Hi-Crush Partners LP: Hi-Crush Partners LP Reports Third Quarter 2013 Results News Release Hi-Crush Partners LP Reports Third Quarter 2013 Results Houston, Texas, November 6, 2013 - Hi-Crush Partners LP (NYSE: HCLP), "Hi-Crush" or the "Partnership", today reported third quarter results. Net income was $15.0 million, or $0.52 per limited partner unit, for the third quarter of 2013 and $40.5 million, or $1.45 per limited partner unit, for the nine months ended September 30, 2013. The Partnership reported earnings before interest, taxes and depreciation and amortization ("EBITDA") of $19.2 million for the third quarter of 2013 and $47.0 million for the nine months ended September 30, 2013. EBITDA was impacted by an estimated $1.5 million due to delays in volumes taken by contract customers at the end of the quarter, as well as $1.1 million of litigation costs and non-cash inventory costs related to the D&I acquisition that are not expected to reoccur in the fourth quarter. The Partnership's distributable cash flow for the third quarter of 2013 of $17.6 million corresponds to distribution coverage of 1.24 times the total $14.1 million in total distributions to be paid on November 15, 2013. "We are seeing the benefits of the D&I acquisition flow through our results as we sold over 530,000 tons of frac sand in the third quarter and increased the number of customers we are serving to more than 25. We were also excited to announce the amicable settlement of the Baker Hughes litigation in early October and, in connection with the settlement, the entry into a six-year supply agreement with Baker Hughes." said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush. "During the quarter, our Wyeville plant operated at close to nameplate capacity and began producing 100-mesh sand. With our distribution network, we see many opportunities ahead to increase volumes across our consolidated company." Revenues for the quarter ended September 30, 2013 totaled $43.5 million on sales of 533,239 tons of frac sand and transload services. The average selling price of frac sand, reflecting the mix between pricing for delivery at the production facility and at the destination, was $73 per ton. "New technology continues to drive demand for high quality proppant ever higher." said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush. "With our low-cost operations, strategic niche in the Marcellus and Utica, and broad logistics capabilities, we are well-positioned to continue to increase our market share." Production cost for sand produced and delivered from the Wyeville facility was $13.10 per ton during the quarter. On October 17, 2013, Hi-Crush declared its third quarter cash distribution of $0.49 per unit for all common and subordinated units, or $1.96 on an annualized basis. This amount corresponds to a 3% increase from the minimum quarterly cash distribution of $0.475 per unit, and will be paid on November 15, 2013 to all common and subordinated unitholders of record on November 1, 2013. Conference Call A conference call for investors will be held on Wednesday, November 6, 2013 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss Hi-Crush's third quarter results and forward outlook. 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 10000594. The replay will be available until November 20, 2013. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto Hi-Crush's website at 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 and, a specialized mineral that is used as a "proppant" (frac sand) to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wyeville, 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 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, 2012 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 email@example.com (713) 960-4811 Unaudited Condensed Consolidated Statement of Operations (Amounts in thousands, except tons, units and per unit amounts) Period from Period from Three Months August 16 July 1 Ended Through Through September 30, September August 15, 2013 30, 2012 2012 Successor Successor Predecessor Revenues $ 43,515 $ 12,643 $ 12,601 Cost of goods sold (including depreciation, depletion, and amortization) 25,958 2,832 3,065 Gross profit 17,557 9,811 9,536 Operating costs and expenses: General and administrative 5,030 592 1,494 Exploration expense - 27 120 Accretion of asset retirement obligation 29 3 4 Income from operations 12,498 9,189 7,918 Other income (expense): Income from preferred interest in Hi-Crush Augusta LLC 3,750 - - Other income - - 6 Interest expense (1,208) (80) (855) Net income $ 15,040 $ 9,109 $ 7,069 Net income per limited partner unit: Common units - basic and diluted $ 0.52 $ 0.33 Subordinated units - basic and diluted $ 0.52 $ 0.33 Weighted average limited partner units outstanding: Common units - basic and diluted 15,224,820 13,640,351 Subordinated units - basic and diluted 13,640,351 13,640,351 Unaudited Condensed Consolidated Statement of Operations (Amounts in thousands, except tons, units and per unit amounts) Period from Period from Nine Months August 16 January 1 Ended Through Through September 30, September August 15, 2013 30, 2012 2012 Successor Successor Predecessor Revenues $ 90,244 $ 12,643 $ 46,776 Cost of goods sold (including depreciation, depletion, and amortization) 43,325 2,832 13,336 Gross profit 46,919 9,811 33,440 Operating costs and expenses: General and administrative 11,596 592 4,631 Exploration expense 46 27 539 Accretion of asset retirement obligation 88 3 16 Income from operations 35,189 9,189 28,254 Other income (expense): Income from preferred interest in Hi-Crush Augusta LLC 7,500 - - Other income - - 6 Interest expense (2,185) (80) (3,240) Net income $ 40,504 $ 9,109 $ 25,020 Net income per limited partner unit: Common units - basic and diluted $ 1.45 $ 0.33 Subordinated units - basic and diluted $ 1.45 $ 0.33 Weighted average limited partner units outstanding: Common units - basic and diluted 14,293,060 13,640,351 Subordinated units - basic and diluted 13,640,351 13,640,351 Unaudited EBITDA and Distributable Cash Flow 2013 2012 2013 2012 Period Period Period from from Period from from Three Nine Months July 1 August 16 months January 1 August 16 Ended Through Through Ended Through Through September September September September 30 August 15 30 30 August 15 30 (in thousands) Successor Predecessor Successor Successor Predecessor Successor Reconciliation of Distributable Cash Flow to Net Income: Net income $ 15,040 $ 7,069 $ 9,109 $ 40,504 $ 25,020 $ 9,109 Depreciation and depletion expense 1,322 421 395 2,317 1,089 395 Amortization expense 1,662 - - 2,025 - - Interest expense 1,208 855 80 2,185 3,240 80 EBITDA $ 19,232 $ 8,345 $ 9,584 $ 47,031 $ 29,349 $ 9,584 Less: Cash interest paid (1,119) (43) (1,744) (43) Less: Maintenance and replacement capital expenditures, including accrual for reserve replacement (1) (541) (258) (1,447) (258) Add: Accretion of asset retirement obligation 29 3 88 3 Add: Quarterly distribution from preferred interest in Augusta (2) - - 3,750 - Distributable cash flow $ 17,601 $ 9,286 $ 47,678 $ 9,286 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 sold 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 amount pertains to the third quarter performance of Augusta, on which we are entitled to receive a preferred distribution of $3,750. We have included this amount in our distributable cash flow for the first nine months of 2013 as we will receive this distribution on November11, 2013, in advance of our third quarter 2013 cash distributions to our common and subordinated unitholders, which will be paid on November 15, 2013. The amount is not reflected in our GAAP net income during the first nine months of 2013 because our investment in Augusta is accounted for under the cost method. In accordance with that method, any distributions earned under our preferred interest are not recognized as income until the cash is actually received by the Partnership. Unaudited Condensed Consolidated Cash Flow Information (Amounts in thousands) Period from Period from Nine Months August 16 January 1 Ended Through Through September 30, September 30, 2013 2012 August 15, 2012 Successor Successor Predecessor Depreciation, depletion, and amortization $ 4,342 $ 395 $ 1,089 Operating activities 43,728 6,691 16,660 Investing activities (137,631) (100) (80,045) Financing activities 103,427 (5,131) 61,048 Net increase (decrease) in cash 9,524 1,460 (2,337) Unaudited Condensed Consolidated Balance Sheet (Amounts in thousands) September 30, December 31, 2013 2012 Successor Successor Assets Current assets: Cash $ 20,022 $ 10,498 Restricted cash 689 - Accounts receivable 23,127 8,199 Inventories 15,230 3,541 Due from Sponsor - 5,615 Prepaid expenses and other current assets 1,615 393 Total current assets 60,683 28,246 Property, plant and equipment, net 112,290 72,844 Goodwill and intangible assets, net 73,598 - Preferred interest in Hi-Crush Augusta LLC 47,043 - Other assets 2,926 1,095 Total assets $ 296,540 $ 102,185 Liabilities and Partners' Capital Current liabilities: Accounts payable $ 8,011 $ 1,977 Accrued and other current liabilities 4,369 1,755 Due to Sponsor 1,212 - Deferred revenue - 1,715 Total current liabilities 13,592 5,447 Long-term debt 138,250 - Asset retirement obligation 1,643 1,555 Total liabilities 153,485 7,002 Commitments and contingencies - - Partners' capital: General partner interest - - Limited partner interests, 28,865,171 and 27,280,702 units outstanding, respectively 133,512 95,183 Class B units, 3,750,000 and zero units outstanding, respectively 9,543 - Total partners' capital 143,055 95,183 Total liabilities and partners' capital $ 296,540 $ 102,185 Unaudited Production Cost per Ton Period from Period from Three Months August 16 July 1 Ended Through Through September 30, September 30, 2013 2012 August 15, 2012 Successor Successor Predecessor Sand produced and delivered (tons) 400,814 191,446 186,957 Production costs ($ in thousands) $ 5,250 $ 2,437 $ 2,644 Production costs per ton $ 13.10 $ 12.73 $ 14.14 Period from Period from Nine Months August 16 January 1 Ended Through Through September 30, September 30, 2013 2012 August 15, 2012 Successor Successor Predecessor Sand produced and delivered (tons) 1,071,706 191,446 726,213 Production costs ($ in thousands) $ 15,517 $ 2,437 $ 12,247 Production costs per ton $ 14.48 $ 12.73 $ 16.86 ------------------------------------------------------------------------------ This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Hi-Crush Partners LP via Thomson Reuters ONE HUG#1740878
Hi-Crush Partners LP: Hi-Crush Partners LP Reports Third Quarter 2013 Results
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