Author Archive

Emerge Energy Services LP Announces a New Terminal Opening in Western Canada

Posted on: July 16th, 2018 by admin No Comments

Fort Worth, Texas – July 16, 2018 – Superior Silica Sands LLC, a subsidiary of Emerge Energy Services LP(“Emerge Energy”), is pleased to announce that it has signed an agreement with a third-party logistics provider, Torq Energy Logistics Ltd. (“Torq”), to open a new frac sand terminal in Buick, British Columbia. Including this new terminal, Emerge Energy will have four strategically-located Western Canadian terminals and 12 total active terminals across North America.

Emerge Energy has contracted with a third-party terminal operator to provide flexibility and minimize capital costs, and the facility is being built for Emerge Energy’s exclusive use. Torq is a leading energy logistics company that operates seven rail terminals in Western Canada and will construct and operate the facility while offering 24/7 service to meet the needs of Emerge Energy’s customers. Situated on 10 acres of property, the terminal is located on the Canadian National Railway (“CN”), which provides a strategic, one-line haul from Emerge Energy’s Barron, Wisconsin facility. Construction of the terminal is expected to be completed by the middle of August, and the site will initially accept manifest shipments with rail-to-truck storage capacity for 45 railcars. The terminal also has the capability to expand to handle unit train shipments.

“This new terminal in Buick highlights the importance of Western Canada to our business and our commitment to serving key customers in the growing Montney shale play,” commented Rick Shearer, Chief Executive Officer of the general partner of Emerge Energy. “We continue to see the Western Canadian region as one of our home markets since we have low-cost, direct access on the CN and long-standing relationships with customers active in the area. The CN has been a crucial partner for over six years, and we are excited about enhancing this relationship as we expand our presence in Western Canada. Contracting with Torq is also exciting in that we are furthering our strategy of using third-party terminal providers to capitalize on their logistics and operating expertise while we preserve our capital for high-return mining and processing projects. Torq has a strong reputation in the energy logistics industry, and we are confident that they will do an outstanding job managing this important facility. Finally, we are in the late stages of contracting with a key Canadian customer on a take-or-pay basis. We look forward to a bright future for northern white sand demand in the Western Canadian market.”

About Emerge Energy Services LP

Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the business of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells, through its subsidiary Superior Silica Sands LLC.

PRESS CONTACT
Investor Relations
(817) 618-4020

Emerge Energy Services LP Announces Date for Earnings Release

Posted on: June 12th, 2018 by admin No Comments

Fort Worth, Texas – June 12, 2018 – Emerge Energy Services LP (“Emerge Energy”) today announced that it will release its second quarter 2018 results before the financial markets open on Wednesday, August 1, 2018. A conference call to discuss the second quarter 2018 financial and operating results will be held on Wednesday, August 1, 2018 at 3:00 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 9248628. 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 9248628.

About Emerge Energy Services LP

Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the business of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells, through its subsidiary Superior Silica Sands LLC.

PRESS CONTACT

Investor Relations

(817) 618-4020

Emerge Energy Services Announces In-Basin Sand Expansion into the Mid-Continent Basin

Posted on: June 5th, 2018 by admin No Comments

Fort Worth, Texas – June 5, 2018 – Emerge Energy Services LP (“Emerge Energy”) today announced an expansion of its in-basin sand presence by commencing the development of a new mining and processing operation located in Kingfisher County, Oklahoma. Emerge Energy’s subsidiary, Superior Silica Sands (“Superior”), signed a 25-year lease agreement that encompasses mining rights on 600 acres of land located approximately 60 miles northwest of Oklahoma City, Oklahoma. Superior has also agreed to purchase 40 acres of adjoining land on which the new wet and dry processing plants will be constructed. Closing of the land purchase is subject to customary due diligence.

Highlights

“We are excited to announce our third in-basin frac sand operation with the addition of our new Oklahoma facility,” noted Rick Shearer, Chief Executive Officer of the general partner of Emerge Energy. “Once the plant begins production, we will have approximately 6.1 million tons per year of in-basin production capacity, or 49% of our new 12.4 million tons per year total capacity.”

“Demand for in-basin fine mesh product is strong, and we have validated the appetite for local Oklahoma sand with several key customers operating in the Mid-Continent basin. We are in the process of signing up customers under contract for the new plant’s capacity, and we expect to fully contract the plant’s capacity by year end. The Oklahoma market represents an under-served basin for us currently, so there is little risk of displacing our existing volume. In fact, potential new customers are interested in bundling northern white 30/50 with the finer mesh local sand. This works to our advantaged model as we are a leading producer of both high quality northern white product and lower-cost in-basin sand.”

“The Mid-Continent basin continues to show impressive growth during the current upswing in drilling and completion activity. Third party research firms estimate that frac sand demand for the basin will total over eight million tons in 2018 and over 10 million tons in 2019. The multiple oil-producing layers of the SCOOP/STACK region make the Mid-Continent basin one of the leading shale plays in the country. Of the 142 currently active drilling rigs in the state of Oklahoma, approximately half are located within a 75-mile radius of our property. Our site also has advantaged logistics with close proximity to a major four-lane US highway, and rail service is less than three miles from our property. This gives us the flexibility of transloading our northern white sand to a nearby terminal and bundling it with in-basin product.”

“We are proud of our efforts to transform Emerge Energy from a northern white producer into a diversified frac sand supplier of northern white and in-basin sand. Once again, we have demonstrated our ability to develop highly attractive in-basin projects with a budget that is often much smaller than our competitors’. The new Oklahoma operation, the continued ramp up of our San Antonio plant, and the sustained high interest in northern white sand have us very excited about capitalizing on the strong demand for all types of frac sand in this growth market.”

About Emerge Energy Services LP

Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the business of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells, through its subsidiary Superior Silica Sands LLC.

PRESS CONTACT
Investor Relations
(817) 618-4020

Emerge Energy Services Commences Shipments from the New San Antonio Plant

Posted on: May 8th, 2018 by admin No Comments

Fort Worth, Texas – May 8, 2018 – Emerge Energy Services LP today announced that its subsidiary Superior Silica Sands LLC has commenced frac sand shipments from its new San Antonio dry plant. The first shipments from the new dry plant were loaded and trucked directly to the Eagle Ford basin on Saturday, May 5th. As noted in last week’s first quarter 2018 earnings release, the new dry plant started production at the end of April, pre-loading silos with finished sand inventory.

“While we have been shipping frac sand at the San Antonio site from our old production circuit for over nine months, our new dry plant has now officially begun shipping frac sand,” noted Rick Shearer, Chief Executive Officer of the general partner of Emerge Energy. “We have set ourselves apart from the competition by opening our new in-basin plant ahead of schedule and under budget. We are working hard to ramp up the plant’s output to reach full capacity of 2.4 million tons per year, as limited by our current permit. The construction of our new wet plant should be completed by July, which will allow us to achieve full production during the third quarter.”

“We are also making progress on obtaining our new air permit that will expand the plant’s total capacity to 4.0 million dry tons per year. The public comment period for the new permit expired last week with no major comments or complaints. As a result, our confidence of obtaining this permit by the fourth quarter has increased. We remain very excited and upbeat about our business.”

  
About Emerge Energy Services LP

Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the business of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells, through its subsidiary Superior Silica Sands LLC.

PRESS CONTACT
Investor Relations
(817) 618-4020

Emerge Energy Services Announces First Quarter 2018 Results

Posted on: May 1st, 2018 by admin No Comments
Emerge Energy Services Announces First Quarter 2018 Results

Fort Worth, Texas – May 1, 2018 – Emerge Energy Services LP (“Emerge Energy”) today announced first quarter 2018 financial and operating results.

Highlights

·         Total volumes sold increased 7% sequentially to a record 1,503 thousand tons in the first quarter.

·         Net income of $1.5 million and diluted earnings per unit of $0.05 for the first quarter.

·         Adjusted EBITDA of $17.4 million for the first quarter.

·         Net income and Adjusted EBITDA were negatively impacted by one-time charges and adjustments.

Overview

Emerge Energy reported net income of $1.5 million, or $0.05 per diluted unit, for the three months ended March 31, 2018, compared to a net loss of $11.4 million, or $(0.38) per diluted unit for the three months ended March 31, 2017.  For the three months ended December 31, 2017, net income was $5.6 million, or $0.18 per diluted unit.

First quarter 2018 results were negatively impacted by $6.7 million in one-time charges, which included a $3.9 million write-off of deferred financing costs relating to the reduction of our revolving credit facility, a $1.7 million write-off of land owner agreements and related prepaid royalties, and $1.1 million of professional fees related to the refinancing in January 2018.

Adjusted EBITDA was $17.4 million for the three months ended March 31, 2018, compared to $0.1 million for the three months ended March 31, 2017, and $18.6 million for the three months ended December 31, 2017.  The first quarter Adjusted EBITDA of $17.4 million declined by $1.3 million sequentially due to a $4 million negative adjustment as per our credit agreement for the repayment of rent that was previously deferred.  Excluding this adjustment, our Adjusted EBITDA would have increased by $2.7 million sequentially.

Emerge Energy generated Distributable Cash Flow of $8.7 million for the three months ended March 31, 2018.  Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge Energy uses to assess its performance on an ongoing basis.  Emerge Energy will not make a cash distribution on its common units for the three months ended March 31, 2018, as the board of directors of its general partner did not approve a cash distribution.

“We are very proud of our performance in the first quarter as we overcame significant obstacles in the form of extreme winter weather and poor railroad service,” noted Ted W. Beneski, Chairman of the board of directors of the general partner of Emerge Energy.  “The 7% sequential volume improvement is a testament to our newly enhanced rail shipping outlets and the positive strides made by our two Texas in-basin plants.  This record-setting quarterly volume of over 1.5 million tons sold in the first quarter represents our ability to respond to a changing market, in both our production and logistics capabilities.  We have increased our direct shipments on the BNSF railroad as the Canadian National continues to experience service issues.  Our Kosse, Texas facility also responded to strong demand with substantially higher production compared to the fourth quarter, and the existing San Antonio production circuit contributed nicely during the quarter.  The first quarter Adjusted EBITDA of $17.4 million included a $4 million negative adjustment as per our credit agreement for the repayment of rent that was previously deferred.  Excluding this adjustment, our Adjusted EBITDA would have increased by $2.7 million sequentially.”

“Our new San Antonio plant is now officially online as we started the dry plant earlier this week.  We are very pleased that we beat our previously communicated target start-up date of May 1st.  We are now in the process of quickly ramping up the production to the nameplate capacity of 2.4 million tons per year as limited by our existing permit.  We have applied for our new permit that will expand our capacity to 4.0 million tons per year, and we expect to receive this permit by year end.”

“The demand for frac sand remains strong, and the market continues to face supply shortages due to constrained railroad service and construction delays for several new in-basin plants.  We are proud that we delivered on our construction timeline for the new San Antonio plant, and our customers value our dependability as they have signed new contracts.  In response to the constructive supply and demand picture, prices for frac sand increased in the first quarter, and we have implemented further price increases for the second quarter.  We are highly confident that we will achieve the 2018 full year guidance of $120 million in Adjusted EBITDA and $60 million in net income.  Our newly-opened San Antonio plant will drive volume and margin growth while we expect the demand for northern white sand will remain resilient.”

Conference Call

Emerge Energy will host its 2018 first quarter results conference call on Tuesday, May 1, 2018, at 3:00 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 3288147.  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 3288147.

 

Operating Results

The following table summarizes Emerge Energy’s operating results for the three months ended March 31, 2018, and 2017, and three months ended December 31, 2017:

Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
($ in thousands)
Revenues:
Frac sand revenues $ 105,971 $ 102,194 $ 75,182
Non-frac sand revenues 779 947 162
Total revenues 106,750 103,141 75,344
Operating expenses
Cost of goods sold (excluding depreciation, depletion and amortization) 80,242 80,301 72,311
Depreciation, depletion and amortization 4,861 5,490 4,656
Selling, general and administrative expenses 8,571 6,766 5,878
Contract and project terminations 1,689
Total operating expenses 95,363 92,557 82,845
Operating income (loss) 11,387 10,584 (7,501 )
Other expense (income)
Interest expense, net 10,492 5,818 3,198
Other (688 ) (989 ) 691
Total other expense 9,804 4,829 3,889
Income (loss) from continuing operations before provision for income taxes 1,583 5,755 (11,390 )
Provision (benefit) for income taxes 97 129
Net income (loss) $ 1,486 $ 5,626 $ (11,390 )
Adjusted EBITDA (a) $ 17,386 $ 18,638 $ 68
Volume of frac sand sold (tons in thousands) 1,437 1,331 1,245
Volume of non-frac sand sold (tons in thousands) 66 79 6
Total volume of sand sold (tons in thousands) 1,503 1,410 1,251
Terminal sand sales (tons in thousands) 655 645 588
Volume of frac sand produced (tons in thousands):
Arland, Wisconsin facility 407 461 368
Barron, Wisconsin facility 498 534 532
New Auburn, Wisconsin facility 345 307 317
San Antonio, Texas facility (b) 59 34
Kosse, Texas facility 99 66 65
Total volume of frac sand produced 1,408 1,402 1,282

(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.

(b)   Emerge Energy commenced frac sand production at the San Antonio facility in July 2017.

Despite record volumes and revenues in the first quarter of 2018, net income declined $4.1 million in the first quarter of 2018, compared to the fourth quarter of 2017.  This decline was due to one-time non-cash charges of $3.9 million write-off of deferred financing costs relating to the reduction of our revolving credit facility, and $1.7 million to write off the land owner agreements and related prepaid royalties.  We also incurred a one-time charge of $1.1 million of professional fees related to the refinancing in January 2018.  Volumes sold through our terminals totaled 44% of volume in the first quarter of 2018, compared to 46% in the fourth quarter of 2017.

Adjusted EBITDA decreased $1.3 million in the first quarter of 2018 due to a $4 million repayment of rent expense previously deferred.

Net income (loss) improved $12.9 million and Adjusted EBITDA improved $17.3 million for the first quarter of 2018, compared to same quarter in 2017, mainly due to an increase in total volumes sold, higher prices, and lower production costs on a per-ton basis.  This was offset by higher selling, general and administrative expenses in 2018 due to higher employee-related expenses for increased staffing levels and bonus accruals.

Interest expense of $10.5 million for the first quarter of 2018 includes among other charges, a one-time $3.9 million write-off of deferred financing costs relating to the reduction of our revolving credit facility in January 2018.

Capital Expenditures

For the three months ended March 31, 2018, Emerge Energy’s capital expenditures totaled $30.1 million.  This includes approximately $1.1 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 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

 

EMERGE ENERGY SERVICES LP
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per unit data)

Three Months Ended March 31,
2018 2017
Revenues $ 106,750 $ 75,344
Operating expenses:
Cost of goods sold (excluding depreciation, depletion and amortization) 80,242 72,311
Depreciation, depletion and amortization 4,861 4,656
Selling, general and administrative expenses 8,571 5,878
Contract and project terminations 1,689
Total operating expenses 95,363 82,845
Operating income (loss) 11,387 (7,501 )
Other expense (income):
Interest expense, net 10,492 3,198
Other (688 ) 691
Total other expense 9,804 3,889
Income (loss) from continuing operations before provision for income taxes 1,583 (11,390 )
Provision (benefit) for income taxes 97
Net income (loss) $ 1,486 $ (11,390 )
Earnings (loss) per common unit
Basic earnings (loss) per common unit $ 0.05 $ (0.38 )
Diluted earnings (loss) per common unit $ 0.05 $ (0.38 )
Weighted average number of common units outstanding – basic 31,212,968 30,061,022
Weighted average number of common units outstanding – diluted 31,371,382 30,061,022

 

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 table reconciles net income (loss) to Adjusted EBITDA for the three months ended March 31, 2018, December 31, 2017, and March 31, 2017:

Three Months Ended
March 31, 2018 December 31, 2017 March 31, 2017
($ in thousands)
Net income (loss) $ 1,486 $ 5,626 $ (11,390 )
Interest expense, net 10,492 5,818 3,198
Depreciation, depletion and amortization 4,861 5,490 4,656
Provision (benefit) for income taxes 97 129
EBITDA 16,936 17,063 (3,536 )
Equity-based compensation expense 434 403 347
Contract and project terminations 1,689
Provision for doubtful accounts 3 17
Accretion expense 31 30 29
Retirement of assets 2 (6 )
Other state and local taxes 395 539 424
Non-cash deferred lease expense (2,576 ) 1,582 1,901
Unrealized (gain) loss on fair value of warrant (677 ) (996 ) 696
Other adjustments allowable under our Credit Agreement 1,149 213
Adjusted EBITDA $ 17,386 $ 18,638 $ 68

The following table reconciles Consolidated Adjusted EBITDA to our operating cash flows for the three months ended March 31, 2018, and 2017, and December 31, 2017:

Three Months Ended,
March 31, 2018 December 31, 2017 March 31, 2017
($ in thousands)
Adjusted EBITDA $ 17,386 $ 18,638 $ 68
Interest expense, net (5,964 ) (4,669 ) (2,684 )
Income tax expense (493 ) (668 ) (424 )
Other adjustments allowable under our Credit Agreement (1,149 ) (213 )
Non-cash deferred lease expense 2,576 (1,582 ) (1,901 )
Change in other operating assets and liabilities (1,612 ) 65 (7,785 )
Cash flows from operating activities: $ 10,744 $ 11,784 $ (12,939 )
Cash flows from investing activities: $ (30,093 ) $ (2,009 ) $ (1,392 )
Cash flows from financing activities: $ 22,309 $ (4,594 ) $ 16,426

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.  We believe that the presentation of Distributable Cash Flow in this report provides information useful to investors in assessing our financial condition and results of operations.  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.  However, our Distributable Cash Flow may not be comparable to similarly-titled measures that other companies use.  Distributable Cash Flow does not reflect changes in working capital balances.  The following table (in thousands) reconciles net income to Distributable Cash Flows:

Three Months Ended March 31, 2018
Net income (loss) $ 1,486
Add (less) reconciling items:
Add depreciation, depletion and amortization expense 4,861
Add amortization of deferred financing costs 4,528
Add non-cash project and contract termination costs 1,689
Add equity-based compensation, net 434
Add income taxes accrued, net of payments 97
Add accretion expense 31
Add allowance for doubtful accounts 3
Add loss on disposal of assets 2
Less unrealized gain on fair value of warrants (677 )
Less maintenance capital expenditures (1,133 )
Less non-cash deferred lease expense (2,576 )
Distributable cash flow $ 8,745

HUG#2189183

Emerge Energy Services Announces Fourth Quarter and Full Year 2017 Results

Posted on: February 26th, 2018 by admin No Comments
Emerge Energy Services Announces Fourth Quarter and Full Year 2017 Results

Fort Worth, Texas – February 26, 2018 – Emerge Energy Services LP (“Emerge Energy”) today announced fourth quarter and full year 2017 financial and operating results.

Highlights

·         Fourth quarter net income of $5.6 million and diluted earnings per unit of $0.18.

·         Full year net loss improved $65.9 million and Adjusted EBITDA for continuing operations improved $95 million in 2017.

·         Exceeded full year 2017 Adjusted EBITDA guidance of $40 million by $5 million.

·         Adjusted EBITDA and volumes remained relatively flat sequentially for the fourth quarter of 2017.

Overview

Emerge Energy reported net income of $5.6 million, or $0.18 per diluted unit, for the three months ended December 31, 2017, compared to a net loss of $(20.8) million, or $(0.80) per diluted unit for the three months ended December 31, 2016.  For the three months ended September 30, 2017, net income was $5.0 million, or $0.16 per diluted unit.  Adjusted EBITDA for continuing operations was $18.6 million for the three months ended December 31, 2017, compared to $(10.5) million for the three months ended December 31, 2016, and $18.7 million for the three months ended September 30, 2017.

Net loss for the full year 2017 was $(6.8) million or $(0.23) per diluted unit, compared to a net loss of $(72.8) million, or $(2.92) per diluted unit for 2016.  Adjusted EBITDA for continuing operations was $45.0 million for the full year 2017, compared to $(50.4) million for 2016.

Emerge Energy generated Distributable Cash Flow of $13.4 million for the three months ended December 31, 2017.  Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge Energy uses to assess its performance on an ongoing basis.  Emerge Energy will not make a cash distribution on its common units for the three months ended December 31, 2017 as the board of directors of its general partner did not approve a cash distribution.

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.

“While we experienced a minor slowdown to finish the year due to widely-documented rail service issues, we are pleased with our overall performance during 2017 as we exceeded our Adjusted EBITDA guidance of $40 million by $5 million,” noted Ted W. Beneski, Chairman of the board of directors of the general partner of Emerge Energy.  “For continuing operations, we saw a 157% increase in full year volumes sold for 2017 compared to 2016, and we accomplished a $95 million improvement in Adjusted EBITDA for continuing operations for the full year.  Additionally, we strengthened our business model with a transformative in-basin acquisition through our new San Antonio operation, and last month, we closed on our refinancing that provides us the capital to expand San Antonio into a leading in-basin frac sand provider for the Eagle Ford basin, which is the second most active shale play in the country.  The construction for our San Antonio wet and dry plant remains on track with the targeted start-up in May.”

“The frac sand market remains strong as we begin 2018, and we expect another year of substantial improvement in profitability during 2018 for our business.  Demand continues to increase, customer sentiment is very positive, and sand prices are moving higher despite the headline noise around in-basin sand supply.  We are updating our 2018 guidance to $120 million in Adjusted EBITDA and $60 million in net income.  We believe that we can outperform this number if the previously noted railroad service improves quickly.  We also believe there is upside to our guidance if we receive our larger air permit for the new San Antonio plant in an expedited manner. “

Conference Call

Emerge Energy will host its 2017 fourth quarter results conference call on Monday, February 26, 2018.  A conference call to discuss the fourth quarter 2017 financial and operating results will be held on Monday, February 26, 2018 at 3:00 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 5467218.  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 5467218.


Operating Results

The following table summarizes Emerge Energy’s consolidated operating results for the three and twelve months ended December 31, 2017 and 2016 and three months ended September 30, 2017:

Three Months Ended Twelve Months ended December 31,
December 31, 2017 September 30, 2017 December 31, 2016 2017 2016
($ in thousands)
Revenues:
Frac sand revenues $ 102,194 $ 101,656 $ 42,489 $ 359,941 $ 127,873
Non-frac sand revenues 947 1,559 130 4,361 526
Total revenues 103,141 103,215 42,619 364,302 128,399
Operating expenses:
Cost of goods sold (excluding depreciation, depletion and amortization) 80,301 80,239 51,263 304,279 173,907
Depreciation, depletion and amortization 5,490 6,078 4,662 21,899 19,126
Selling, general and administrative expenses 6,766 7,302 5,020 26,796 20,951
Contract and project terminations 4,011
Total operating expenses 92,557 93,619 60,945 352,974 217,995
Income (loss) from operations 10,584 9,596 (18,326 ) 11,328 (89,596 )
Other expense (income):
Interest expense, net 5,818 5,073 3,448 19,171 21,339
Other expense (income) (989 ) (901 ) (885 ) (4,207 ) 2,471
Total other expense 4,829 4,172 2,563 14,964 23,810
Income (loss) from continuing operations before provision for income taxes 5,755 5,424 (20,889 ) (3,636 ) (113,406 )
Provision (benefit) for income taxes 129 (58 ) (220 ) 71 (191 )
Net income (loss) from continuing operations 5,626 5,482 (20,669 ) (3,707 ) (113,215 )
Discontinued Operations
Income (loss) from discontinued operations, net of taxes (468 ) (106 ) (3,125 ) 8,746
Gain on sale of discontinued operations 31,699
Total income (loss) from discontinued operations, net of tax (468 ) (106 ) (3,125 ) 40,445
Net income (loss) $ 5,626 $ 5,014 $ (20,775 ) $ (6,832 ) $ (72,770 )
Adjusted EBITDA (a) $ 18,638 $ 18,743 $ (10,648 ) $ 44,983 $ (37,354 )
Adjusted EBITDA from continuing operations (a) $ 18,638 $ 18,743 $ (10,543 ) $ 44,983 $ (50,425 )
Volume of frac sand sold (tons in thousands) 1,331 1,361 821 5,221 2,134
Volume of non-frac sand sold (tons in thousands) 79 119 5 312 23
Total volume of sand sold (tons in thousands) 1,410 1,480 826 5,533 2,157
Terminal sand sales (tons in thousands) 645 671 412 2,448 1,240
Volume of frac sand produced (tons in thousands):
Arland, Wisconsin facility 461 463 165 1,800 186
Barron, Wisconsin facility 534 497 494 2,081 1,588
New Auburn, Wisconsin facility 307 346 162 1,272 352
Kosse, Texas facility 66 53 53 231 140
San Antonio, Texas facility (b) 34 16 50
Total volume of frac sand produced 1,402 1,375 874 5,434 2,266

(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.

(b)   Emerge Energy commenced frac sand production at the San Antonio facility in July 2017.

Continuing Operations

Net income improved $0.1 million and Adjusted EBITDA declined $0.1 million in the fourth quarter of 2017, compared to the third quarter of 2017.  This change in net income and Adjusted EBITDA was due to a slight decrease in total volumes sold and higher production costs on a per-ton basis due to seasonal shut down costs for the northern mines, offset by higher sales prices.  Volumes sold through our terminals totaled 46% of volume in the fourth quarter of 2017 compared to 45% in the third quarter of 2017.

Net income (loss) improved $26.3 million and Adjusted EBITDA improved $29.2 million for the fourth quarter of 2017, compared to same quarter in 2016, mainly due to an increase in total volumes sold, higher prices, and lower production costs on a per-ton basis.  This was offset by higher selling, general and administrative expenses in 2017 due to higher employee-related expenses for increased staffing levels and bonus accruals.

Discontinued Operations

Emerge Energy completed the sale of its Fuel business on August 31, 2016 and thus did not have any operations for the Fuel business in 2017.

Capital Expenditures

For the three months ended December 31, 2017, Emerge Energy’s capital expenditures totaled $2.0 million.

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 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


EMERGE ENERGY SERVICES LP
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per unit data)

Three Months Ended December 31, Twelve Months ended December 31,
2017 2016 2017 2016
Revenues $ 103,141 $ 42,619 $ 364,302 $ 128,399
Operating expenses:
Cost of goods sold (excluding depreciation, depletion and amortization) 80,301 51,263 304,279 173,907
Depreciation, depletion and amortization 5,490 4,662 21,899 19,126
Selling, general and administrative expenses 6,766 5,020 26,796 20,951
Contract and project terminations 4,011
Total operating expenses 92,557 60,945 352,974 217,995
Operating income (loss) 10,584 (18,326 ) 11,328 (89,596 )
Other expense (income):
Interest expense, net 5,818 3,448 19,171 21,339
Other (989 ) (885 ) (4,207 ) 2,471
Total other expense 4,829 2,563 14,964 23,810
Income (loss) from continuing operations before provision for income taxes 5,755 (20,889 ) (3,636 ) (113,406 )
Provision (benefit) for income taxes 129 (220 ) 71 (191 )
Net income (loss) from continuing operations 5,626 (20,669 ) (3,707 ) (113,215 )
Discontinued Operations
Income (loss) from discontinued operations, net of taxes (106 ) (3,125 ) 8,746
Gain on sale of discontinued operations 31,699
Total income (loss) from discontinued operations, net of taxes (106 ) (3,125 ) 40,445
Net income (loss) $ 5,626 $ (20,775 ) $ (6,832 ) $ (72,770 )
Basic earnings (loss) per unit:
Earnings (loss) per common unit from continuing operations $ 0.19 $ (0.77 ) $ (0.12 ) $ (4.55 )
Earnings (loss) per common unit from discontinued operations (0.11 ) 1.63
Basic earnings (loss) per common unit $ 0.19 $ (0.77 ) $ (0.23 ) $ (2.92 )
Diluted earnings (loss) per unit:
Earnings (loss) per common unit from continuing operations $ 0.18 $ (0.80 ) $ (0.12 ) $ (4.55 )
Earnings (loss) per common unit from discontinued operations (0.11 ) 1.63
Diluted earnings (loss) per common unit $ 0.18 $ (0.80 ) $ (0.23 ) $ (2.92 )
Weighted average number of common units outstanding – basic 30,373,306 27,055,160 30,132,480 24,870,258
Weighted average number of common units outstanding – diluted 30,523,149 27,159,837 30,132,480 24,870,258



Adjusted EBITDA and Distributable Cash Flow

We calculate Adjusted EBITDA, a non-GAAP measure, in accordance with our Credit Agreement in effect as of December 31, 2017 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 reconciles net income (loss) to Adjusted EBITDA for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016:

Continuing Discontinued Consolidated
Three Months Ended December 31,
2017 2016 2017 2016 2017 2016
($ in thousands)
Net income (loss) $ 5,626 $ (20,669 ) $ $ (106 ) $ 5,626 $ (20,775 )
Interest expense, net 5,818 3,448 5,818 3,448
Depreciation, depletion and amortization 5,490 4,662 5,490 4,662
Provision (benefit) for income taxes 129 (220 ) 129 (220 )
EBITDA 17,063 (12,779 ) (106 ) 17,063 (12,885 )
Equity-based compensation expense 403 251 403 251
Reduction in escrow receivable
Provision for doubtful accounts 17 4 17 4
Accretion expense 30 30 30 30
Retirement of assets 350 350
Other state and local taxes 539 389 1 539 390
Non-cash deferred lease expense 1,582 2,079 1,582 2,079
Unrealized loss (gain) on fair value of warrants (996 ) (885 ) (996 ) (885 )
Non-capitalized cost of private placement 17 17
Other adjustments allowable under our existing credit agreement 1 1
Adjusted EBITDA $ 18,638 $ (10,543 ) $ $ (105 ) $ 18,638 $ (10,648 )


Continuing Discontinued Consolidated (a)
Three Months Ended September 30,
2017 2017 2017
($ in thousands)
Net income (loss) $ 5,482 $ (468 ) $ 5,014
Interest expense, net 5,073 5,073
Depreciation, depletion and amortization 6,078 6,078
Provision (benefit) for income taxes (58 ) (58 )
EBITDA 16,575 (468 ) 16,107
Equity-based compensation expense 343 343
Reduction in escrow receivable 468 468
Provision for doubtful accounts
Accretion expense 25 25
Retirement of assets
Other state and local taxes 477 477
Non-cash deferred lease expense 2,223 2,223
Unrealized loss (gain) on fair value of warrants (900 ) (900 )
Non-capitalized cost of private placement
Other adjustments allowable under our existing credit agreement
Adjusted EBITDA $ 18,743 $ $ 18,743

The following tables reconciles net income (loss) to Adjusted EBITDA for the twelve months ended December 31, 2017 and 2016:

Continuing Discontinued Consolidated (a)
Year Ended December 31,
2017 2016 2017 2016 2017 2016
($ in thousands)
Net income (loss) $ (3,707 ) $ (113,215 ) $ (3,125 ) $ 40,445 $ (6,832 ) $ (72,770 )
Interest expense, net 19,171 21,339 1,727 19,171 23,066
Depreciation, depletion and amortization 21,899 19,126 2,354 21,899 21,480
Provision (benefit) for income taxes 71 (191 ) 19 71 (172 )
EBITDA 37,434 (72,941 ) (3,125 ) 44,545 34,309 (28,396 )
Equity-based compensation expense 1,423 388 331 1,423 719
Write-down of sand inventory 5,394 5,394
Reduction in escrow receivable 3,125 3,125
Contract and project terminations 4,011 4,011
Provision for doubtful accounts 17 1,684 (469 ) 17 1,215
Accretion expense 113 119 113 119
Retirement of assets 60 559 67 60 626
Reduction in force 76 76
Other state and local taxes 1,896 1,824 296 1,896 2,120
Non-cash deferred lease expense 8,035 5,758 8,035 5,758
Unrealized (gain) loss on fair value of warrants (4,208 ) 2,090 (4,208 ) 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 213 209 213 209
Adjusted EBITDA $ 44,983 $ (50,425 ) $ $ 13,071 $ 44,983 $ (37,354 )

(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 and twelve months ended December 31, 2017 and 2016, and September 30, 2017:

Three Months Ended, Year Ended
 December 31,
December 31, 2017 September 30, 2017 December 31, 2016 2017 2016
($ in thousands)
Adjusted EBITDA $ 18,638 $ 18,743 $ (10,648 ) $ 44,983 $ (37,354 )
Interest expense, net (4,669 ) (4,169 ) (3,001 ) (15,497 ) (16,672 )
Income tax expense (668 ) (419 ) (170 ) (1,967 ) (1,948 )
Contract and project terminations – non-cash (3 ) (3 )
Reduction in force (76 )
Write-down of sand inventory (5,394 )
Other adjustments allowable under our existing credit agreement (1 ) (213 ) (209 )
Cost to retire assets 19 9
Non-cash deferred lease expense (1,582 ) (2,223 ) (2,079 ) (8,035 ) (5,758 )
Change in other operating assets and liabilities 65 (18,646 ) (3,589 ) (21,393 ) 20,079
Cash flows from operating activities: $ 11,784 $ (6,714 ) $ (19,491 ) $ (2,103 ) $ (47,326 )
Cash flows from investing activities: $ (2,009 ) $ (2,036 ) $ (1,263 ) $ (27,667 ) $ 140,541
Cash flows from financing activities: $ (4,594 ) $ 9,110 $ 20,753 $ 35,495 $ (114,081 )

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.  We believe that the presentation of Distributable Cash Flow in this report provides information useful to investors in assessing our financial condition and results of operations.  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.  However, our Distributable Cash Flow may not be comparable to similarly-titled measures that other companies use.   Distributable Cash Flow does not reflect changes in working capital balances.  The following table (in thousands) reconciles net income to Distributable Cash Flows:

Three Months Ended December 31, 2017
Net income (loss) $ 5,626
Add (less) reconciling items:
Add depreciation, depletion and amortization expense 5,490
Add non-cash deferred lease expense 1,582
Add amortization of deferred financing costs 1,151
Add equity-based compensation expense 403
Add income taxes accrued, net of payments 124
Add accretion 30
Add provision for doubtful accounts 17
Less unrealized gain on fair value of interest rate swaps (1 )
Less unrealized gain on fair value of warrants (996 )
Distributable cash flow $ 13,426

Emerge Energy Services Responds to Industry-wide Railroad Service Issues

Posted on: February 19th, 2018 by admin No Comments
Emerge Energy Services LP Responds to Industry-wide Railroad Service Issues

Fort Worth, Texas – February 19, 2018 – Emerge Energy Services LP today announced that its subsidiary Superior Silica Sands LLC (“SSS”) has issued a response to the recent announcements made by leading oilfield service companies regarding railroad service issues. As noted by these leading oilfield service companies, harsh weather conditions and the continued surge in frac sand demand are straining railroad networks across the country, particularly the Canadian National Railway (“CN”). Please see below for SSS’s response issued to customers and to various social media outlets:

We want to provide an update regarding the CN system-wide service outage that has affected some outbound shipments and to make you aware of some measures SSS has already implemented to maximize our shipping flexibility in the rare event of a rail outage.

Please note that:

  • Our latest communications from the CN indicate that operations have begun to resume and we currently have activity on a portion of outbound CN shipments.
  • Our Northern White infrastructure utilizes a triangle of three closely located dry plants in Wisconsin. This strategic layout allows for rail shipment flexibility that is unique to SSS in that it gives us access to multiple railways, including the Union Pacific and Burlington Northern and Santa Fe (“BNSF”) rail lines.
  • In addition, SSS proactively arranged a delivery option on BNSF that now gives us access to ship direct via three Class 1 rail carriers. We are currently increasing unit train shipments on the BNSF.
  • SSS has a strong trucking network in Wisconsin to transport loads reliably and at short notice to our various loadouts. We have no shortage of trucks or drivers.

With these above measures, we were able to divert empty railcars onto the BNSF and maximize alternate shipping routes to continue supplying the market with as much high quality frac sand as possible during the CN service pause.

We will notify you of updates on any CN direct shipments, while our Union Pacific and BNSF shipping is escalated and performing as scheduled.

Please contact us with any questions, details or additional clarification.

 About Emerge Energy Services LP

Emerge Energy Services LP (NYSE: EMES) is a growth-oriented limited partnership engaged in the business of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells, through its subsidiary Superior Silica Sands LLC.

 

PRESS CONTACT

Investor Relations

(817) 618-4020

Emerge Energy Services Announces Third Quarter 2017 Results

Posted on: November 1st, 2017 by admin No Comments

Fort Worth, Texas – November 1, 2017 – Emerge Energy Services LP (“Emerge Energy”) today announced third quarter 2017 financial and operating results.

Highlights

·         Net income of $5.0 million and diluted earnings per unit of $0.16 for the third quarter.

·         Adjusted EBITDA improved 149% or $11.2 million sequentially to $18.7 million for the third quarter.

·         Total volumes sold increased 6.3% sequentially to 1,480 thousand tons in the third quarter.

Overview

Emerge Energy reported net income of $5.0 million, or $0.16 per diluted unit, for the three months ended September 30, 2017.  For the three months ended September 30, 2016, net income was $5.1 million, or $0.21 per diluted unit, mainly due to a $31.7 million gain on sale of the Fuel business last year.  Adjusted EBITDA was $18.7 million for the three months ended September 30, 2017 compared to $(8.1) million for the three months ended September 30, 2016.  Emerge Energy generated Distributable Cash Flow of $14.1 million for the three months ended September 30, 2017.  Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge Energy uses to assess its performance on an ongoing basis.

Emerge Energy will not make a cash distribution on its common units for the three months ended September 30, 2017 as the board of directors of its general partner did not approve a cash distribution and it is restricted from making distributions to its common unitholders under its amended credit agreement.

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.

“The business performed at a high level during the third quarter, and we are proud of our many accomplishments,” noted Ted W. Beneski, Chairman of the board of directors of the general partner of Emerge Energy.  “During the third quarter, we achieved positive net income from continuing operations for the first quarter in over two years, and our revenue and profitability grew substantially over the second quarter.  Pricing increased at a faster rate than we had expected three months ago, and both our total and frac sand volumes increased by 6% in the quarter compared to the second quarter of 2017.  Total cost per ton sold also declined due to operational improvements and higher utilization of our production and logistics assets.  As a result, net income (loss) from continuing operations and Adjusted EBITDA increased by nearly 260% and 150% sequentially to $5.5 million and $18.7 million, respectively, for the third quarter.  We are well on track to meet or exceed our previously announced guidance of $40 million in Adjusted EBITDA for 2017.  Additionally, we are continuing to make progress on our debt capital raise that will refinance our revolving credit facility and provide growth capital for the build out of our San Antonio operation.  We broke ground on construction of the phase three expansion last week, and we remain on track to have the expansion operational by early second quarter next year.  As we look out to the rest of 2017 and into 2018, we believe that the business will continue to post strong results based on sustained high demand for frac sand and continued execution of our strategic initiatives.”

Conference Call

Emerge Energy will host its 2017 third quarter results conference call on Wednesday, November 1, 2017 at 3:00 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 93023127.  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 93023127.

 

Operating Results

The following table summarizes Emerge Energy’s consolidated operating results for the three and nine months ended September 30, 2017 and 2016 and three months ended June 30, 2017:

Three Months Ended Nine Months Ended September 30,
September 30, 2017 June 30, 2017 September 30, 2016 2017 2016
($ in thousands)
Revenues:
Frac sand revenues $ 101,795 $ 80,916 $ 31,147 $ 258,055 $ 85,384
Non-frac sand revenues 1,420 1,686 138 3,106 396
Total revenues 103,215 82,602 31,285 261,161 85,780
Operating expenses
Cost of goods sold (excluding depreciation, depletion and amortization) 80,239 71,428 40,500 223,978 122,644
Depreciation, depletion and amortization 6,078 5,675 4,687 16,409 14,464
Selling, general and administrative expenses 7,302 6,850 4,697 20,030 15,931
Contract and project terminations (25 ) 4,011
Total operating expenses 93,619 83,953 49,859 260,417 157,050
Operating income (loss) 9,596 (1,351 ) (18,574 ) 744 (71,270 )
Other expense (income)
Interest expense, net 5,073 5,082 8,014 13,353 17,891
Other (901 ) (3,008 ) 3,359 (3,218 ) 3,356
Total other expense 4,172 2,074 11,373 10,135 21,247
Income (loss) from continuing operations before provision for income taxes 5,424 (3,425 ) (29,947 ) (9,391 ) (92,517 )
Provision (benefit) for income taxes (58 ) 8 (58 ) 29
Net income (loss) from continuing operations 5,482 (3,425 ) (29,955 ) (9,333 ) (92,546 )
Discontinued Operations
Income (loss) from discontinued operations, net of taxes (468 ) (2,657 ) 3,373 (3,125 ) 8,852
Gain on sale of discontinued operations 31,699 31,699
Total income (loss) from discontinued operations, net of taxes (468 ) (2,657 ) 35,072 (3,125 ) 40,551
Net income (loss) $ 5,014 $ (6,082 ) $ 5,117 $ (12,458 ) $ (51,995 )
Adjusted EBITDA (a) $ 18,743 $ 7,534 $ (8,113 ) $ 26,345 $ (26,706 )
Adjusted EBITDA from continuing operations (a) $ 18,743 $ 7,534 $ (10,872 ) $ 26,345 $ (39,882 )
Volume of frac sand sold (tons in thousands) 1,361 1,284 487 3,890 1,313
Volume of non-frac sand sold (tons in thousands) 119 108 6 233 18
Total volume of sand sold (tons in thousands) 1,480 1,392 493 4,123 1,331
Volume of frac sand produced (tons in thousands):
Arland, Wisconsin facility 463 508 21 1,339 21
Barron, Wisconsin facility 497 518 383 1,547 1,094
New Auburn, Wisconsin facility 346 302 10 965 190
Kosse, Texas facility 53 47 44 165 87
San Antonio, Texas facility (b) 16 16
Total volume of frac sand produced 1,375 1,375 458 4,032 1,392

(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.

(b)   Emerge Energy commenced frac sand production at the San Antonio facility in July 2017.

Continuing Operations

Net income (loss) improved $8.9 million and Adjusted EBITDA improved $11.2 million in the third quarter of 2017, compared to the second quarter of 2017.  This improvement was due to an increase in total volumes sold, higher sales prices and lower production costs on a per-ton basis.  Volumes sold through our terminals totaled 45% of volume in the third quarter of 2017 compared to 39% in the second quarter of 2017.

Net income (loss) improved $35.4 million and Adjusted EBITDA improved $29.6 million for the third quarter of 2017, compared to same quarter in 2016, mainly due to an increase in total volumes sold, higher prices, and lower production costs on a per-ton basis.  This was offset by higher selling, general and administrative expenses in 2017 due to higher employee-related expenses for increased staffing levels and bonus accruals.

Discontinued Operations

Emerge Energy completed the sale of its Fuel business on August 31, 2016 and thus did not have any operations for the Fuel business in 2017.

During the three months ended September 30, 2017, Emerge Energy wrote off an estimated $0.5 million of the hydrotreator escrow receivables relating to completion delays and cost overruns.

Capital Expenditures

For the three months ended September 30, 2017, Emerge Energy’s capital expenditures totaled $2.0 million.  This includes approximately $124 thousand 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 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

 

EMERGE ENERGY SERVICES LP
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per unit data)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues $ 103,215 $ 31,285 $ 261,161 $ 85,780
Operating expenses:
Cost of goods sold (excluding depreciation, depletion and amortization) 80,239 40,500 223,978 122,644
Depreciation, depletion and amortization 6,078 4,687 16,409 14,464
Selling, general and administrative expenses 7,302 4,697 20,030 15,931
Contract and project terminations (25 ) 4,011
Total operating expenses 93,619 49,859 260,417 157,050
Operating income (loss) 9,596 (18,574 ) 744 (71,270 )
Other expense (income):
Interest expense, net 5,073 8,014 13,353 17,891
Other (901 ) 3,359 (3,218 ) 3,356
Total other expense 4,172 11,373 10,135 21,247
Income (loss) from continuing operations before provision for income taxes 5,424 (29,947 ) (9,391 ) (92,517 )
Provision (benefit) for income taxes (58 ) 8 (58 ) 29
Net income (loss) from continuing operations 5,482 (29,955 ) (9,333 ) (92,546 )
Discontinued Operations
Income (loss) from discontinued operations, net of taxes (468 ) 3,373 (3,125 ) 8,852
Gain on sale of discontinued operations 31,699 31,699
Total income (loss) from discontinued operations, net of taxes (468 ) 35,072 (3,125 ) 40,551
Net income (loss) $ 5,014 $ 5,117 $ (12,458 ) $ (51,995 )
Basic earnings (loss) per unit:
Earnings (loss) per common unit from continuing operations $ 0.19 $ (1.24 ) $ (0.31 ) $ (3.82 )
Earnings (loss) per common unit from discontinued operations (0.02 ) 1.45 (0.10 ) 1.67
Basic earnings (loss) per common unit $ 0.17 $ 0.21 $ (0.41 ) $ (2.15 )
Diluted earnings (loss) per unit:
Earnings (loss) per common unit from continuing operations $ 0.18 $ (1.24 ) $ (0.42 ) $ (3.82 )
Earnings (loss) per common unit from discontinued operations (0.02 ) 1.45 (0.10 ) 1.67
Diluted earnings (loss) per common unit $ 0.16 $ 0.21 $ (0.52 ) $ (2.15 )
Weighted average number of common units outstanding – basic 30,270,572 24,159,038 30,120,216 24,136,642
Weighted average number of common units outstanding – diluted 30,400,584 24,159,038 30,183,091 24,136,642



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 reconciles net income (loss) to Adjusted EBITDA for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016:

Three Months Ended September 30,
2017 2016 2017 2016 2017 2016
Continuing Discontinued Consolidated (a)
($ in thousands)
Net income (loss) $ 5,482 $ (29,955 ) $ (468 ) $ 35,072 $ 5,014 $ 5,117
Interest expense, net 5,073 8,014 444 5,073 8,458
Depreciation, depletion and amortization 6,078 4,687 6,078 4,687
Provision (benefit) for income taxes (58 ) 8 8 (58 ) 16
EBITDA 16,575 (17,246 ) (468 ) 35,524 16,107 18,278
Equity-based compensation expense 343 235 97 343 332
Contract and project terminations (25 ) (25 )
Reduction in escrow receivable 468 468
Provision for doubtful accounts 8 (543 ) (535 )
Accretion expense 25 30 25 30
Retirement of assets 209 209
Fuel division selling expenses (679 ) (679 )
Other state and local taxes 477 483 59 477 542
Non-cash deferred lease expense 2,223 2,072 2,223 2,072
Unrealized (gain) loss on fair value of warrant (900 ) 2,975 (900 ) 2,975
Non-capitalized cost of private placement 387 387
Gain on sale of discontinued operations, net of tax (31,699 ) (31,699 )
Adjusted EBITDA $ 18,743 $ (10,872 ) $ $ 2,759 $ 18,743 $ (8,113 )

 

Three Months Ended June 30, 2017
Continuing Discontinued Consolidated (a)
  ($ in thousands)
Net income (loss) $ (3,425 ) $ (2,657 ) $ (6,082 )
Interest expense, net 5,082 5,082
Depreciation, depletion and amortization 5,675 5,675
Provision (benefit) for income taxes
EBITDA 7,332 (2,657 ) 4,675
Equity-based compensation expense 330 330
Contract and project terminations
Reduction in escrow receivable 2,657 2,657
Provision for doubtful accounts
Accretion expense 29 29
Retirement of assets 66 66
Fuel division selling expenses
Other state and local taxes 456 456
Non-cash deferred lease expense 2,329 2,329
Unrealized (gain) loss on fair value of warrant (3,008 ) (3,008 )
Non-capitalized cost of private placement
Gain on sale of discontinued operations, net of tax
Adjusted EBITDA $ 7,534 $ $ 7,534

The following tables reconciles net income (loss) to Adjusted EBITDA for the nine months ended September 30, 2017 and 2016:

Continuing Discontinued Consolidated (a)
Nine Months Ended September 30,
2017 2016 2017 2016 2017 2016
($ in thousands)
Net income (loss) $ (9,333 ) $ (92,546 ) $ (3,125 ) $ 40,551 $ (12,458 ) $ (51,995 )
Interest expense, net 13,353 17,891 1,727 13,353 19,618
Depreciation, depletion and amortization 16,409 14,464 2,354 16,409 16,818
Provision (benefit) for income taxes (58 ) 29 19 (58 ) 48
EBITDA 20,371 (60,162 ) (3,125 ) 44,651 17,246 (15,511 )
Equity-based compensation expense 1,020 137 331 1,020 468
Write-down of sand inventory 5,394 5,394
Contract and project terminations 4,011 4,011
Reduction in escrow receivable 3,125 3,125
Provision for doubtful accounts 1,680 (469 ) 1,211
Accretion expense 83 89 83 89
Retirement of assets 60 209 67 60 276
Reduction in force 76 76
Fuel division selling expenses
Other state and local taxes 1,357 1,435 295 1,357 1,730
Non-cash deferred lease expense 6,453 3,679 6,453 3,679
Unrealized (gain) Loss on fair value of warrant (3,212 ) 2,975 (3,212 ) 2,975
Non-capitalized cost of private placement 387 387
Gain on sale of discontinued operations, net of tax (31,699 ) (31,699 )
Other adjustments allowable under our Credit Agreement 213 208 213 208
Adjusted EBITDA $ 26,345 $ (39,882 ) $ $ 13,176 $ 26,345 $ (26,706 )

(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 and nine months ended September 30, 2017 and 2016, and June 30, 2017:

Three Months Ended, Nine Months Ended September 30,
September 30, 2017 June 30, 2017 September 30, 2016 2017 2016
($ in thousands)
Adjusted EBITDA $ 18,743 $ 7,534 $ (8,113 ) $ 26,345 $ (26,706 )
Interest expense, net (4,169 ) (3,975 ) (4,682 ) (10,828 ) (13,671 )
Income tax expense (419 ) (456 ) (558 ) (1,299 ) (1,778 )
Contract and project terminations – non-cash 25
Reduction in force (76 )
Write-down of sand inventory (5,394 )
Other adjustments allowable under our Credit Agreement (213 ) (208 )
Fuel division selling expenses 679
Cost to retire assets 19 19 9
Non-cash deferred lease expense (2,223 ) (2,329 ) (2,072 ) (6,453 ) (3,679 )
Change in other operating assets and liabilities (18,646 ) 4,973 (82 ) (21,458 ) 23,668
Cash flows from operating activities: $ (6,714 ) $ 5,766 $ (14,803 ) $ (13,887 ) $ (27,835 )
Cash flows from investing activities: $ (2,036 ) $ (22,230 ) $ 152,816 $ (25,658 ) $ 141,804
Cash flows from financing activities: $ 9,110 $ 14,554 $ (141,166 ) $ 40,090 $ (134,834 )

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 September 30, 2017
Net income (loss) $ 5,014
Add (less) reconciling items:
Add depreciation, depletion and amortization expense 6,078
Add non-cash deferred lease expense 2,223
Add amortization of deferred financing costs 915
Add non-cash escrow write-down 468
Add equity-based compensation, net 343
Add income taxes accrued, net of payments 36
Add accretion expense 25
Less unrealized gain on fair value of interest rate swaps (11 )
Less maintenance capital expenditures (124 )
Less unrealized gain on fair value of warrants (900 )
Distributable cash flow $ 14,067

Wisconsin at “Global Epicenter” of Frac Sand Mining Industry

Posted on: October 10th, 2013 by admin No Comments

In Wisconsin, frac sand is the new gold. And by most accounts, the rush is only beginning.The type of ancient, coarse-grained sand that form the hills and river bluffs of west central Wisconsin is now highly prized by the oil and gas industry.

Used in a process called hydraulic fracturing, or “fracking,” the sand is mixed with water and chemicals, then injected at high pressure into shale rock formations, forcing out formerly difficult-to-extract deposits of oil and natural gas.

Fracking is why the U.S. is now producing more of its own petroleum than ever before, moving from importing 60 percent of its oil in 2007 to just 33 percent today, including Canadian imports. And almost all the oil and gas being produced in this country is coming via fracking.

For that reason – and because Wisconsin has some of the best frac sand deposits in the world – the state is suddenly center stage on the world energy scene, despite having no fossil fuels of its own.

“Wisconsin is the global epicenter, and we’re just getting started,” said Richard Shearer, president and CEO of Superior Silica Sands, which is headquartered in Ft. Worth, Texas, but has significant mining operations in this state.

Shearer was a featured speaker Wednesday at the 7th annual Wisconsin Freight Rail Day at Madison’s Concourse Hotel, where frac sand was the major topic of conversation. Rail is the least expensive way to move large quantities of sand from Wisconsin to drilling sites in North Dakota, Pennsylvania, Texas and beyond.

Click here to read the entire news article.

 

BACK TO NEWS

Superior Silica Sands on Wall Street

Posted on: October 9th, 2013 by admin No Comments

Officials with Superior Silica Sands, a company doing business in Barron County, helped ring the closing bell on Aug. 27 at the New York Stock Exchange. They included Rick Shearer, third from left, president and Chief Executive Officer, and Jim Walker, far left, director of operations for the company’s properties near New Auburn and in the towns of Arland and Clinton. Superior Silica Sands is owned by Texas-based Insight Equity, a venture capital firm. Officials with that company attended the bell-ringing, including Ted Beneski, CEO of Insight Equities and Chairman of Emerge Energy Services, parent company for Superior Silica Sands, and Victor Vescovo, far right, Chief Operating Officer for Insight Equity.

Click here to read the news article.

 

 

BACK TO NEWS

Superior Silica named Outstanding New Business

Posted on: October 2nd, 2013 by admin No Comments

Superior Silica Sands was named the Outstanding New Business at the annual awards banquet for the Barron County Economic Development Corp. on Thursday, Sept. 26. Two Rice Lake businesses, Henry Wisconsin and American Excelsior, also received special recognition.Superior Silica was formed in 2008 when a private equity firm, Insight Equity, acquired a family owned sand mining operation in central Texas. Since then the growth of the company has been unprecedented, now comprising the fourth largest frac sand supplier in the nation. It entered Barron County in 2011 with the construction of a sand processing plant at New Auburn. Over the next year it added two sand mines and a second, larger plant in the Town of Clinton, near Poskin. That Clinton project included collaboration with Canadian National Railroad to rebuild 38 miles of rail line through the heart of Barron County.

The revived rail service is expected to lead to opportunities for other businesses. Superior Silica now directly or indirectly employs more than 210 people in its Barron County operations. Its success has resulted in it becoming the lead business in a recent public stock offering on the New York Stock Exchange under the name Emerge Energy Services. In addition to sand for hydraulic fracturing in oil and gas wells, the company produces sand for foundries, golf courses and construction uses. Henry Wisconsin received the Outstanding Growth Award.

Click here to read the entire news article.

 

BACK TO NEWS

title img