Hi-Crush Inc. (NYSE: HCR), "Hi-Crush" or the "Company," a
fully-integrated, strategic provider of technology and logistics
solutions to the North American petroleum industry, today reported
second quarter 2019 results.
Revenues during the second quarter of 2019
totaled $178.0 million on total volumes sold of 2,662,086 tons.
This compares to $159.9 million of revenues during the first
quarter of 2019 on total volumes sold of 2,411,262 tons.
On May 31, 2019, the Company completed the
conversion to a corporation (the "Conversion") and as a result
recorded an estimated net non-cash deferred tax provision of
$(115.5) million during the second quarter of 2019, or $(1.14) per
share, representing the difference in the book basis and the tax
basis of the Company's assets on the date of Conversion.
Including the non-cash deferred taxes attributable to the
Conversion, net loss was $(117.5) million for the second quarter of
2019, resulting in basic and diluted loss of $(1.16) per
share. Excluding the non-cash deferred taxes attributable to
the Conversion, adjusted net loss was $(2.0) million for the second
quarter of 2019, resulting in basic and diluted adjusted loss of
$(0.02) per share. The Company reported basic and diluted
loss of $(0.06) per unit in the first quarter of 2019.
Adjusted EBITDA for the second quarter of 2019
was $24.1 million, an increase of 40% compared to $17.2 million for
the first quarter of 2019.
"Our second quarter financial results surpassed
expectations on revenue and Adjusted EBITDA, and reflected volumes
on the high end of our guidance, primarily driven by services
provided in our last mile business and Northern White sales," said
Robert E. Rasmus, Chairman and Chief Executive Officer of
Hi-Crush. "Our quarterly performance benefited from our
intense focus on managing costs and delivering operating
efficiencies, while also advancing our fully-integrated strategy
with more last mile systems deployed, leading to positive free cash
flow of $5.8 million during the second quarter. We are also
pleased to achieve another record in quarterly sales to E&Ps,
representing 66% of total second quarter volumes. I am proud
of our team's continuous effort to best meet the needs of all of
our customers with our improved equipment operations, advancements
in technology, and in combination with further alignment of our
business to focus on delivering the right services to the right
customers within each service line. Also during the quarter, we
achieved a major milestone with the completion of our conversion to
a corporation structure, which enhances Hi-Crush’s ability to best
succeed over the near and long-term."
Second Quarter 2019 Results
Revenues during the second quarter of 2019
totaled $178.0 million, reflecting an increase of 11% compared to
$159.9 million in the first quarter of 2019. Revenues
associated with logistics services were $51.1 million in the second
quarter of 2019, reflecting an increase of 34% compared to $38.2
million in the first quarter of 2019. The improvements were
due primarily to higher sand volumes and increased delivered
truckloads through our last mile service, including increases due
to the acquisition of Pronghorn Logistics in May 2019.
Revenues from the sale of logistics equipment were $1.0 million in
the second quarter of 2019 compared to $6.6 million in the first
quarter of 2019.
Revenues from sales of frac sand totaled $125.9
million in the second quarter of 2019, reflecting an increase of 9%
compared to $115.1 million in the first quarter of 2019.
Total volumes sold were 2.7 million tons, an increase of 10%
compared to the first quarter of 2019, primarily driven by a 21%
increase in Northern White volumes. Average sales price of
$47 per ton for the second quarter of 2019 was largely unchanged
compared to $48 per ton in the first quarter of 2019.
Volumes sold directly to E&Ps during the
second quarter of 2019 increased to a company record of 66%,
compared to 63% in the first quarter of 2019 and 31% in the second
quarter of 2018. Volumes sold at the wellsite through our
logistics and wellsite operations business increased by 28% over
the first quarter of 2019, representing another company record, and
resulting from improved utilization of last mile crews during the
second quarter of 2019. Volumes sold through our logistics
and wellsite operations represented 28% of total volumes in the
second quarter of 2019, up from 24% in the first quarter of
2019.
For the second quarter of 2019, last mile
delivered truckloads were up 36% over the first quarter of 2019,
resulting in higher utilization of deployed crews. The
delivered truckloads metric will be used going forward to better
enable comparison of quarterly last mile services activity and
utilization of our last mile equipment, versus point-in-time
deployment numbers of container or silo crews. As of June 30,
2019, the Company had 21 last mile crews operating in the Permian,
Eagle Ford, Marcellus / Utica, Powder River, Mid-Con and Bakken
regions, an increase from 13 crews at the end of the first quarter
of 2019.
Contribution margin was $13.80 per ton in the
second quarter of 2019, reflecting an increase of 13% compared to
$12.19 per ton in the first quarter of 2019. The sequential
increase in contribution margin per ton primarily resulted from
higher sales volumes and the resulting reduction of production
costs, particularly at our Wisconsin facilities, as well as sales
through our last mile services.
General and administrative expenses totaled
$12.1 million in the second quarter of 2019, excluding
non-recurring expenses of $3.1 million associated with business
development activities and costs associated with the
Conversion. Compared to $11.6 million in the first quarter of
2019, excluding $1.0 million of non-recurring expenses associated
with business development activities and costs associated with the
Conversion, general and administrative expenses were relatively
unchanged.
"We achieved strong financial results, supported
by our team's success in improving efficiencies, reducing costs,
and providing high quality last mile solutions to meet our
customers’ high standards and dynamic requirements," said Laura C.
Fulton, Chief Financial Officer of Hi-Crush. "In particular,
our second quarter results benefited from increased profitability
from our logistics and wellsite operations business, and higher
Northern White volumes sold, along with improvements in production
costs. Our organizational and operational agility continue to
differentiate Hi-Crush, and are expected to further support strong
profitability, cash flow and enhanced balance sheet flexibility
going forward."
Operational Update
The Company also announced the reorganization of
its operations into three distinct business lines, to more
effectively serve target customers across logistics, equipment
sales and rental, and frac sand supply. Following the
acquisitions of FB Industries, the PropDispatch software and
Pronghorn Logistics, and the combination of those businesses with
the existing PropStream business, the Company has consolidated its
logistics and wellsite operations under the name Pronghorn Energy
Services. The equipment business supporting Pronghorn Energy
Services will sell and lease equipment to third parties under the
name NexStage Equipment Systems. Sand production and sales
will continue to be handled under the name Hi-Crush Inc.
"The creation of a leading, comprehensive
logistics and wellsite operations organization, under the name
Pronghorn Energy Services, extends our reputation for leading
safety, customer service and operational excellence, enhances our
offering and allows us to pursue a wider range of market
opportunities," commented M. Alan Oehlert, Chief Operating Officer
of Hi-Crush. "The improvements we are making across our
platform, including enhancements to our PropDispatch technology,
expand the value of the integrated last mile offerings we provide
and result in what we believe is an unmatched portfolio of critical
logistics and wellsite solutions. These improvements are
crucial to addressing our customers’ primary focus - lower
delivered cost per ton into the blender, combined with safety,
service, and reliability.
"Additionally, the branding of our equipment
leasing and sales under the name NexStage Equipment Systems
reflects an important step in our continued development of a truly
differentiated set of equipment solutions," continued Mr.
Oehlert. "We are proud to provide the only last mile offering
with both silos and containers. The customer flexibility this
provides, combined with enhanced measurement and other upgrades,
will serve as key differentiators for NexStage."
Liquidity
As of June 30, 2019, Hi-Crush had $52.8
million of cash, no borrowings and $59.2 million in available
borrowing capacity under its senior secured revolving credit
facility (the "ABL Facility"), resulting in total liquidity of
$112.0 million.
Stock Repurchase Program
On June 8, 2019, the Company's board of
directors approved a stock repurchase program of up to $25.0
million, effective on that date and authorized through June
2020. As of June 30, 2019, the Company has repurchased a
total of 1,177,731 common shares for a total cost of $3.2
million. The Company's stock repurchase program had $21.8
million of remaining authorized capacity as of June 30,
2019.
"The Board authorized repurchase program and the
recent purchases of shares by the Company and management reflect
ongoing confidence in our strategy and the strength of our balance
sheet," said Mr. Rasmus. "We remain committed to balancing
our capital allocation priorities over the next year, including
additional stock repurchases or opportunistic purchases of
debt."
The Company has no restrictions with regard to
stock or debt repurchases under its ABL Facility and Senior Notes
due 2026 (the "Senior Notes"). The repurchase program does
not obligate the Company to repurchase any specific dollar amount
or number of shares, and may be suspended, modified or discontinued
by the Board of Directors at any time, in its sole discretion and
without notice.
Capital Expenditures
Total capital expenditures for the six months
ended June 30, 2019 totaled $57.9 million. Growth capex
for the six months ended June 30, 2019 totaled $19.2 million,
primarily related to spending on logistics assets, including new
topfill conveyor systems and trailers. For the second half of
2019, growth capex, including upgrades to the current silo systems
and PropDispatch enhancements, is expected to range between $10 and
$15 million.
Maintenance capex for the six months ended
June 30, 2019 totaled $7.7 million. For the second half
of 2019, maintenance capex is expected to range between $6 and $8
million.
Carryover growth capex from 2018 for
construction projects associated with completion of our second
Kermit facility and expansion at our Wyeville facility totaled
$31.0 million. These expansion initiatives were fully-funded
in 2018.
"We have continued to strategically deploy
capital for the development of our equipment, focusing our
investments on meeting the evolving requirements of our customers,"
said Ms. Fulton. "We are balancing thoughtful investments
focused on minimizing the delivered cost of sand for our customers,
combined with a major focus on generating strong investment returns
and free cash flow. We are excited about the response we have
received from the equipment upgrades we have made, and we are
committed to limiting future investments to customer-driven, high
impact opportunities. As a result, we expect a meaningfully
lower capex spend for the remainder of 2019, with growth in the
logistics and wellsite operations business coming from incremental
improvements in technology and utilization of existing assets."
Free Cash Flow
Free cash flow was $5.8 million and $(17.9)
million for the three and six months ended June 30, 2019,
respectively. Free cash flow for the six months ended June
30, 2019 reflects the semi-annual interest payment made in February
2019 on the Senior Notes. Free cash flow for the three and
six months ended June 30, 2019 excludes $5.8 million and $31.0
million, respectively, in 2018 carryover capex spending, which was
fully-funded in 2018.
"This has been a year of strategic investment,
aimed at best positioning our business for ongoing success
regardless of market conditions," said Ms. Fulton. "In 2020,
we anticipate reduced capex compared to the growth and maintenance
capex spending in 2019, while maintaining strong liquidity and a
focus on cash flow generation. Our leading, fully-integrated
solutions offering, combined with returns on equipment investments
and a reduction in capital investment requirements, is expected to
result in positive free cash flow in 2020."
Corporate Conversion
On May 22, 2019, the unitholders of Hi-Crush
Partners LP approved the proposed Conversion of its corporate
structure from a master limited partnership (MLP) to a
C-Corporation. As a result of the Conversion, the Company
converted from an entity treated as a partnership for U.S. federal
income tax purposes to an entity treated as a corporation for U.S.
federal income tax purposes and is therefore subject to U.S.
federal, state and local corporate income tax. The Conversion
resulted in the Company obtaining a partial step-down in the tax
basis of certain assets, and the Company recorded an estimated
deferred tax provision of $(115.5) million, representing the excess
of book basis over tax basis on the date of Conversion. The
deferred tax provision does not impact the tax treatment of the
Conversion to the Company's former unitholders.
"We do not anticipate any significant cash taxes
for U.S. federal income tax purposes for the next few years as a
result of available depreciation deductions," said Ms.
Fulton. "Further, cash taxes associated with our state and
Canadian operations are expected to be minimal for the foreseeable
future."
Outlook
Reflecting customer conversations and potential
market conditions, the Company expects total sales volumes to be in
a range of 2.4 to 2.7 million tons for the third quarter of
2019. The Company also expects continued deployment of last
mile systems during the second half of 2019. Outlook for
volumes and last mile operations is subject to market conditions,
E&P budget management and other factors.
"We remain intensely focused on managing our
business in a way that maximizes shareholder value and cash flow
over the near and long-term," said Mr. Rasmus. "The widely
discussed potential for E&P budget exhaustion in the back half
of 2019 could result in a modest decrease in activity levels late
in the third quarter of 2019. We have taken steps to lower
our cost structure and leverage the flexibility of our operations
to respond to changes in our operating environment, while
maintaining our focus on excellent customer service and
safety. Our deep relationships with our E&P customers
continue to provide visibility into their dynamic needs, and our
platform of services is able to react quickly to provide
fit-for-purpose solutions for whatever our customers require.
We expect to continue the discipline we demonstrated in the second
quarter which will lead to positive free cash flow generation in
2020, while keeping our balance sheet strong and flexible to meet
the demands of an ever changing market."
Conference Call
On Wednesday, August 7, 2019, 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 second quarter 2019
results. Hosting the call will be Robert E. Rasmus, Chairman and
Chief Executive Officer, M. Alan Oehlert, Chief Operating 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 13691985. The replay will be available
until August 21, 2019.
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-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-Event
Calendar and Presentations section.
Non-GAAP Financial Measures
This news release and the accompanying schedules
include the non-GAAP financial measure of EBITDA, Adjusted EBITDA,
free cash flow 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; (i)
depreciation, depletion and amortization; (ii) interest expense,
net of interest income; and (iii) income tax expense. We
define Adjusted EBITDA as EBITDA, plus; (i) non-cash impairments of
long-lived assets and goodwill; (ii) change in estimated fair value
of contingent consideration; (iii) earnings (loss) from equity
method investments; (iv) gain on remeasurement of equity method
investments; (v) loss on extinguishment of debt; and (vi)
non-recurring business development costs and other items.
EBITDA and Adjusted EBITDA are supplemental measures utilized by
our management and other users of our financial statements, such as
investors, commercial banks and research analysts, to assess the
financial performance of our assets without regard to financing
methods, capital structure or historical cost basis.
We define free cash flow as net cash provided by
(used in) operating activities less maintenance and growth capital
expenditures. Free cash flow is a supplemental measure
utilized by our management and other users of our financial
statements, such as investors, commercial banks and research
analysts, to assess our ability to generate cash from operations
for mandatory obligations, including debt repayment, and
discretionary investment opportunities.
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. We believe contribution margin is a meaningful
measure because it provides an operating and financial measure of
our ability to generate margin in excess of our operating cost
base.
About Hi-Crush
We are a fully-integrated, strategic provider of
technology and logistics solutions to the North American petroleum
industry. Our integrated suite of offerings, including
software, range of equipment solutions for wellsite storage and
delivery of proppant, owned and operated terminals, and frac sand
mining facilities, as well as third party sourcing for proppant,
provides customers with mine-to-wellsite logistics solutions in all
major oil and gas basins in the United States.
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. 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," "should," "assume," "forecast,"
"position," "predict," "strategy," "expect," "intend," "hope,"
"plan," "estimate," "anticipate," "could," "believe," "project,"
"budget," "potential," "likely," or "continue," and similar
expressions are used to identify forward-looking statements. They
can be affected by assumptions used or by known or unknown risks or
uncertainties. Consequently, no forward-looking statements can be
guaranteed. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements in Hi-Crush’s reports filed with the
Securities and Exchange Commission (the "SEC"), including those
described under Item 1A of Hi-Crush’s Form 10-K for the year ended
December 31, 2018 and any subsequently filed 10-Q. Actual
results may vary materially. You are cautioned not to place
undue reliance on any forward-looking statements. You should
also understand that it is not possible to predict or identify all
such factors and should not consider the risk factors in our
reports filed with the SEC or the following list to be a complete
statement of all potential risks and uncertainties. Factors
that could cause our actual results to differ materially from the
results contemplated by such forward looking statements include:
the volume of frac sand we are able to sell; the price at which we
are able to sell frac sand; the outcome of any pending litigation,
claims or assessments, including unasserted claims; changes in the
price and availability of natural gas or electricity; changes in
prevailing economic conditions; 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:Caldwell
Bailey, Lead Investor Relations AnalystMarc Silverberg,
ICRir@hicrush.com(713) 980-6270
Unaudited Condensed Consolidated Statements of
Operations(Amounts in thousands, except per share
amounts)
|
Three Months Ended |
|
June 30, |
|
March 31, |
|
2019 |
|
2018 (1) |
|
2019 |
Revenues |
$ |
178,001 |
|
|
$ |
248,520 |
|
|
$ |
159,910 |
|
Cost of goods sold (excluding
depreciation, depletion and amortization) |
141,272 |
|
|
154,531 |
|
|
130,522 |
|
Depreciation, depletion and
amortization |
14,062 |
|
|
10,482 |
|
|
11,272 |
|
Gross profit |
22,667 |
|
|
83,507 |
|
|
18,116 |
|
Operating costs and
expenses: |
|
|
|
|
|
General and administrative expenses |
15,210 |
|
|
12,943 |
|
|
12,613 |
|
Depreciation and amortization |
1,697 |
|
|
536 |
|
|
1,676 |
|
Accretion of asset retirement obligations |
130 |
|
|
123 |
|
|
129 |
|
Change in estimated fair value of contingent consideration |
(672 |
) |
|
— |
|
|
— |
|
Other operating expenses, net |
469 |
|
|
371 |
|
|
431 |
|
Income from operations |
5,833 |
|
|
69,534 |
|
|
3,267 |
|
Other income (expense): |
|
|
|
|
|
Earnings from equity method investments |
1,284 |
|
|
1,144 |
|
|
1,116 |
|
Gain on remeasurement of equity method investment |
3,612 |
|
|
— |
|
|
— |
|
Interest expense |
(11,806 |
) |
|
(3,722 |
) |
|
(10,590 |
) |
Income (loss) before income
tax |
(1,077 |
) |
|
66,956 |
|
|
(6,207 |
) |
Income tax expense
(benefit): |
|
|
|
|
|
Current tax |
259 |
|
|
— |
|
|
— |
|
Deferred tax |
660 |
|
|
— |
|
|
— |
|
Deferred tax resulting from conversion to a corporation |
115,488 |
|
|
— |
|
|
— |
|
Income tax expense |
116,407 |
|
|
— |
|
|
— |
|
Net income (loss) |
$ |
(117,484 |
) |
|
$ |
66,956 |
|
|
$ |
(6,207 |
) |
Earnings (loss) per common
share: |
|
|
|
|
|
Basic |
$ |
(1.16 |
) |
|
$ |
0.68 |
|
|
$ |
(0.06 |
) |
Diluted |
$ |
(1.16 |
) |
|
$ |
0.67 |
|
|
$ |
(0.06 |
) |
Weighted average common stock outstanding: |
|
|
|
|
|
Basic |
101,312,754 |
|
|
88,392,179 |
|
|
101,017,441 |
|
Diluted |
101,312,754 |
|
|
89,729,428 |
|
|
101,017,441 |
|
(1) Financial information has been recast to include the
results attributable to the sponsor and general partner.
|
Six Months Ended |
|
June 30, |
|
2019 |
|
2018 (1) |
Revenues |
$ |
337,911 |
|
|
$ |
466,633 |
|
Cost of goods sold (excluding
depreciation, depletion and amortization) |
271,794 |
|
|
296,514 |
|
Depreciation, depletion and
amortization |
25,334 |
|
|
18,281 |
|
Gross profit |
40,783 |
|
|
151,838 |
|
Operating costs and
expenses: |
|
|
|
General and administrative expenses |
27,823 |
|
|
23,886 |
|
Depreciation and amortization |
3,373 |
|
|
1,061 |
|
Accretion of asset retirement obligations |
259 |
|
|
249 |
|
Change in estimated fair value of contingent consideration |
(672 |
) |
|
— |
|
Other operating expenses, net |
900 |
|
|
1,370 |
|
Income from operations |
9,100 |
|
|
125,272 |
|
Other income (expense): |
|
|
|
Earnings from equity method investments |
2,400 |
|
|
2,310 |
|
Gain on remeasurement of equity method investment |
3,612 |
|
|
— |
|
Interest expense |
(22,396 |
) |
|
(7,195 |
) |
Income (loss) before income
tax |
(7,284 |
) |
|
120,387 |
|
Income tax expense
(benefit): |
|
|
|
Current tax |
259 |
|
|
— |
|
Deferred tax |
660 |
|
|
— |
|
Deferred tax resulting from conversion to a corporation |
115,488 |
|
|
— |
|
Income tax expense |
116,407 |
|
|
— |
|
Net income (loss) |
$ |
(123,691 |
) |
|
$ |
120,387 |
|
Earnings (loss) per common
share: |
|
|
|
Basic |
$ |
(1.22 |
) |
|
$ |
1.32 |
|
Diluted |
$ |
(1.22 |
) |
|
$ |
1.30 |
|
Weighted average common stock outstanding: |
|
|
|
Basic |
101,165,914 |
|
|
88,629,958 |
|
Diluted |
101,165,914 |
|
|
89,967,207 |
|
(1) Financial information has been recast to include the
results attributable to the sponsor and general partner.
Unaudited Adjusted Net Loss and Adjusted Loss Per Common
Share(Amounts in thousands, except shares, units, per
share and per unit amounts)
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2019 |
Net loss |
$ |
(117,484 |
) |
|
$ |
(123,691 |
) |
Deferred tax resulting from
conversion to a corporation |
$ |
115,488 |
|
|
$ |
115,488 |
|
Adjusted net loss |
$ |
(1,996 |
) |
|
$ |
(8,203 |
) |
|
|
|
|
Basic weighted average common
shares outstanding |
101,312,754 |
|
|
101,165,914 |
|
Potentially dilutive common
shares |
— |
|
|
— |
|
Diluted weighted average common
shares outstanding |
101,312,754 |
|
|
101,165,914 |
|
|
|
|
|
Adjusted loss per share -
basic |
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
Adjusted loss per share -
diluted |
$ |
(0.02 |
) |
|
$ |
(0.08 |
) |
Unaudited EBITDA and Adjusted EBITDA(Amounts in
thousands)
|
Three Months Ended |
|
June 30, |
|
March 31, |
|
2019 |
|
2018 |
|
2019 |
Reconciliation of
Adjusted EBITDA to net income (loss): |
|
|
|
|
|
Net income (loss) |
$ |
(117,484 |
) |
|
$ |
66,956 |
|
|
$ |
(6,207 |
) |
Depreciation and depletion expense |
14,237 |
|
|
10,598 |
|
|
11,500 |
|
Amortization expense |
1,522 |
|
|
420 |
|
|
1,448 |
|
Interest expense |
11,806 |
|
|
3,722 |
|
|
10,590 |
|
Income tax expense |
116,407 |
|
|
— |
|
|
— |
|
EBITDA |
26,488 |
|
|
81,696 |
|
|
17,331 |
|
Change in estimated fair value of contingent consideration |
(672 |
) |
|
— |
|
|
— |
|
Earnings from equity method investments |
(1,284 |
) |
|
(1,144 |
) |
|
(1,116 |
) |
Gain on remeasurement of equity method investment |
(3,612 |
) |
|
— |
|
|
— |
|
Non-recurring business development costs and other items (1) |
3,135 |
|
|
1,084 |
|
|
1,009 |
|
Adjusted EBITDA |
$ |
24,055 |
|
|
$ |
81,636 |
|
|
$ |
17,224 |
|
(1) Non-recurring business development costs and other
items for the three months ended June 30, 2019 and March 31, 2019,
are primarily associated with the Conversion and business
acquisitions. Non-recurring business development costs and
other items for the three months ended June 30, 2018, are primarily
associated with lease termination fees and expenses associated with
the relocation of our corporate offices, following displacement
from Hurricane Harvey and business development and legal
costs.
|
Six Months Ended |
|
June 30, |
|
2019 |
|
2018 |
Reconciliation of
Adjusted EBITDA to net income (loss): |
|
|
|
Net income (loss) |
$ |
(123,691 |
) |
|
$ |
120,387 |
|
Depreciation and depletion expense |
25,737 |
|
|
18,501 |
|
Amortization expense |
2,970 |
|
|
841 |
|
Interest expense |
22,396 |
|
|
7,195 |
|
Income tax expense |
116,407 |
|
|
— |
|
EBITDA |
43,819 |
|
|
146,924 |
|
Change in estimated fair value of contingent consideration |
(672 |
) |
|
— |
|
Earnings from equity method investments |
(2,400 |
) |
|
(2,310 |
) |
Gain on remeasurement of equity method investment |
(3,612 |
) |
|
— |
|
Non-recurring business development costs and other items (1) |
4,144 |
|
|
1,084 |
|
Adjusted EBITDA |
$ |
41,279 |
|
|
$ |
145,698 |
|
(1) Non-recurring business development costs and other
items for the six months ended June 30, 2019, are primarily
associated with the Conversion and business acquisitions.
Non-recurring business development costs and other items for the
six months ended June 30, 2018, are primarily associated with lease
termination fees and expenses associated with the relocation of our
corporate offices, following displacement from
Hurricane Harvey and business development and legal costs.
Unaudited Condensed Consolidated Cash Flow
Information(Amounts in thousands)
|
Six Months Ended |
|
June 30, |
|
2019 |
|
2018 (1) |
Operating activities |
$ |
8,975 |
|
|
$ |
140,723 |
|
Investing activities |
(61,039 |
) |
|
(43,191 |
) |
Financing activities |
(9,350 |
) |
|
(76,766 |
) |
Effects of exchange rate on
cash |
11 |
|
|
— |
|
Net change in cash |
$ |
(61,403 |
) |
|
$ |
20,766 |
|
(1) Financial information has been recast to include the
results attributable to the sponsor and general partner.
Unaudited Free Cash Flow(Amounts in
thousands)
The following table presents a reconciliation of
free cash flow to the most directly comparable GAAP financial
measure, as applicable, for each of the periods indicated:
|
Three Months Ended |
|
Six Months Ended |
|
June 30, 2019 |
|
June 30, 2019 |
Net cash provided by operating activities |
$ |
17,582 |
|
|
$ |
8,975 |
|
Less: Maintenance capital expenditures |
(3,717 |
) |
|
(7,723 |
) |
Less: Growth capital expenditures (1) |
(8,089 |
) |
|
(19,167 |
) |
Free cash flow |
$ |
5,776 |
|
|
$ |
(17,915 |
) |
(1) We have excluded growth capital expenditures of $5,840
and $31,045 spent during the three and six months ended June 30,
2019, respectively, related to construction projects associated
with completion of our second Kermit facility and expansion at our
Wyeville facility, both of which were fully-funded in 2018.
All other growth capital expenditures related to investments in our
logistics and wellsite operations are included in the above.
Unaudited Per Ton Operating Activity(Amounts in
thousands, except tons and per ton amounts)
|
Three Months Ended |
|
June 30, |
|
March 31, |
|
2019 |
|
2018 |
|
2019 |
Sand sold |
2,662,086 |
|
|
3,037,504 |
|
|
2,411,262 |
|
Contribution margin |
$ |
36,729 |
|
|
$ |
93,989 |
|
|
$ |
29,388 |
|
Contribution margin per ton
sold |
$ |
13.80 |
|
|
$ |
30.94 |
|
|
$ |
12.19 |
|
|
Six Months Ended |
|
June 30, |
|
2019 |
|
2018 |
Sand sold |
5,073,348 |
|
|
5,655,131 |
|
Contribution margin |
$ |
66,117 |
|
|
$ |
170,119 |
|
Contribution margin per ton
sold |
$ |
13.03 |
|
|
$ |
30.08 |
|
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