Hi-Crush Partners LP Reports Record Fourth Quarter and Full-Year 2014 Results
- 4Q14 Revenues of $131 million vs. $64 million in 4Q13
- 4Q14 EBITDA of $45 million vs. $24 million in 4Q13
- $1.03 earnings per unit before allocations of income to IDRs
- $0.85 basic and diluted earnings per unit
Houston, Texas, February 3, 2015 - Hi-Crush Partners LP (NYSE: HCLP), "Hi-Crush" or the "Partnership", today reported record fourth quarter and full year 2014 results. Net income for the quarter was $38.4 million. The limited partners' interest in net income of $38.1 million for the fourth quarter of 2014 represents earnings of $1.03 per weighted average common and subordinated units outstanding during the period. For purposes of calculating earnings per unit, $6.8 million of limited partners' interest in net income was allocated to the holder of incentive distribution rights, resulting in reported basic and diluted earnings per unit of $0.85 per common and subordinated unit.
The Partnership reported earnings before interest, taxes and depreciation and amortization ("EBITDA") of $44.6 million for the fourth quarter of 2014. Distributable cash flow of $32.7 million attributable to the common and subordinated unitholders for the fourth quarter of 2014 corresponds to distribution coverage of 1.31 times the $24.9 million in distributions to be paid to common and subordinated unitholders on February 13, 2015.
"2014 was an exceptional year for Hi-Crush," said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. "We nearly doubled our produced volumes. We further reduced our already low production cost per ton, and we increased our distributable cash flow by over 60%. All of these factors allowed Hi-Crush to increase its distribution by more than 32% during the year, placing us near the top of the entire MLP universe in this parameter. In addition, over the course of 2014 we solidified our top-tier position in the industry by providing our customers with premier white sand, delivering a full suite of services and best-in-class logistics."
Revenues for the quarter ended December 31, 2014 totaled $130.9 million on sales of 1.5 million tons of frac sand sold, and transload services. Approximately 90% of the volumes sold were under long-term fixed price contracts.
Revenues for the year ended December 31, 2014 totaled $386.5 million on 4.6 million tons of frac sand sold, and transload services, compared to revenues of $179.0 million on 2.5 million tons of frac sand sold for the year ended December 31, 2013.
"While there are headwinds entering 2015, the industry remains focused on efficiency, quality and execution," said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. "Over 88% of our and our sponsor's 2015 production, or 6.6 million tons, is committed under long term take-or-pay contracts. While the volatility in the market continues, we are confident in the strength of our balance sheet, the quality of our assets and the solid foundation of our relationships. We continue to be the low-cost leader in the sector and we are prepared for the challenges and looking forward to the opportunities in 2015."
Production cost for sand produced and delivered from the Wyeville and Augusta facilities was $15.72 per ton during the quarter. Of the 1.5 million tons sold, approximately 1.0 million tons were produced and delivered from the Partnership's facilities, with the remainder being purchased from the sponsor's Whitehall facility or from third parties.
On January 15, 2015, Hi-Crush declared its fourth quarter cash distribution of $0.675 per unit for all common and subordinated units, or $2.70 on an annualized basis. This amount corresponds to a 42% increase from the minimum quarterly cash distribution of $0.475 per unit and a 8% increase over the previous quarter's distribution. The distribution will be paid on February 13, 2015 to all common and subordinated unitholders of record on January 30, 2015.
Conference Call
A conference call for investors will be held on Tuesday February 3, 2015 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss Hi-Crush's fourth quarter and year-end results. Hosting the call will be Robert E. Rasmus, Co-Chief Executive Officer, James M. Whipkey, Co-Chief Executive Officer and Laura C. Fulton, Chief Financial Officer. The call can be accessed live over the telephone by dialing (877) 407-3982, or for international callers, (201) 493-6780. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers (858) 384-5517. The passcode for the replay is 13599881. The replay will be available until February 17, 2015.
Interested parties may also listen to a simultaneous webcast of the conference call by logging onto Hi-Crush's website at http://www.hicrushpartners.com in the Investors-Event Calendar and Presentations section. A replay of the webcast will also be available for approximately 30 days following the call.
The slide presentation to be referenced on the call will also be on Hi-Crush's website at www.hicrushpartners.com in the Investors-Event Calendar and Presentations section.
Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP financial measure of EBITDA, Distributable Cash Flow and Production Costs, which may be used periodically by management when discussing our financial results with investors and analysts. The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). EBITDA, Distributable Cash Flow and Production Costs are presented as management believes the data provides a measure of operating performance that is unaffected by historical cost basis and provides additional information and metrics relative to the performance of our business.
About Hi-Crush
Hi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline sand, a specialized mineral that is used as a proppant to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wisconsin, consist of "Northern White" sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America. For more information, visit http://www.hicrushpartners.com.
Forward-Looking Statements
Some of the information in this news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "may," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush's reports filed with the Securities and Exchange Commission ("SEC"), including those described under 1A of Hi-Crush's Form 10-K for the year ended December 31, 2013 and any subsequently filed 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any pending litigation; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush's forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Investor contact:
Investor Relations
ir@hicrushpartners.com
(713) 960-4811
Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)
Year Ended December 31, 2014 2013(a) Revenues $ 130,929 $ 63,975 Cost of goods sold (including depreciation, depletion and amortization) 82,319 37,271 Gross profit 48,610 26,704 Operating costs and expenses: General and administrative expenses 7,059 5,774 Exploration expense - (9 ) Accretion of asset retirement obligation 62 56 Income from operations 41,489 20,883 Other income (expense): Interest expense (3,110 ) (1,370 ) Net income 38,379 19,513 Income attributable to non-controlling interest (251 ) (124 ) Net income attributable to Hi-Crush Partners LP $ 38,128 $ 19,389 Earnings per unit: Common and subordinated units - basic $ 0.85 $ 0.63 Common and subordinated units - diluted $ 0.85 $ 0.63
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)
Year Ended December 31, 2014(a) 2013(a) Revenues $ 386,547 $ 178,970 Cost of goods sold (including depreciation, depletion and amortization) 225,984 95,884 Gross profit 160,563 83,086 Operating costs and expenses: General and administrative expenses 26,346 19,096 Exploration expense - 47 Accretion of asset retirement obligation 246 228 Income from operations 133,971 63,715 Other income (expense): Interest expense (9,946 ) (3,671 ) Net income 124,025 60,044 Income attributable to non-controlling interest (955 ) (274 ) Net income attributable to Hi-Crush Partners LP $ 123,070 $ 59,770 Earnings per unit: Common and subordinated units - basic $ 3.09 $ 2.08 Common and subordinated units - diluted $ 3.00 $ 2.08
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. Unaudited EBITDA and Distributable Cash Flow
Three Months Ended December 31, (in thousands) 2014 2013 Reconciliation of distributable cash flow to net income: Net income $ 38,379 $ 19,513 Depreciation and depletion expense 2,277 1,873 Amortization expense 801 1,662 Interest expense 3,110 1,370 EBITDA $ 44,567 $ 24,418 Less: Cash interest paid (2,698 ) (1,269 ) Less: Income attributable to non-controlling interest (251 ) (124 ) Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) (1,357 ) (909 ) Add: Accretion of asset retirement obligation 62 56 Add: Unit based compensation 548 - Distributable cash flow $ 40,871 $ 22,172 Adjusted for: Distributable cash flow attributable to Hi-Crush Augusta LLC, net of intercompany eliminations, prior to the Augusta Contribution (2) - (1,815 ) Distributable cash flow attributable to Hi-Crush Partners LP 40,871 20,357 Less: Distributable cash flow attributable to holders of incentive distribution rights (8,157 ) - Distributable cash flow attributable to common and subordinated unitholders $ 32,714 $ 20,357
(1) Maintenance and replacement capital expenditures, including accrual for reserve replacement, were determined based on an estimated reserve replacement cost of $1.35 per ton produced and delivered during the period. Such expenditures include those associated with the replacement of equipment and sand reserves, to the extent that such expenditures are made to maintain our long-term operating capacity. The amount presented does not represent an actual reserve account or requirement to spend the capital.
(2) The Partnership's historical financial information has been recast to consolidate Augusta for all periods presented. For purposes of calculating distributable cash flow attributable to Hi-Crush Partners LP, the Partnership excludes the incremental amount of recasted distributable cash flow earned during the periods prior to the acquisition by the Partnership on April 28, 2014 of substantially all of the remaining equity interests in Hi-Crush Augusta LLC (the "Augusta Contribution").
Unaudited EBITDA and Distributable Cash Flow
Year Ended December 31, (in thousands) 2014 2013 Reconciliation of distributable cash flow to net income: Net income $ 124,025 $ 60,044 Depreciation and depletion expense 8,858 6,132 Amortization expense 5,186 3,687 Interest expense 9,946 3,671 EBITDA $ 148,015 $ 73,534 Less: Cash interest paid (8,682 ) (3,123 ) Less: Income attributable to non-controlling interest (955 ) (274 ) Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) (5,001 ) (3,026 ) Add: Accretion of asset retirement obligation 246 228 Add: Unit based compensation 1,470 - Distributable cash flow $ 135,093 $ 67,339 Adjusted for: Distributable cash flow attributable to Hi-Crush Augusta LLC, net of intercompany eliminations, prior to the Augusta Contribution (2) (7,199 ) 696 Distributable cash flow attributable to Hi-Crush Partners LP 127,894 68,035 Less: Distributable cash flow attributable to holders of incentive distribution rights (18,401 ) - Distributable cash flow attributable to common and subordinated unitholders $ 109,493 $ 68,035
(1) Maintenance and replacement capital expenditures, including accrual for reserve replacement, were determined based on an estimated reserve replacement cost of $1.35 per ton produced and delivered during the period. Such expenditures include those associated with the replacement of equipment and sand reserves, to the extent that such expenditures are made to maintain our long-term operating capacity. The amount presented does not represent an actual reserve account or requirement to spend the capital.
(2) The Partnership's historical financial information has been recast to consolidate Augusta for all periods presented. For purposes of calculating distributable cash flow attributable to Hi-Crush Partners LP, the Partnership excludes the incremental amount of recasted distributable cash flow earned during the periods prior to the Augusta Contribution.
Unaudited Condensed Consolidated Cash Flow Information
(Amounts in thousands)
Year Year Ended Ended December 31, December 31, 2014(a) 2013(a) Operating activities $ 104,370 $ 64,323 Investing activities (264,715 ) (105,585 ) Financing activities 144,383 51,372 Net (decrease) increase in cash $ (15,962 ) $ 10,110
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC. Unaudited Condensed Consolidated Balance Sheet
(Amounts in thousands)
December 31, December 31, 2014 2013(a) Assets Current assets: Cash $ 4,646 $ 20,608 Restricted cash 691 690 Accounts receivable 82,117 37,442 Inventories 23,684 22,418 Prepaid expenses and other current assets 4,081 1,625 Total current assets 115,219 82,783 Property, plant and equipment, net 241,325 195,834 Goodwill and intangible assets, net 66,750 71,936 Other assets 12,826 3,808 Total assets $ 436,120 $ 354,361 Liabilities, Equity and Partners' Capital Current liabilities: Accounts payable $ 24,878 $ 10,108 Accrued and other current liabilities 12,248 7,669 Due to sponsor 13,459 10,352 Current portion of long-term debt 2,000 - Total current liabilities 52,585 28,129 Long-term debt 198,364 138,250 Asset retirement obligation 6,730 4,628 Total liabilities 257,679 171,007 Commitments and contingencies - - Equity and Partners' capital: General partner interest - - Limited partner interests, 36,952,426 and 28,865,171 units outstanding, respectively 175,962 138,580 Class B units, zero and 3,750,000 units outstanding, respectively - 9,543 Total partners' capital 175,962 148,123 Non-controlling interest 2,479 35,231 Total equity and partners' capital 178,441 183,354 Total liabilities, equity and partners' capital $ 436,120 $ 354,361
(a) Financial information has been recast to include the financial position and results attributable to Hi-Crush Augusta LLC.
Unaudited Per Ton Operating Activity
Three Months Year Ended December 31, Ended December 31, 2014 2013 2014 2013 Sand sold (in tons) 1,481,914 814,094 4,584,811 2,520,119 Sand produced and delivered (in tons) 1,005,492 703,479 3,704,630 2,241,199 Production costs ($ in thousands) $ 15,808 $ 12,018 $ 58,452 $ 41,999 Production costs per ton $ 15.72 $ 17.08 $ 15.78 $ 18.74
Unaudited Net Income per Limited Partner Unit
(Amounts in thousands, except units and per unit amounts)
Three Months Year Ended Ended December 31, Ended December 31, Weighted average limited partner units outstanding: 2014 2013 2014 2013 Common units - basic 23,312,075 15,224,820 19,729,669 14,527,914 Subordinated units - basic 13,640,351 13,640,351 13,640,351 13,640,351 Common units - diluted 23,393,092 15,224,820 22,143,189 14,527,914 Subordinated units - diluted 13,640,351 13,640,351 13,640,351 13,640,351
Reconciliation of net income and the assumed allocation of net income under the two-class method for purposes of computing earnings per unit:
For the Three Months Ended December 31, 2014 General Partner and IDRs Common Units Subordinated Units Class B Units Total Declared distribution $ 1,311 $ 15,736 $ 9,207 $ - $ 26,254 Assumed allocation of undistributed net income attributable to the Partnership 5,475 4,037 2,362 - 11,874 Limited partners' interest in net income $ 6,786 $ 19,773 $ 11,569 $ - $ 38,128
Earnings per unit - basic $ 0.85 $ 0.85 Earnings per unit - diluted (1) $ 0.85 $ 0.85
For the Year Ended December 31, 2014 General Partner and IDRs Common Units Subordinated Units Class B Units Total Declared distribution $ 2,174 $ 51,774 $ 32,737 $ 2,156 $ 88,841 Assumed allocation of undistributed net income attributable to the Partnership 12,367 9,268 9,465 - 31,100 Limited partners' interest in net income $ 14,541 $ 61,042 $ 42,202 $ 2,156 $ 119,941 Recast adjustments to include the results of operations of Hi-Crush Augusta LLC and income attributable to non-controlling interest 3,129 Net income attributable to Hi-Crush Partners LP $ 123,070 Earnings per unit - basic $ 3.09 $ 3.09 Earnings per unit - diluted (1) $ 3.00 $ 3.00 (1) Diluted earnings per unit includes the impact of income allocations attributable to a conversion of the Class B units into common units.
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients. The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Hi-Crush Partners LP via Globenewswire
HUG#1891036
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