News Release


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
ir@hicrushpartners.com
(713) 960-4811

Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)

 
Period fromPeriod from
Three MonthsAugust 16July 1
EndedThroughThrough
September 30, 2013September 30, 2012August 15, 2012
SuccessorSuccessorPredecessor
Revenues$43,515$12,643$12,601
Cost of goods sold (including depreciation, depletion, and amortization)25,9582,8323,065
Gross profit17,5579,8119,536
Operating costs and expenses:
General and administrative5,0305921,494
Exploration expense-27120
Accretion of asset retirement obligation2934
Income from operations12,4989,1897,918
Other income (expense):
Income from preferred interest in Hi-Crush Augusta LLC3,750--
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 diluted15,224,82013,640,351
Subordinated units - basic and diluted 13,640,35113,640,351

Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)

 
Period fromPeriod from
Nine MonthsAugust 16January 1
EndedThroughThrough
September 30, 2013September 30, 2012August 15, 2012
SuccessorSuccessorPredecessor
Revenues$90,244$12,643$46,776
Cost of goods sold (including depreciation, depletion, and amortization)43,3252,83213,336
Gross profit46,9199,81133,440
Operating costs and expenses:
General and administrative11,5965924,631
Exploration expense4627539
Accretion of asset retirement obligation88316
Income from operations35,1899,18928,254
Other income (expense):
Income from preferred interest in Hi-Crush Augusta LLC7,500--
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 diluted14,293,06013,640,351
Subordinated units - basic and diluted 13,640,35113,640,351

Unaudited EBITDA and Distributable Cash Flow

 
2013201220132012
Period fromPeriod fromPeriod fromPeriod from
Three MonthsJuly 1August 16Nine monthsJanuary 1August 16
EndedThroughThroughEndedThroughThrough
September 30August 15September 30September 30August 15September 30
(in thousands)SuccessorPredecessorSuccessorSuccessorPredecessorSuccessor
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 expense1,3224213952,3171,089395
Amortization expense1,662--2,025--
Interest expense1,208855802,1853,24080
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 293883
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. 

  1. 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 November 11, 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 fromPeriod from
Nine MonthsAugust 16January 1
EndedThroughThrough
September 30, 2013September 30, 2012August 15, 2012
SuccessorSuccessorPredecessor
Depreciation, depletion, and amortization$4,342$395$1,089
Operating activities43,7286,69116,660
Investing activities(137,631)(100)(80,045)
Financing activities103,427(5,131)61,048
Net increase (decrease) in cash9,5241,460(2,337)

Unaudited Condensed Consolidated Balance Sheet
(Amounts in thousands)

 
September 30,December 31,
20132012
SuccessorSuccessor
Assets
Current assets:
Cash$20,022$10,498
Restricted cash689-
Accounts receivable23,1278,199
Inventories15,2303,541
Due from Sponsor-5,615
Prepaid expenses and other current assets1,615393
Total current assets60,68328,246
Property, plant and equipment, net112,29072,844
Goodwill and intangible assets, net73,598-
Preferred interest in Hi-Crush Augusta LLC47,043-
Other assets2,9261,095
Total assets$296,540$102,185
Liabilities and Partners' Capital
Current liabilities:
Accounts payable$8,011$1,977
Accrued and other current liabilities4,3691,755
Due to Sponsor1,212-
Deferred revenue-1,715
Total current liabilities13,5925,447
Long-term debt138,250-
Asset retirement obligation1,6431,555
Total liabilities153,4857,002
Commitments and contingencies--
Partners' capital:
General partner interest--
Limited partner interests, 28,865,171 and 27,280,702 units outstanding, respectively133,51295,183
Class B units, 3,750,000 and zero units outstanding, respectively9,543-
Total partners' capital143,05595,183
Total liabilities and partners' capital$296,540$102,185

Unaudited Production Cost per Ton

 
Period fromPeriod from
Three MonthsAugust 16July 1
EndedThroughThrough
September 30, 2013September 30, 2012August 15, 2012
SuccessorSuccessorPredecessor
Sand produced and delivered (tons)400,814191,446186,957
Production costs ($ in thousands)$        5,250$        2,437$        2,644
Production costs per ton$        13.10$        12.73$        14.14
 
Period fromPeriod from
Nine MonthsAugust 16January 1
EndedThroughThrough
September 30, 2013September 30, 2012August 15, 2012
SuccessorSuccessorPredecessor
Sand produced and delivered (tons)1,071,706191,446726,213
Production costs ($ in thousands)$      15,517$        2,437$      12,247
Production costs per ton$        14.48$        12.73$        16.86

HUG#1740878