impairments of long-lived assets and
goodwill, earnings (loss) from equity method investments and loss
on extinguishment of debt. We define distributable cash flow
as Adjusted EBITDA less cash paid for interest expense and
maintenance and replacement capital expenditures, including accrual
for reserve replacement, plus accretion of asset retirement
obligations and non-cash unit-based compensation. We use
distributable cash flow as a performance metric to compare cash
generating performance of the Partnership from period to period and
to compare the cash generating performance for specific periods to
the cash distributions (if any) that are expected to be paid to our
unitholders. Distributable cash flow will not reflect changes
in working capital balances. We define adjusted earnings per
limited partner unit as earnings per limited partner unit, adjusted
for the impact of non-recurring items.
We use contribution margin, which we define as
total revenues less costs of goods sold excluding depreciation,
depletion and amortization, to measure our financial and operating
performance. Contribution margin excludes other operating
expenses and income, including costs not directly associated with
the operations of our business such as accounting, human resources,
information technology, legal, sales and other administrative
activities.
EBITDA, Adjusted EBITDA, distributable cash
flow, adjusted earnings per limited partner unit and contribution
margin 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 a premier provider of proppant and
logistics solutions to the North American energy industry.
Our portfolio of purpose-built production facilities is
capable of producing 13.4 million tons per year of high-quality
monocrystalline sand, a specialized mineral used as a proppant
during the well completion process, necessary to facilitate the
recovery of hydrocarbons from oil and natural gas wells. Our
Wisconsin production facilities' direct access to major U.S.
railroads enhances our delivery capabilities into consuming basins,
while our strategically located owned and operated in-basin
terminals as well as our Texas production facility positions us
within close proximity to significant activity in all major oil and
gas basins for advantageous truck transportation. Our
integrated distribution system, enhanced by our innovative
PropStream logistics solution, efficiently delivers proppant the
"last mile" into the blender, providing customers surety of supply
from mine to wellsite. For more information, visit
www.hicrush.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 SEC, including
those described under 1A of Hi-Crush’s Form 10-K for the year ended
December 31, 2017. 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
Relationsir@hicrush.com (713) 980-6270
Marc Silverberg, ICRmarc.silverberg@icrinc.com
Unaudited Consolidated Statements of
Operations(Amounts in thousands, except per unit
amounts)
|
Three Months Ended |
|
December 31, |
|
September 30, |
|
2017 |
|
2016 (a) |
|
2017 |
Revenues |
$ |
216,456 |
|
|
$ |
67,297 |
|
|
$ |
167,583 |
|
Cost of goods sold
(excluding depreciation, depletion and amortization) |
146,428 |
|
|
62,532 |
|
|
119,955 |
|
Depreciation, depletion
and amortization |
8,220 |
|
|
4,349 |
|
|
8,805 |
|
Gross
profit |
61,808 |
|
|
416 |
|
|
38,823 |
|
Operating costs and
expenses: |
|
|
|
|
|
General
and administrative expenses |
10,787 |
|
|
5,383 |
|
|
9,583 |
|
Impairments and other expenses |
522 |
|
|
27 |
|
|
200 |
|
Accretion
of asset retirement obligations |
115 |
|
|
111 |
|
|
115 |
|
Other
operating income |
— |
|
|
— |
|
|
(3,554 |
) |
Income
(loss) from operations |
50,384 |
|
|
(5,105 |
) |
|
32,479 |
|
Other income
(expense): |
|
|
|
|
|
Earnings
from equity method investments |
217 |
|
|
— |
|
|
128 |
|
Interest
expense |
(3,091 |
) |
|
(3,021 |
) |
|
(2,800 |
) |
Loss on
extinguishment of debt |
(4,332 |
) |
|
— |
|
|
— |
|
Net
income (loss) |
$ |
43,178 |
|
|
$ |
(8,126 |
) |
|
$ |
29,807 |
|
Earnings (loss) per
limited partner unit: |
|
|
|
|
|
Basic |
$ |
0.48 |
|
|
$ |
(0.11 |
) |
|
$ |
0.33 |
|
Diluted |
$ |
0.47 |
|
|
$ |
(0.11 |
) |
|
$ |
0.32 |
|
Consolidated Statements of Operations
|
Year Ended |
|
December 31, |
|
2017 |
|
2016 (a) |
Revenues |
$ |
602,623 |
|
|
$ |
204,430 |
|
Cost of goods sold
(excluding depreciation, depletion and amortization) |
438,348 |
|
|
188,308 |
|
Depreciation, depletion
and amortization |
29,449 |
|
|
17,032 |
|
Gross
profit (loss) |
134,826 |
|
|
(910 |
) |
Operating costs and
expenses: |
|
|
|
General
and administrative expenses |
39,008 |
|
|
35,501 |
|
Impairments and other expenses |
865 |
|
|
34,025 |
|
Accretion
of asset retirement obligations |
458 |
|
|
430 |
|
Other
operating income |
(3,554 |
) |
|
— |
|
Income
(loss) from operations |
98,049 |
|
|
(70,866 |
) |
Other income
(expense): |
|
|
|
Earnings
from equity method investments |
75 |
|
|
— |
|
Interest
expense |
(11,258 |
) |
|
(13,653 |
) |
Loss on
extinguishment of debt |
(4,332 |
) |
|
— |
|
Net
income (loss) |
$ |
82,534 |
|
|
$ |
(84,519 |
) |
Earnings (loss) per
limited partner unit: |
|
|
|
Basic |
$ |
0.97 |
|
|
$ |
(1.64 |
) |
Diluted |
$ |
0.96 |
|
|
$ |
(1.64 |
) |
- Financial information has been recast to include the financial
position and results attributable to Hi-Crush Whitehall LLC, 2.0%
equity interest in Hi-Crush Augusta LLC and PDQ Properties LLC
(together the "Other Assets").
Unaudited EBITDA, Adjusted EBITDA and Distributable Cash
Flow(Amounts in thousands)
|
Three Months Ended |
|
December 31, |
|
September 30, |
|
2017 |
|
2016 |
|
2017 |
Reconciliation
of distributable cash flow to net income (loss): |
|
|
|
|
|
Net
income (loss) |
$ |
43,178 |
|
|
$ |
(8,126 |
) |
|
$ |
29,807 |
|
Depreciation and depletion expense |
8,222 |
|
|
4,350 |
|
|
8,806 |
|
Amortization expense |
419 |
|
|
421 |
|
|
421 |
|
Interest
expense |
3,091 |
|
|
3,021 |
|
|
2,800 |
|
EBITDA |
54,910 |
|
|
(334 |
) |
|
41,834 |
|
Earnings
from equity method investments |
(217 |
) |
|
— |
|
|
(128 |
) |
Loss on
extinguishment of debt |
4,332 |
|
|
— |
|
|
— |
|
Adjusted EBITDA |
59,025 |
|
|
(334 |
) |
|
41,706 |
|
Less:
Cash interest paid |
(2,818 |
) |
|
(2,649 |
) |
|
(2,427 |
) |
Less:
Maintenance and replacement capital expenditures, including accrual
for reserve replacement (a) |
(5,553 |
) |
|
(1,717 |
) |
|
(3,399 |
) |
Add:
Accretion of asset retirement obligations |
115 |
|
|
111 |
|
|
115 |
|
Add:
Unit-based compensation |
1,808 |
|
|
(395 |
) |
|
1,509 |
|
Distributable cash
flow |
52,577 |
|
|
(4,984 |
) |
|
37,504 |
|
Adjusted
for: Distributable cash flow attributable to assets contributed by
the sponsor, prior to the period in which the contribution occurred
(b) |
— |
|
|
579 |
|
|
— |
|
Distributable cash flow
attributable to Hi-Crush Partners LP |
52,577 |
|
|
(4,405 |
) |
|
37,504 |
|
Less:
Distributable cash flow attributable to holders of incentive
distribution rights |
— |
|
|
— |
|
|
— |
|
Distributable cash flow attributable to limited partner
unitholders |
$ |
52,577 |
|
|
$ |
(4,405 |
) |
|
$ |
37,504 |
|
- 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 through September 30, 2017. Effective October 1,
2017, we increased the estimated reserve replacement cost to $1.85
per ton produced and delivered, due to the addition of our Kermit
facility. 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.
- The Partnership's historical financial information has been
recast to consolidate Hi-Crush Whitehall LLC and Other Assets for
the periods leading up to their contribution into the
Partnership. For purposes of calculating distributable cash
flow attributable to Hi-Crush Partners LP, the Partnership excludes
the incremental amount of recast distributable cash flow earned
during the periods prior to the contributions.
Unaudited EBITDA, Adjusted EBITDA and Distributable Cash
Flow(Amounts in thousands)
|
Year Ended |
|
December 31, |
|
2017 |
|
2016 |
Reconciliation
of distributable cash flow to net income (loss): |
|
|
|
Net
income (loss) |
$ |
82,534 |
|
|
$ |
(84,519 |
) |
Depreciation and depletion expense |
29,456 |
|
|
17,039 |
|
Amortization expense |
1,681 |
|
|
1,682 |
|
Interest
expense |
11,258 |
|
|
13,653 |
|
EBITDA |
124,929 |
|
|
(52,145 |
) |
Non-cash
impairment of goodwill |
— |
|
|
33,745 |
|
Earnings
from equity method investments |
(75 |
) |
|
— |
|
Loss on
extinguishment of debt |
4,332 |
|
|
— |
|
Adjusted EBITDA |
129,186 |
|
|
(18,400 |
) |
Less:
Cash interest paid |
(9,867 |
) |
|
(11,787 |
) |
Less:
Maintenance and replacement capital expenditures, including accrual
for reserve replacement (a) |
(13,742 |
) |
|
(5,680 |
) |
Add:
Accretion of asset retirement obligations |
458 |
|
|
430 |
|
Add:
Unit-based compensation |
5,714 |
|
|
2,620 |
|
Distributable cash
flow |
111,749 |
|
|
(32,817 |
) |
Adjusted
for: Distributable cash flow attributable to assets contributed by
the sponsor, prior to the period in which the contribution occurred
(b) |
1,247 |
|
|
1,641 |
|
Distributable cash flow
attributable to Hi-Crush Partners LP |
112,996 |
|
|
(31,176 |
) |
Less:
Distributable cash flow attributable to holders of incentive
distribution rights |
— |
|
|
— |
|
Distributable cash flow attributable to limited partner
unitholders |
$ |
112,996 |
|
|
$ |
(31,176 |
) |
- 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 through September 30, 2017. Effective October 1,
2017, we increased the estimated reserve replacement cost to $1.85
per ton produced and delivered, due to the addition of our Kermit
facility. 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.
- The Partnership's historical financial information has been
recast to consolidate Hi-Crush Blair LLC, Hi-Crush Whitehall LLC
and Other Assets for the periods leading up to their contribution
into the Partnership. For purposes of calculating
distributable cash flow attributable to Hi-Crush Partners LP, the
Partnership excludes the incremental amount of recast distributable
cash flow earned during the periods prior to the
contributions.
Consolidated Cash Flow Information(Amounts in
thousands)
|
Year Ended |
|
December 31, |
|
2017 |
|
2016 (a) |
Operating
activities |
$ |
96,269 |
|
|
$ |
(27,985 |
) |
Investing
activities |
(470,022 |
) |
|
(127,840 |
) |
Financing
activities |
374,894 |
|
|
147,104 |
|
Net increase (decrease)
in cash |
$ |
1,141 |
|
|
$ |
(8,721 |
) |
(a)Financial information has been recast to include the
financial position and results attributable to Hi-Crush Whitehall
LLC and Other Assets.
Consolidated Balance Sheets(Amounts in
thousands, except unit amounts)
|
December 31, |
|
2017 |
|
2016 (a) |
Assets |
|
|
|
Current assets: |
|
|
|
Cash |
$ |
5,662 |
|
|
$ |
4,521 |
|
Accounts
receivable, net |
139,448 |
|
|
52,834 |
|
Inventories |
44,272 |
|
|
29,277 |
|
Prepaid
expenses and other current assets |
2,832 |
|
|
2,716 |
|
Total
current assets |
192,214 |
|
|
89,348 |
|
Property, plant and
equipment, net |
899,158 |
|
|
541,693 |
|
Goodwill and intangible
assets, net |
8,416 |
|
|
10,097 |
|
Equity method
investments |
17,475 |
|
|
10,232 |
|
Other assets |
5,877 |
|
|
7,831 |
|
Total
assets |
$ |
1,123,140 |
|
|
$ |
659,201 |
|
Liabilities, Equity and
Partners’ Capital |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
46,794 |
|
|
$ |
19,264 |
|
Accrued
and other current liabilities |
29,931 |
|
|
8,155 |
|
Current
portion of deferred revenues |
4,399 |
|
|
— |
|
Due to
sponsor |
12,399 |
|
|
118,641 |
|
Current
portion of long-term debt |
2,957 |
|
|
2,962 |
|
Total
current liabilities |
96,480 |
|
|
149,022 |
|
Deferred
revenues |
7,384 |
|
|
— |
|
Long-term
debt |
194,462 |
|
|
193,458 |
|
Asset
retirement obligations |
10,179 |
|
|
9,514 |
|
Other
liabilities |
19,000 |
|
|
5,000 |
|
Total
liabilities |
327,505 |
|
|
356,994 |
|
Commitments and
contingencies |
|
|
|
Equity and partners'
capital: |
|
|
|
General
partner interest |
— |
|
|
— |
|
Limited
partners interest, 89,009,188 and 63,668,244 units outstanding,
respectively |
795,635 |
|
|
299,516 |
|
Total
partners’ capital |
795,635 |
|
|
299,516 |
|
Non-controlling interest |
— |
|
|
2,691 |
|
Total
equity and partners' capital |
795,635 |
|
|
302,207 |
|
Total
liabilities, equity and partners’ capital |
$ |
1,123,140 |
|
|
$ |
659,201 |
|
- Financial information has been recast to include the financial
position and results attributable to Hi-Crush Whitehall LLC and
Other Assets.
Unaudited Per Ton Operating Activity
|
Three Months Ended |
|
December 31, |
|
September 30, |
|
2017 |
|
2016 |
|
2017 |
Sand sold (in
tons) |
2,985,115 |
|
|
1,358,511 |
|
|
2,456,195 |
|
Sand produced and
delivered (in tons) |
3,001,744 |
|
|
1,271,763 |
|
|
2,517,752 |
|
Contribution margin ($
in thousands) |
$ |
70,028 |
|
|
$ |
4,765 |
|
|
$ |
47,628 |
|
Contribution margin per
ton sold |
$ |
23.46 |
|
|
$ |
3.51 |
|
|
$ |
19.39 |
|
|
Year Ended |
|
December 31, |
|
2017 |
|
2016 |
Sand sold (in
tons) |
8,938,713 |
|
|
4,253,746 |
|
Sand produced and
delivered (in tons) |
9,067,584 |
|
|
4,207,044 |
|
Contribution margin ($
in thousands) |
$ |
164,275 |
|
|
$ |
16,122 |
|
Contribution margin per
ton sold |
$ |
18.38 |
|
|
$ |
3.79 |
|
Unaudited Net Income per Limited Partner
Unit(Amounts in thousands, except units and per unit
amounts)
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
Weighted
average limited partner units outstanding: |
2017 |
|
2016 |
|
2017 |
|
2016 |
Basic
common units outstanding |
90,201,488 |
|
|
63,668,189 |
|
|
86,518,249 |
|
|
49,567,268 |
|
Potentially dilutive common units |
1,382,733 |
|
|
— |
|
|
1,382,733 |
|
|
— |
|
Diluted
common units outstanding |
91,584,221 |
|
|
63,668,189 |
|
|
87,900,982 |
|
|
49,567,268 |
|
Reconciliation of net income (loss) and the
assumed allocation of net income (loss) under the two-class method
for purposes of computing earnings (loss) per limited partner
unit:
|
Three Months Ended December 31,
2017 |
|
General Partner and IDRs |
|
Limited Partner Units |
|
Total |
Declared
distribution |
$ |
— |
|
|
$ |
17,802 |
|
|
$ |
17,802 |
|
Assumed allocation of
earnings in excess of distributions |
— |
|
|
25,376 |
|
|
25,376 |
|
Assumed allocation of
net income |
$ |
— |
|
|
$ |
43,178 |
|
|
$ |
43,178 |
|
|
|
|
|
|
|
Earnings per limited
partner unit - basic |
|
|
$ |
0.48 |
|
|
|
Earnings per limited
partner unit - diluted |
|
|
$ |
0.47 |
|
|
|
|
Three Months Ended December 31,
2016 |
|
General Partner and IDRs |
|
Limited Partner Units |
|
Total |
Declared
distribution |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Assumed allocation of
distributions in excess of loss |
— |
|
|
(8,126 |
) |
|
(8,126 |
) |
Add back recast losses
attributable to Whitehall and Other Assets |
— |
|
|
902 |
|
|
902 |
|
Assumed allocation of
net loss |
$ |
— |
|
|
$ |
(7,224 |
) |
|
$ |
(7,224 |
) |
|
|
|
|
|
|
Loss per limited
partner unit - basic |
|
|
$ |
(0.11 |
) |
|
|
Loss per limited
partner unit - diluted |
|
|
$ |
(0.11 |
) |
|
|
|
Year Ended December 31, 2017 |
|
General Partner and IDRs |
|
Limited Partner Units |
|
Total |
Declared
distribution |
$ |
— |
|
|
$ |
31,457 |
|
|
$ |
31,457 |
|
Assumed allocation of
earnings in excess of distributions |
— |
|
|
51,077 |
|
|
51,077 |
|
Add back recast losses
attributable to Whitehall and Other Assets through March 15,
2017 |
— |
|
|
1,471 |
|
|
1,471 |
|
Assumed allocation of
net income |
$ |
— |
|
|
$ |
84,005 |
|
|
$ |
84,005 |
|
|
|
|
|
|
|
Earnings per limited
partner unit - basic |
|
|
$ |
0.97 |
|
|
|
Earnings per limited
partner unit - diluted |
|
|
$ |
0.96 |
|
|
|
|
Year Ended December 31, 2016 |
|
General Partner and IDRs |
|
Limited Partner Units |
|
Total |
Declared
distribution |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Assumed allocation of
distributions in excess of loss |
— |
|
|
(84,519 |
) |
|
(84,519 |
) |
Add back recast income
attributable to Blair through August 31, 2016 |
— |
|
|
(279 |
) |
|
(279 |
) |
Add back recast losses
attributable to Whitehall and Other Assets |
— |
|
|
3,485 |
|
|
3,485 |
|
Assumed allocation of
net loss |
$ |
— |
|
|
$ |
(81,313 |
) |
|
$ |
(81,313 |
) |
|
|
|
|
|
|
Loss per limited
partner unit - basic |
|
|
$ |
(1.64 |
) |
|
|
Loss per limited
partner unit - diluted |
|
|
$ |
(1.64 |
) |
|
|
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