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Delaware
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90-0832937
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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180 State Street, Suite 225, Southlake, Texas 76092
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(817) 865-5830
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(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
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Title of Each Class
|
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Name of Each Exchange On Which Registered
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Common Units Representing Limited Partner Interests
|
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New York Stock Exchange
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Large Accelerated Filer
o
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Accelerated Filer
o
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Non-Accelerated Filer
x
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Smaller Reporting Company
o
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Page
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•
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failure to secure or maintain contracts with our largest customers, or non-performance of any of those customers under the applicable contract;
|
•
|
competitive conditions in our industry;
|
•
|
the amount of frac sand we are able to excavate and process, which could be adversely affected by, among other things, operating difficulties and unusual or unfavorable geologic conditions;
|
•
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the volume of frac sand we are able to sell;
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•
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the price at which we are able to sell frac sand;
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•
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changes in the long-term supply of and demand for oil and natural gas;
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•
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volatility of fuel prices;
|
•
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unanticipated ground, grade or water conditions at our sand mines;
|
•
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actions taken by our customers, competitors and third-party operators;
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•
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our ability to complete growth projects on time and on budget;
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•
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inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change;
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•
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environmental hazards;
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•
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industrial accidents;
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•
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changes in laws and regulations (or the interpretation thereof) related to the mining and hydraulic fracturing industries, silica dust exposure or the environment;
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•
|
inability to acquire or maintain necessary permits or mining or water rights;
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•
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facility shutdowns in response to environmental regulatory actions;
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•
|
inability to obtain necessary production equipment or replacement parts;
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•
|
reduction in the amount of water available for processing;
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•
|
technical difficulties or failures;
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•
|
labor disputes and disputes with our excavation contractor;
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•
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late delivery of supplies;
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•
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difficulty collecting receivables;
|
•
|
inability of our customers to take delivery or our products;
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•
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changes in the price and availability of transportation;
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•
|
fires, explosions or other accidents;
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•
|
pit wall failures or rock falls;
|
•
|
the effects of future litigation; and
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•
|
other factors discussed in this Quarterly Report on Form 10-Q and the detailed factors discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2013.
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|
June 30, 2014
|
|
December 31, 2013
|
||||
ASSETS
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
11,602
|
|
|
$
|
2,167
|
|
Restricted cash and equivalents
|
—
|
|
|
6,188
|
|
||
Trade and other receivables, net
|
74,691
|
|
|
49,645
|
|
||
Inventories
|
32,509
|
|
|
41,320
|
|
||
Direct financing lease receivable
|
364
|
|
|
555
|
|
||
Prepaid expenses and other current assets
|
7,484
|
|
|
4,515
|
|
||
Total current assets
|
126,650
|
|
|
104,390
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
175,396
|
|
|
146,131
|
|
||
Intangible assets, net
|
35,211
|
|
|
39,415
|
|
||
Goodwill
|
29,264
|
|
|
29,264
|
|
||
Other assets, net
|
22,832
|
|
|
3,816
|
|
||
|
|
|
|
||||
Total assets
|
$
|
389,353
|
|
|
$
|
323,016
|
|
|
|
|
|
||||
LIABILITIES AND PARTNERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
34,030
|
|
|
$
|
36,096
|
|
Accrued liabilities
|
15,495
|
|
|
17,274
|
|
||
Current portion of long-term debt
|
65
|
|
|
233
|
|
||
Current portion of capital lease liability
|
3,885
|
|
|
3,469
|
|
||
Total current liabilities
|
53,475
|
|
|
57,072
|
|
||
|
|
|
|
||||
Long-term debt, net of current portion
|
169,964
|
|
|
93,809
|
|
||
Capital lease liability, net of current portion
|
2,507
|
|
|
—
|
|
||
Asset retirement obligations
|
1,564
|
|
|
1,414
|
|
||
Total liabilities
|
227,510
|
|
|
152,295
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||
Partners’ equity:
|
|
|
|
|
|
||
General partner
|
—
|
|
|
—
|
|
||
Limited partner common units (issued and outstanding 23,714,880 units and 23,219,608 units as of June 30, 2014 and December 31, 2013, respectively)
|
161,843
|
|
|
170,721
|
|
||
Total partners’ equity
|
161,843
|
|
|
170,721
|
|
||
|
|
|
|
||||
Total liabilities and partners’ equity
|
$
|
389,353
|
|
|
$
|
323,016
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Revenues*
|
$
|
298,273
|
|
|
$
|
204,929
|
|
|
$
|
572,354
|
|
|
$
|
356,984
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods sold (excluding depreciation, depletion and amortization)*
|
261,395
|
|
|
182,760
|
|
|
501,191
|
|
|
314,248
|
|
||||
Depreciation, depletion and amortization
|
5,711
|
|
|
4,922
|
|
|
11,481
|
|
|
8,076
|
|
||||
Selling, general and administrative expenses
|
8,994
|
|
|
6,128
|
|
|
17,469
|
|
|
9,427
|
|
||||
IPO transaction-related costs
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total operating expenses
|
276,100
|
|
|
204,732
|
|
|
530,141
|
|
|
342,673
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
22,173
|
|
|
197
|
|
|
42,213
|
|
|
14,311
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
1,943
|
|
|
3,450
|
|
|
3,527
|
|
|
7,663
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
—
|
|
|
907
|
|
||||
Other
|
(32
|
)
|
|
(117
|
)
|
|
(151
|
)
|
|
(159
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Total other expense (income)
|
1,911
|
|
|
4,240
|
|
|
3,376
|
|
|
8,411
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) before provision for income taxes
|
20,262
|
|
|
(4,043
|
)
|
|
38,837
|
|
|
5,900
|
|
||||
Provision for income taxes
|
170
|
|
|
95
|
|
|
259
|
|
|
125
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
20,092
|
|
|
(4,138
|
)
|
|
38,578
|
|
|
5,775
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Less Predecessor net income before May 14, 2013
|
—
|
|
|
3,211
|
|
|
—
|
|
|
13,124
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Post-IPO net income (loss)
|
$
|
20,092
|
|
|
$
|
(7,349
|
)
|
|
$
|
38,578
|
|
|
$
|
(7,349
|
)
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common unit (basic)
|
$
|
0.83
|
|
|
$
|
(0.31
|
)
|
|
$
|
1.60
|
|
|
$
|
(0.31
|
)
|
Earnings (loss) per common unit (diluted)
|
$
|
0.83
|
|
|
$
|
(0.31
|
)
|
|
$
|
1.60
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common units outstanding including participating securities (basic)
|
24,136,022
|
|
|
24,015,562
|
|
|
24,059,214
|
|
|
24,015,562
|
|
||||
Weighted average number of common units outstanding (diluted)
|
24,144,150
|
|
|
24,015,562
|
|
|
24,066,632
|
|
|
24,015,562
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
* Fuel revenues and cost of goods sold include excise taxes and similar taxes:
|
$
|
13,292
|
|
|
$
|
12,885
|
|
|
$
|
25,197
|
|
|
$
|
23,649
|
|
|
Limited Partner Common Units
|
|
General Partner
(non-economic
interest)
|
|
Total Partners’ Equity
|
||||||
Balance at December 31, 2013
|
$
|
170,721
|
|
|
$
|
—
|
|
|
$
|
170,721
|
|
|
|
|
|
|
|
||||||
Net income
|
38,578
|
|
|
—
|
|
|
38,578
|
|
|||
Equity-based compensation expense
|
4,330
|
|
|
—
|
|
|
4,330
|
|
|||
Distributions paid
|
(51,153
|
)
|
|
—
|
|
|
(51,153
|
)
|
|||
Distribution equivalent rights accrued
|
(644
|
)
|
|
—
|
|
|
(644
|
)
|
|||
Other
|
11
|
|
|
—
|
|
|
11
|
|
|||
|
|
|
|
|
|
||||||
Balance at June 30, 2014
|
$
|
161,843
|
|
|
$
|
—
|
|
|
$
|
161,843
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
38,578
|
|
|
$
|
5,775
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation, depletion and amortization
|
11,481
|
|
|
8,076
|
|
||
Equity-based compensation expense
|
4,330
|
|
|
1,221
|
|
||
Interest paid in-kind
|
—
|
|
|
3,125
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
||
Provision for doubtful accounts
|
63
|
|
|
64
|
|
||
Loss on disposal of assets
|
19
|
|
|
—
|
|
||
Amortization of debt discount/premium and deferred financing costs
|
426
|
|
|
454
|
|
||
Unrealized loss on derivative instruments
|
633
|
|
|
—
|
|
||
Other non-cash
|
10
|
|
|
—
|
|
||
Changes in operating assets and liabilities, net of business acquired:
|
|
|
|
|
|
||
Restricted cash and equivalents
|
6,188
|
|
|
—
|
|
||
Accounts receivable
|
(31,124
|
)
|
|
(10,618
|
)
|
||
Inventories
|
8,811
|
|
|
(2,440
|
)
|
||
Prepaid expenses and other current assets
|
(9,076
|
)
|
|
1,371
|
|
||
Accounts payable and accrued liabilities
|
(757
|
)
|
|
8,805
|
|
||
Other assets
|
(4
|
)
|
|
90
|
|
||
Net cash provided by operating activities
|
29,578
|
|
|
16,830
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Purchases of property, plant and equipment
|
(30,856
|
)
|
|
(15,970
|
)
|
||
Deposit for business acquisition
|
(11,000
|
)
|
|
—
|
|
||
Proceeds from disposals of assets
|
245
|
|
|
—
|
|
||
Acquisition of Direct Fuels, net of cash acquired
|
—
|
|
|
(16,686
|
)
|
||
Other investing activities
|
6
|
|
|
7
|
|
||
Net cash used in investing activities
|
(41,605
|
)
|
|
(32,649
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from IPO including over commitment
|
—
|
|
|
122,221
|
|
||
IPO offering costs
|
—
|
|
|
(6,001
|
)
|
||
Proceeds from line of credit borrowings
|
167,057
|
|
|
134,180
|
|
||
Repayment of line of credit borrowings
|
(90,903
|
)
|
|
(121
|
)
|
||
Repayment of Direct Fuels' debt
|
—
|
|
|
(21,673
|
)
|
||
Proceeds from other long-term debt
|
—
|
|
|
81
|
|
||
Repayment of other long-term debt
|
(168
|
)
|
|
(163,161
|
)
|
||
Distributions to unitholders
|
(51,481
|
)
|
|
—
|
|
||
Distributions to Predecessor owners
|
—
|
|
|
(19,628
|
)
|
||
Pre-IPO dividends paid (Direct Fuels)
|
—
|
|
|
(11,500
|
)
|
||
Payment of financing costs
|
(2,330
|
)
|
|
(3,660
|
)
|
||
Payments on capital lease obligation
|
(724
|
)
|
|
(1,095
|
)
|
||
Repayment of other debt
|
—
|
|
|
(309
|
)
|
||
Redemption of general partner interest
|
—
|
|
|
(2
|
)
|
||
Other financing activities
|
11
|
|
|
—
|
|
||
Net cash provided by financing activities
|
21,462
|
|
|
29,332
|
|
||
|
|
|
|
||||
Cash and cash equivalents:
|
|
|
|
|
|
||
Net increase
|
9,435
|
|
|
13,513
|
|
||
Balance at beginning of period
|
2,167
|
|
|
1,467
|
|
||
Balance at end of period
|
$
|
11,602
|
|
|
$
|
14,980
|
|
|
Three Months Ended
June 30, 2013 |
|
Six Months Ended
June 30, 2013 |
|
||||
|
($ in thousands)
|
|
||||||
Revenues
|
$
|
242,044
|
|
|
$
|
480,206
|
|
|
Net income
|
$
|
(4,853
|
)
|
|
$
|
5,204
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
|
||||
|
($ in thousands)
|
|
||||||
Refined fuels
|
$
|
12,320
|
|
|
$
|
15,049
|
|
|
Fuel raw materials and supplies
|
10,470
|
|
|
12,304
|
|
|
||
Sand raw materials
|
4,343
|
|
|
7,981
|
|
|
||
Sand work in process
|
100
|
|
|
1,528
|
|
|
||
Sand finished goods
|
5,276
|
|
|
4,458
|
|
|
||
Total
|
$
|
32,509
|
|
|
$
|
41,320
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
|
||||
|
($ in thousands)
|
|
||||||
Machinery and equipment (1)
|
$
|
121,816
|
|
|
$
|
115,629
|
|
|
Buildings and improvements (1)
|
32,154
|
|
|
31,819
|
|
|
||
Land and improvements (1)
|
24,232
|
|
|
20,314
|
|
|
||
Mineral reserves
|
10,800
|
|
|
10,800
|
|
|
||
Construction in progress
|
29,245
|
|
|
3,405
|
|
|
||
Capitalized reclamation costs
|
1,538
|
|
|
1,398
|
|
|
||
Total cost
|
219,785
|
|
|
183,365
|
|
|
||
Accumulated depreciation and depletion
|
44,389
|
|
|
37,234
|
|
|
||
|
|
|
|
|
||||
Net property, plant and equipment
|
$
|
175,396
|
|
|
$
|
146,131
|
|
|
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
||||||
|
($ in thousands)
|
|
||||||||||
June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|||
Trade names
|
$
|
46
|
|
|
$
|
19
|
|
|
$
|
27
|
|
|
Customer relationships
|
43,922
|
|
|
11,740
|
|
|
32,182
|
|
|
|||
Supply and transportation agreements
|
3,330
|
|
|
1,356
|
|
|
1,974
|
|
|
|||
Non-compete agreement
|
1,450
|
|
|
422
|
|
|
1,028
|
|
|
|||
Total
|
$
|
48,748
|
|
|
$
|
13,537
|
|
|
$
|
35,211
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|||
Trade names
|
$
|
46
|
|
|
$
|
17
|
|
|
$
|
29
|
|
|
Customer relationships
|
43,922
|
|
|
8,187
|
|
|
35,735
|
|
|
|||
Supply and transportation agreements
|
3,330
|
|
|
887
|
|
|
2,443
|
|
|
|||
Non-compete agreement
|
1,450
|
|
|
242
|
|
|
1,208
|
|
|
|||
Total
|
$
|
48,748
|
|
|
$
|
9,333
|
|
|
$
|
39,415
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
|
||||
|
($ in thousands)
|
|
||||||
Deposit for business acquisition
|
$
|
11,000
|
|
|
$
|
—
|
|
|
Prepaid lease assets, net of current portion*
|
6,107
|
|
|
—
|
|
|
||
Deferred financing costs, net
|
5,373
|
|
|
3,469
|
|
|
||
Other
|
352
|
|
|
347
|
|
|
||
|
|
|
|
|
||||
Total
|
$
|
22,832
|
|
|
$
|
3,816
|
|
|
|
*
|
The cost to transport leased railcars from the manufacturer to our site for initial placement in service is capitalized and amortized over the term of the lease (typically
five
to
seven
years). This balance reflects the non-current portion of these capitalized costs.
|
|
June 30,
2014 |
|
December 31, 2013
|
|
||||
|
($ in thousands)
|
|
||||||
Salaries and other employee-related
|
$
|
2,623
|
|
|
$
|
2,701
|
|
|
Deferred compensation
|
946
|
|
|
6,740
|
|
|
||
Deferred revenue
|
126
|
|
|
3,131
|
|
|
||
Sales, excise, property and income taxes
|
4,251
|
|
|
2,659
|
|
|
||
Other
|
7,549
|
|
|
2,043
|
|
|
||
|
|
|
|
|
||||
Total
|
$
|
15,495
|
|
|
$
|
17,274
|
|
|
Incentive compensation:
|
|
|
||
Compensation and payroll-related costs for termination of LTIC plan
|
$
|
6,512
|
|
|
Incentive compensation and payroll-related costs to other management employees
|
2,853
|
|
|
|
Other IPO-related costs
|
1,557
|
|
|
|
|
|
|
||
Total IPO transaction-related costs
|
$
|
10,922
|
|
|
|
June 30,
2014 |
|
December 31, 2013
|
|
||||
|
($ in thousands)
|
|
||||||
Revolving credit facility
|
$
|
169,964
|
|
|
$
|
93,809
|
|
|
Other notes
|
65
|
|
|
233
|
|
|
||
Total debt
|
170,029
|
|
|
94,042
|
|
|
||
Less current portion
|
65
|
|
|
233
|
|
|
||
|
|
|
|
|
||||
Long-term portion
|
$
|
169,964
|
|
|
$
|
93,809
|
|
|
•
|
increase our revolving credit facility (the “Credit Facility”) to
$350 million
, which we may increase from time to time upon our satisfaction of certain conditions by up to an aggregate of
$150 million
;
|
•
|
revise the interest rates applicable to borrowings under the Credit Facility as follows (at our option);
|
•
|
a
Base Rate
(as defined in the Credit Agreement), which will be the base commercial lending rate of PNC Bank, as publicly announced to be in effect from time to time, plus an applicable margin ranging from
1.25%
to
2%
based on our total leverage ratio; or
|
•
|
LIBOR
plus an applicable margin ranging from
2.25%
to
3.0%
based on our total leverage ratio;
|
•
|
increase the sublimit for the issuance of letters of credit to
$30 million
;
|
•
|
revise financial covenants as discussed below; and
|
•
|
extend the maturity date to June 27, 2019.
|
•
|
an interest coverage ratio (as defined in the Credit Agreement) of not less than
3.00
to 1.00; and
|
•
|
a total leverage ratio (as defined in the Credit Agreement) of not greater than
3.00
to 1.00. The requirement to maintain the total leverage ratio is subject an increase to
3.50
to 1.00 in connection with certain permitted acquisitions.
|
|
Operating Lease Commitments
|
|
Purchase Commitments
|
|
Capital Lease Obligations
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Remainder of 2014
|
$
|
9,479
|
|
|
$
|
750
|
|
|
$
|
500
|
|
|
2015
|
22,961
|
|
|
1,200
|
|
|
800
|
|
|
|||
2016
|
22,961
|
|
|
1,200
|
|
|
800
|
|
|
|||
2017
|
22,301
|
|
|
1,200
|
|
|
800
|
|
|
|||
2018
|
20,928
|
|
|
1,200
|
|
|
615
|
|
|
|||
Thereafter
|
33,085
|
|
|
—
|
|
|
—
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
131,715
|
|
|
$
|
5,550
|
|
|
3,515
|
|
|
|
Less amount representing interest
|
|
|
|
|
345
|
|
|
|||||
|
|
|
|
|
|
|
||||||
Total less interest
|
|
|
|
|
$
|
3,170
|
|
|
|
Six Months Ended June 30,
|
|
||||||
|
2014
|
|
2013
|
|
||||
|
($ in thousands)
|
|
||||||
Wages and employee-related costs (1)
|
$
|
13,677
|
|
|
$
|
4,310
|
|
|
Interest expense (2)
|
—
|
|
|
1,915
|
|
|
||
General and administrative expense reimbursements (3)
|
75
|
|
|
19
|
|
|
||
Consulting services (4)
|
—
|
|
|
112
|
|
|
||
Lease expense
|
13
|
|
|
12
|
|
|
|
June 30,
2014 |
|
December 31,
2013 |
|
||||
|
($ in thousands)
|
|
||||||
Accounts receivable
|
$
|
174
|
|
|
$
|
124
|
|
|
Accounts payable and accrued liabilities
|
428
|
|
|
515
|
|
|
|
(1)
|
We do not have any employees. Prior to May 14, 2013, our Predecessor and Direct Fuels had employees assigned directly to their respective operations. On May 14, 2013, our general partner hired all employees of the Predecessor and Direct Fuels. After this date, our general partner manages our human resource assets, including fringe benefits and other employee-related charges. We routinely and regularly reimburse our general partner for any employee-related costs paid on our behalf, and report such costs as operating expenses.
|
(2)
|
Debt payable to related parties was repaid using proceeds of our IPO in May 2013.
|
(3)
|
We paid Insight Equity Management Company LLC (collectively, with its affiliated investment funds and its controlling equity owners, “Insight Equity”) certain IPO transaction-related costs and other general and administrative costs. See discussion of the current services agreement below.
|
(4)
|
Prior to May 14, 2013, our Fuel segment paid an affiliated company for leadership services at an annual amount of
$250,000
plus bonus for financial performance, if any. Beginning May 14, 2013, these services are being performed by Insight Equity employees and are charged to us through the reimbursement process described in (1) above.
|
|
Total
Units |
|
Phantom
Units |
|
Restricted
Units |
|
Fair Value per Unit
at Award Date |
|
|||||
Outstanding at December 31, 2013
|
1,098,235
|
|
|
1,087,648
|
|
|
10,587
|
|
|
$
|
17.00
|
|
|
Grants
|
2,895
|
|
|
—
|
|
|
2,895
|
|
|
84.65
|
|
|
|
Vested
|
(495,200
|
)
|
|
(484,546
|
)
|
|
(10,654
|
)
|
|
17.01
|
|
|
|
Forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
Outstanding at June 30, 2014
|
605,930
|
|
|
603,102
|
|
|
2,828
|
|
|
$
|
17.32
|
|
|
|
Six Months Ended June 30,
|
|
||||||
|
2014
|
|
2013
|
|
||||
|
($ in thousands)
|
|
||||||
Federal and state income tax expense for Distributor
|
$
|
181
|
|
|
$
|
50
|
|
|
Texas margin tax
|
78
|
|
|
75
|
|
|
||
|
|
|
|
|
||||
Total provision for income taxes
|
$
|
259
|
|
|
$
|
125
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
Post-IPO net income (loss) (in thousands)
|
$
|
20,092
|
|
|
$
|
(7,349
|
)
|
|
$
|
38,578
|
|
|
$
|
(7,349
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per unit:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common units outstanding
|
23,445,671
|
|
|
23,219,680
|
|
|
23,333,300
|
|
|
23,219,680
|
|
|
||||
Weighted average phantom units deemed participating securities
|
690,351
|
|
|
795,882
|
|
|
725,914
|
|
|
795,882
|
|
|
||||
Total
|
24,136,022
|
|
|
24,015,562
|
|
|
24,059,214
|
|
|
24,015,562
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common unit (basic)
|
$
|
0.83
|
|
|
$
|
(0.31
|
)
|
|
$
|
1.60
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per unit:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average common units outstanding
|
23,445,671
|
|
|
23,219,680
|
|
|
23,333,300
|
|
|
23,219,680
|
|
|
||||
Weighted average phantom units deemed participating securities
|
690,351
|
|
|
795,882
|
|
|
725,914
|
|
|
795,882
|
|
|
||||
Weighted average potentially dilutive units outstanding
|
8,128
|
|
|
—
|
|
|
7,418
|
|
|
—
|
|
|
||||
Total
|
24,144,150
|
|
|
24,015,562
|
|
|
24,066,632
|
|
|
24,015,562
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (loss) per common unit (diluted)
|
$
|
0.83
|
|
|
$
|
(0.31
|
)
|
|
$
|
1.60
|
|
|
$
|
(0.31
|
)
|
|
•
|
Sand
- the production and sale of various grades of sand primarily used in the extraction of oil and natural gas and the production of numerous building products and foundry materials.
|
•
|
Fuel -
the refining of transmix, distribution of finished fuel products, terminal and reclamation activities, and refining of biodiesel.
|
•
|
general and administrative costs related to corporate overhead, such as headquarters facilities and personnel, as well as equity-based compensation;
|
•
|
certain other operating costs such as IPO transaction-related; and
|
•
|
non-operating items such as interest, other income and income taxes.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
|
($ in thousands)
|
||||||||||||||||||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues
|
$
|
77,470
|
|
|
$
|
34,463
|
|
|
$
|
220,803
|
|
|
$
|
170,466
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
298,273
|
|
|
$
|
204,929
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
51,860
|
|
|
18,263
|
|
|
209,535
|
|
|
164,497
|
|
|
—
|
|
|
—
|
|
|
261,395
|
|
|
182,760
|
|
||||||||
Depreciation, depletion and amortization
|
2,688
|
|
|
2,517
|
|
|
3,017
|
|
|
2,405
|
|
|
6
|
|
|
—
|
|
|
5,711
|
|
|
4,922
|
|
||||||||
Selling, general and administrative expenses
|
2,448
|
|
|
2,075
|
|
|
1,507
|
|
|
1,513
|
|
|
5,039
|
|
|
2,540
|
|
|
8,994
|
|
|
6,128
|
|
||||||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating income (loss)
|
$
|
20,474
|
|
|
$
|
11,608
|
|
|
$
|
6,744
|
|
|
$
|
2,051
|
|
|
$
|
(5,045
|
)
|
|
$
|
(13,462
|
)
|
|
$
|
22,173
|
|
|
$
|
197
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
|
($ in thousands)
|
||||||||||||||||||||||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues
|
$
|
141,804
|
|
|
$
|
66,521
|
|
|
$
|
430,550
|
|
|
$
|
290,463
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
572,354
|
|
|
$
|
356,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
90,736
|
|
|
35,439
|
|
|
410,455
|
|
|
278,809
|
|
|
—
|
|
|
—
|
|
|
501,191
|
|
|
314,248
|
|
||||||||
Depreciation, depletion and amortization
|
5,446
|
|
|
4,957
|
|
|
6,022
|
|
|
3,119
|
|
|
13
|
|
|
—
|
|
|
11,481
|
|
|
8,076
|
|
||||||||
Selling, general and administrative expenses
|
5,664
|
|
|
4,298
|
|
|
2,789
|
|
|
2,589
|
|
|
9,016
|
|
|
2,540
|
|
|
17,469
|
|
|
9,427
|
|
||||||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating income (loss)
|
$
|
39,958
|
|
|
$
|
21,827
|
|
|
$
|
11,284
|
|
|
$
|
5,946
|
|
|
$
|
(9,029
|
)
|
|
$
|
(13,462
|
)
|
|
$
|
42,213
|
|
|
$
|
14,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total assets (at period end)
|
$
|
202,349
|
|
|
$
|
121,014
|
|
|
$
|
169,183
|
|
|
$
|
193,539
|
|
|
$
|
17,821
|
|
|
$
|
17,919
|
|
|
$
|
389,353
|
|
|
$
|
332,472
|
|
•
|
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
|
•
|
Level 3 inputs are measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources.
|
Agreement Date
|
|
Effective Date
|
|
Maturity Date
|
|
Notional Amount
|
|
Fixed Rate
|
|
Variable Rate
|
|
Nov. 1, 2013
|
|
Oct. 14, 2014
|
|
Oct. 16, 2017
|
|
$25,000,000
|
|
1.33200%
|
|
1 Month LIBOR
|
|
Nov. 7, 2013
|
|
Oct. 14, 2014
|
|
Oct. 16, 2017
|
|
$25,000,000
|
|
1.25500%
|
|
1 Month LIBOR
|
|
Nov. 21, 2013
|
|
Oct. 14, 2014
|
|
Oct. 16, 2017
|
|
$20,000,000
|
|
1.21875%
|
|
1 Month LIBOR
|
|
|
June 30, 2014
|
|
December 31, 2013
|
|
Classification
|
|
||||
|
($ in thousands)
|
|
|
|
||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
||
Interest rate swaps
|
$
|
—
|
|
|
$
|
247
|
|
|
Prepaid expenses and other current assets
|
|
Derivative liabilities:
|
|
|
|
|
|
|
|
|
||
Interest rate swaps
|
$
|
386
|
|
|
$
|
—
|
|
|
Accrued liabilities
|
|
Commodity derivative contracts
|
$
|
149
|
|
|
$
|
66
|
|
|
Accrued liabilities
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Classification
|
|
||||||||
|
(expense(income), $ in thousands)
|
|
|
|
||||||||||||||
Interest rate swaps
|
$
|
498
|
|
|
$
|
—
|
|
|
$
|
633
|
|
|
$
|
—
|
|
|
Interest expense, net
|
|
Commodity derivative contracts
|
322
|
|
|
(1,048
|
)
|
|
403
|
|
|
(952
|
)
|
|
Cost of goods sold
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
$
|
820
|
|
|
$
|
(1,048
|
)
|
|
$
|
1,036
|
|
|
$
|
(952
|
)
|
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2014
|
|
2013
|
||||
|
($ in thousands)
|
||||||
Cash paid for interest
|
$
|
2,357
|
|
|
$
|
2,825
|
|
Cash paid for income taxes, net of refunds
|
163
|
|
|
—
|
|
||
Issuance of common units to acquire Direct Fuels
|
—
|
|
|
53,721
|
|
||
Customer advances offset against accounts receivable
|
—
|
|
|
4,043
|
|
||
Deferred compensation expense
|
81
|
|
|
6,216
|
|
||
Distribution equivalent rights accrued, net of payments
|
316
|
|
|
—
|
|
||
Capitalized reclamation costs
|
140
|
|
|
—
|
|
||
Purchases of PP&E accrued in a prior period and paid in the current period
|
1,641
|
|
|
9,455
|
|
||
Purchases of PP&E included in accounts payable
|
4,102
|
|
|
—
|
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Revenues
|
$
|
298,273
|
|
|
$
|
204,929
|
|
|
$
|
572,354
|
|
|
$
|
356,984
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
261,395
|
|
|
182,760
|
|
|
501,191
|
|
|
314,248
|
|
|
||||
Depreciation, depletion and amortization
|
5,711
|
|
|
4,922
|
|
|
11,481
|
|
|
8,076
|
|
|
||||
Selling, general and administrative expenses
|
8,994
|
|
|
6,128
|
|
|
17,469
|
|
|
9,427
|
|
|
||||
IPO transaction-related costs
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total operating expenses
|
276,100
|
|
|
204,732
|
|
|
530,141
|
|
|
342,673
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
22,173
|
|
|
197
|
|
|
42,213
|
|
|
14,311
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense
|
1,943
|
|
|
3,450
|
|
|
3,527
|
|
|
7,663
|
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
—
|
|
|
907
|
|
|
||||
Other
|
(32
|
)
|
|
(117
|
)
|
|
(151
|
)
|
|
(159
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total other expense
|
1,911
|
|
|
4,240
|
|
|
3,376
|
|
|
8,411
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Income before provision for taxes
|
20,262
|
|
|
(4,043
|
)
|
|
38,837
|
|
|
5,900
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Provision for taxes
|
170
|
|
|
95
|
|
|
259
|
|
|
125
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
20,092
|
|
|
$
|
(4,138
|
)
|
|
$
|
38,578
|
|
|
$
|
5,775
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (a)
|
$
|
30,137
|
|
|
$
|
17,296
|
|
|
$
|
58,116
|
|
|
$
|
34,594
|
|
|
|
•
|
substantial growth of our Sand segment through:
|
•
|
addition of the Barron plant in late 2012, which ramped up its production throughout 2013;
|
•
|
development of our distribution and logistics services to better serve our customers through additional transload sites in 2013 and 2014;
|
•
|
construction on two new wet plants situated at two new mine sites - one beginning operations in April 2014, and the other which we expect to begin operations later in 2014; and
|
•
|
construction of two new facilities to produce finished sand, which we expect to commence operations in the fourth quarter of 2014 and the first quarter of 2015;
|
•
|
the acquisition of Direct Fuels to substantially increase our Fuel segment in May 2013; and
|
•
|
our IPO in May 2013, which brought these two segments together for the first time and allowed us to refinance our debt at more favorable terms going forward.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Revenues
|
$
|
77,470
|
|
|
$
|
34,463
|
|
|
$
|
141,804
|
|
|
$
|
66,521
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
51,860
|
|
|
18,263
|
|
|
90,736
|
|
|
35,439
|
|
|
||||
Depreciation, depletion and amortization
|
2,688
|
|
|
2,517
|
|
|
5,446
|
|
|
4,957
|
|
|
||||
Selling, general and administrative expenses
|
2,448
|
|
|
2,075
|
|
|
5,664
|
|
|
4,298
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
$
|
20,474
|
|
|
$
|
11,608
|
|
|
$
|
39,958
|
|
|
$
|
21,827
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (a)
|
$
|
23,184
|
|
|
$
|
14,125
|
|
|
$
|
45,421
|
|
|
$
|
26,784
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Volume of sand sold (tons in thousands):
|
|
|
|
|
|
|
|
|
||||||||
Barron, Wisconsin facility
|
522
|
|
|
289
|
|
|
1,012
|
|
|
477
|
|
|
||||
New Auburn, Wisconsin facility
|
432
|
|
|
309
|
|
|
785
|
|
|
607
|
|
|
||||
Kosse, Texas facility
|
91
|
|
|
36
|
|
|
130
|
|
|
68
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total volume of sand sold
|
1,045
|
|
|
634
|
|
|
1,927
|
|
|
1,152
|
|
|
|
•
|
$31.4 million increase for the Barron plant due to:
|
•
|
an
81%
increase in volumes sold as operations ramped up throughout the year following its opening; and
|
•
|
higher sales prices related mainly to sales from transload sites;
|
•
|
$8.6 million increase for the New Auburn plant due to a production capacity increase with installation of an additional screen deck in 2013; and
|
•
|
$3.0 million increase for the Kosse plant due to a
153%
increase in volumes sold as well as an increase in average sales prices.
|
•
|
$22.6 million increase in rail transportation expense, mainly for additional railcars to transport sand from our plants to the transload sites;
|
•
|
$10.0 million increase in the cost of sand purchased from third-party mines and processed and washed sand from proprietary mines, due primarily to increased sales from the Wisconsin plants; and
|
•
|
$1.2 million increase in utilities and labor costs, primarily for processing higher volumes of sand in our dry plants.
|
•
|
$62.7 million increase for the Barron plant due to:
|
•
|
a
112%
increase in volumes sold as operations ramped up throughout the year following its opening; and
|
•
|
higher sales prices related to sales from transload sites;
|
•
|
$10.2 million increase for the New Auburn plant due to:
|
•
|
a production capacity increase with installation of an additional screen deck in 2013;
|
•
|
partially offset by select customer discounts; and
|
•
|
$2.4 million increase for the Kosse plant due mainly to:
|
•
|
increased sales volumes in the second quarter of 2014; slightly offset by
|
•
|
lower average prices per ton, as coarser grades of Northern White frac sand were shipped to, processed and sold from the Kosse plant in the first quarter of 2013, leading to higher average sales prices than the finer sands sold from Kosse in 2014.
|
•
|
$38.3 million increase in rail transportation expense, mainly for additional railcars to transport sand from our plants to the transload sites;
|
•
|
$14.2 million increase in the cost of sand purchased from third-party mines and processed and washed sand from proprietary mines, due primarily to increased production at the Wisconsin plants; and
|
•
|
$1.6 million increase in utilities costs, primarily for processing higher volumes of sand in our dry plants; and
|
•
|
$1.0 million increase in labor to process higher volumes of sand in our dry plants.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Revenues
|
$
|
220,803
|
|
|
$
|
170,466
|
|
|
$
|
430,550
|
|
|
$
|
290,463
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
209,535
|
|
|
164,497
|
|
|
410,455
|
|
|
278,809
|
|
|
||||
Depreciation, depletion and amortization
|
3,017
|
|
|
2,405
|
|
|
6,022
|
|
|
3,119
|
|
|
||||
Selling, general and administrative expenses
|
1,507
|
|
|
1,513
|
|
|
2,789
|
|
|
2,589
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
$
|
6,744
|
|
|
$
|
2,051
|
|
|
$
|
11,284
|
|
|
$
|
5,946
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (a)
|
$
|
9,799
|
|
|
$
|
4,490
|
|
|
$
|
17,381
|
|
|
$
|
9,129
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Volume of refined fuels sold (gallons in thousands)
|
70,514
|
|
|
55,404
|
|
|
138,742
|
|
|
91,426
|
|
|
||||
Volume of terminal throughput (gallons in thousands)
|
53,094
|
|
|
53,553
|
|
|
106,425
|
|
|
90,663
|
|
|
||||
Volume of transmix refined (gallons in thousands)
|
28,479
|
|
|
18,073
|
|
|
63,695
|
|
|
24,483
|
|
|
||||
Refined transmix as a percent of total refined fuels sold
|
40.4
|
%
|
|
32.6
|
%
|
|
45.9
|
%
|
|
26.8
|
%
|
|
|
•
|
$6.1 million increased revenues for higher sales volumes; and
|
•
|
$5.9 million related to higher average sales prices; offset by
|
•
|
$0.7 million decrease in excise and other transaction taxes.
|
•
|
$5.8 million increased costs for higher volumes; and
|
•
|
$2.9 million related to higher average purchase prices; offset by
|
•
|
$0.7 million decrease in excise and other transaction taxes.
|
•
|
$10.9 million increased revenues for higher sales volumes; and
|
•
|
$1.1 million related to lower average sales prices, particularly in the first quarter; offset by
|
•
|
$1.4 million decrease in excise and other transaction taxes.
|
•
|
$10.2 million increased costs for higher volumes; offset by
|
•
|
$1.1 million decrease related to lower average purchase prices; and
|
•
|
$1.4 million decrease in excise and other transaction taxes.
|
|
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
||||||||
|
($ in thousands)
|
|
||||||||||||||
Depreciation, depletion and amortization
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
Selling, general and administrative expenses
|
5,039
|
|
|
2,540
|
|
|
9,016
|
|
|
2,540
|
|
|
||||
IPO transaction-related costs
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
(5,045
|
)
|
|
(13,462
|
)
|
|
(9,029
|
)
|
|
(13,462
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
1,943
|
|
|
3,450
|
|
|
3,527
|
|
|
7,663
|
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
—
|
|
|
907
|
|
|
||||
Other
|
(32
|
)
|
|
(117
|
)
|
|
(151
|
)
|
|
(159
|
)
|
|
||||
Income (loss) before provision for taxes
|
(6,956
|
)
|
|
(17,702
|
)
|
|
(12,405
|
)
|
|
(21,873
|
)
|
|
||||
Provision for income taxes
|
170
|
|
|
95
|
|
|
259
|
|
|
125
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Unallocated corporate income (loss)
|
$
|
(7,126
|
)
|
|
$
|
(17,797
|
)
|
|
$
|
(12,664
|
)
|
|
$
|
(21,998
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA (a)
|
$
|
(2,846
|
)
|
|
$
|
(1,319
|
)
|
|
$
|
(4,686
|
)
|
|
$
|
(1,319
|
)
|
|
|
|
Six Months Ended
June 30, |
|
||||||
|
2014
|
|
2013
|
|
||||
|
($ in thousands)
|
|
||||||
Cash flows from operating activities
|
$
|
29,578
|
|
|
$
|
16,830
|
|
|
Cash flows from investing activities
|
$
|
(41,605
|
)
|
|
$
|
(32,649
|
)
|
|
Cash flows from financing activities
|
$
|
21,462
|
|
|
$
|
29,332
|
|
|
Cash and cash equivalents at beginning of period
|
$
|
2,167
|
|
|
$
|
1,467
|
|
|
Cash and cash equivalents at end of period
|
$
|
11,602
|
|
|
$
|
14,980
|
|
|
|
Six Months Ended
June 30, |
|
||||||
|
2014
|
|
2013
|
|
||||
|
($ in thousands)
|
|
||||||
Non-recurring:
|
|
|
|
|
||||
Proceeds from IPO, net of offering costs
|
$
|
—
|
|
|
$
|
116,220
|
|
|
Distribution to Direct Fuels' owners
|
—
|
|
|
(11,500
|
)
|
|
||
Recurring:
|
|
|
|
|
||||
Net debt proceeds (payments)
|
75,986
|
|
|
(50,694
|
)
|
|
||
Distributions to owners
|
(51,481
|
)
|
|
(19,628
|
)
|
|
||
Other
|
(3,043
|
)
|
|
(5,066
|
)
|
|
||
|
|
|
|
|
||||
Total
|
$
|
21,462
|
|
|
$
|
29,332
|
|
|
|
Operating Lease Commitments
|
|
Purchase Commitments
|
|
Capital Lease Obligations
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Remainder of 2014
|
$
|
9,479
|
|
|
$
|
750
|
|
|
$
|
500
|
|
|
2015
|
22,961
|
|
|
1,200
|
|
|
800
|
|
|
|||
2016
|
22,961
|
|
|
1,200
|
|
|
800
|
|
|
|||
2017
|
22,301
|
|
|
1,200
|
|
|
800
|
|
|
|||
2018
|
20,928
|
|
|
1,200
|
|
|
615
|
|
|
|||
Thereafter
|
33,085
|
|
|
—
|
|
|
—
|
|
|
|||
|
|
|
|
|
|
|
|
|||||
Total
|
$
|
131,715
|
|
|
$
|
5,550
|
|
|
$
|
3,515
|
|
|
•
|
the financial performance of our assets without regard to the impact of financing methods, capital structure or historical cost basis of our assets;
|
•
|
the viability of capital expenditure projects and the overall rates of return on alternative investment opportunities;
|
•
|
our liquidity position and the ability of our assets to generate cash sufficient to make debt payments and to make distributions; and
|
•
|
our operating performance as compared to those of other companies in our industry without regard to the impact of financing methods and capital structure.
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
|
($ in thousands)
|
||||||||||||||||||||||||||||||
Net income (loss)
|
$
|
20,474
|
|
|
$
|
11,608
|
|
|
$
|
6,744
|
|
|
$
|
2,051
|
|
|
$
|
(7,126
|
)
|
|
$
|
(17,797
|
)
|
|
$
|
20,092
|
|
|
$
|
(4,138
|
)
|
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,943
|
|
|
3,450
|
|
|
1,943
|
|
|
3,450
|
|
||||||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
907
|
|
|
—
|
|
|
907
|
|
||||||||
Other (income) loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
(117
|
)
|
|
(32
|
)
|
|
(117
|
)
|
||||||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
95
|
|
|
170
|
|
|
95
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating income (loss)
|
20,474
|
|
|
11,608
|
|
|
6,744
|
|
|
2,051
|
|
|
(5,045
|
)
|
|
(13,462
|
)
|
|
22,173
|
|
|
197
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation, depletion and amortization
|
2,688
|
|
|
2,517
|
|
|
3,017
|
|
|
2,405
|
|
|
6
|
|
|
—
|
|
|
5,711
|
|
|
4,922
|
|
||||||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,193
|
|
|
1,221
|
|
|
2,193
|
|
|
1,221
|
|
||||||||
Loss (gain) on disposal of equipment
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||||||
Provision for doubtful accounts
|
(7
|
)
|
|
—
|
|
|
38
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
34
|
|
||||||||
Accretion of asset retirement obligation
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted EBITDA
|
$
|
23,184
|
|
|
$
|
14,125
|
|
|
$
|
9,799
|
|
|
$
|
4,490
|
|
|
$
|
(2,846
|
)
|
|
$
|
(1,319
|
)
|
|
$
|
30,137
|
|
|
$
|
17,296
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||||||||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||||||||||
|
($ in thousands)
|
||||||||||||||||||||||||||||||
Net income (loss)
|
$
|
39,958
|
|
|
$
|
21,827
|
|
|
$
|
11,284
|
|
|
$
|
5,946
|
|
|
$
|
(12,664
|
)
|
|
$
|
(21,998
|
)
|
|
$
|
38,578
|
|
|
$
|
5,775
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,527
|
|
|
7,663
|
|
|
3,527
|
|
|
7,663
|
|
||||||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
907
|
|
|
—
|
|
|
907
|
|
||||||||
Other (income) loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(151
|
)
|
|
(159
|
)
|
|
(151
|
)
|
|
(159
|
)
|
||||||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
259
|
|
|
125
|
|
|
259
|
|
|
125
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Operating income (loss)
|
39,958
|
|
|
21,827
|
|
|
11,284
|
|
|
5,946
|
|
|
(9,029
|
)
|
|
(13,462
|
)
|
|
42,213
|
|
|
14,311
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Depreciation, depletion and amortization
|
5,446
|
|
|
4,957
|
|
|
6,022
|
|
|
3,119
|
|
|
13
|
|
|
—
|
|
|
11,481
|
|
|
8,076
|
|
||||||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,922
|
|
|
—
|
|
|
10,922
|
|
||||||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,330
|
|
|
1,221
|
|
|
4,330
|
|
|
1,221
|
|
||||||||
Loss on disposal of equipment
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||||||
Provision for doubtful accounts
|
(12
|
)
|
|
—
|
|
|
75
|
|
|
64
|
|
|
—
|
|
|
|
|
63
|
|
|
64
|
|
|||||||||
Accretion of asset retirement obligation
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Adjusted EBITDA
|
$
|
45,421
|
|
|
$
|
26,784
|
|
|
$
|
17,381
|
|
|
$
|
9,129
|
|
|
$
|
(4,686
|
)
|
|
$
|
(1,319
|
)
|
|
$
|
58,116
|
|
|
$
|
34,594
|
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Limited Partnership of Emerge Energy Services LP (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.2
|
|
Amendment to Certificate of Limited Partnership of Emerge Energy Services LP (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.3
|
|
First Amended and Restated Limited Partnership Agreement of Emerge Energy Services LP, dated as of May 14, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
3.4
|
|
Certificate of Limited Formation of Emerge Energy Services GP LLC (incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.5
|
|
Amendment to Certificate of Formation of Emerge Energy Services GP LLC (incorporated by reference to Exhibit 3.6 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.6
|
|
Amended and Restated Limited Liability Company Agreement of Emerge Energy Services GP, LLC, dated as of May 14, 2013 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.1*†
|
|
Second Amendment to Sand Supply Agreement, dated as of June 10, 2014, between Superior Silica Sands LLC and Schlumberger Technology Corporation.
|
|
|
|
10.2
|
|
Amended and Restated Revolving Credit and Security Agreement, dated as of June 27, 2014, among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, PNC Bank, National Association, as administrative agent and collateral agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 30, 2014).
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
|
|
Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
95.1*
|
|
Mine Safety Disclosure Exhibit.
|
|
|
|
101*
|
|
Interactive Data Files - XBRL
|
|
|
EMERGE ENERGY SERVICES LP
|
||
|
|
|
|
|
By:
|
EMERGE ENERGY SERVICES GP LLC, its general partner
|
|
|
|
|
|
|
By:
|
/s/ Rick Shearer
|
|
|
|
Rick Shearer
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
By:
|
/s/ Robert Lane
|
|
|
|
Robert Lane
|
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Limited Partnership of Emerge Energy Services LP (incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.2
|
|
Amendment to Certificate of Limited Partnership of Emerge Energy Services LP (incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.3
|
|
First Amended and Restated Limited Partnership Agreement of Emerge Energy Services LP, dated as of May 14, 2013 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
3.4
|
|
Certificate of Limited Formation of Emerge Energy Services GP LLC (incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.5
|
|
Amendment to Certificate of Formation of Emerge Energy Services GP LLC (incorporated by reference to Exhibit 3.6 to the Registrant’s Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
3.6
|
|
Amended and Restated Limited Liability Company Agreement of Emerge Energy Services GP, LLC, dated as of May 14, 2013 (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.1*†
|
|
Second Amendment to Sand Supply Agreement, dated as of June 10, 2014, between Superior Silica Sands LLC and Schlumberger Technology Corporation.
|
|
|
|
10.2
|
|
Amended and Restated Revolving Credit and Security Agreement, dated as of June 27, 2014, among Emerge Energy Services LP, as parent guarantor, the Borrowers party thereto, PNC Bank, National Association, as administrative agent and collateral agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on June 30, 2014).
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
|
|
Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
95.1*
|
|
Mine Safety Disclosure Exhibit.
|
|
|
|
101*
|
|
Interactive Data Files - XBRL
|
|
1.
|
Volume Commitments
:
|
a.
|
Supplier agrees to use commercially reasonable best efforts to supply to Company, and Company agrees to use commercially reasonable best efforts to purchase from Supplier, the following volumes of the Product:
|
i.
|
For two (2) years immediately following the Amendment Effective Date, 2.5 million Tons per year.
|
ii.
|
Following the two (2) year period referenced above, upon sixty (60) days written notice to the other Party, Supplier or Company may reduce the volume commitment to 1 million Tons per year for the remainder of the Term;
provided
,
however
, that Company shall have the option to reject such reduction within fourteen (14) days of receiving notice from Supplier by giving written notice of the rejection to Supplier.
|
b.
|
Notwithstanding the volume commitments set forth above, from the Amendment Effective Date until the establishment of Supplier’s operations in Arland, Wisconsin, the annualized tonnage of Product to be supplied hereunder shall be 1.5 million Tons. Until establishment of Supplier’s Arland, Wisconsin operations, under no circumstances shall Supplier’s failure to supply more than 1.5 million Tons on an annualized basis be deemed a breach of its obligations under the Agreement.
|
2.
|
Pricing Commitment
:
|
a.
|
Company agrees to pay Supplier the following prices for the Product for the remainder of the Agreement term:
|
Grade
|
Price Per Net Ton
|
***
|
***
|
SCHLUMBERGER TECHNOLOGY
CORPORATION
|
|
SUPERIOR SILICA SANDS LLC
|
|
|
|
/s/ Robert Bergeron
|
|
/s/ Richard J. Shearer
|
By
|
|
By
|
|
|
|
|
|
|
Robert Bergeron
|
|
Richard J. Shearer
|
Print Name
|
|
Print Name
|
|
|
|
|
|
|
Vice President
|
|
President & CEO
|
Title
|
|
Title
|
|
|
|
|
Date: August 8, 2014
|
/s/ Rick Shearer
|
|
Rick Shearer
|
|
President and Chief Executive Officer of Emerge Energy Services GP LLC (the general partner of Emerge Energy Services LP)
(Principal Executive Officer)
|
Date: August 8, 2014
|
/s/ Robert Lane
|
|
Robert Lane
|
|
Senior Vice President, Chief Financial Officer and Treasurer of Emerge Energy Services GP LLC (the general partner of Emerge Energy Services LP)
(Principal Financial Officer)
|
Date: August 8, 2014
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Rick Shearer
|
|
|
Rick Shearer
|
|
|
President and Chief Executive Officer of
Emerge Energy Services
GP LLC (the general partner of
Emerge Energy Services
LP)
|
Date: August 8, 2014
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert Lane
|
|
|
Robert Lane
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer of
Emerge Energy Services
GP LLC (the general partner of
Emerge Energy Services
LP)
|
Mine or Operating
Name and MSHA
Identification Number
|
Section 104
S&S Citations
(#)
|
Section
104(b)
Orders
(#)
|
Section
104(d)
Citations
and Orders
(#)
|
Section
110(b)(2)
Violations
(#)
|
Section
107(a)
Orders
(#)
|
Total Dollar
Value of MSHA
Assessments
Proposed
($)
|
Total Number
of Mining
Related
Fatalities
(#)
|
Received Notice
of Pattern of
Violations Under
Section 104(e)
(yes/no)
|
Received Notice of
Potential to Have
Pattern Under Section
104(e)
(yes/no)
|
Legal
Actions
Pending as
of Last Day
of Period
(#)
|
Legal
Actions
Initiated
During
Period
(#)
|
Legal
Actions
Resolved
During
Period
(#)
|
Kosse Mine
(#4104312)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Chippewa Sand
(#4703607)
(New Auburn)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Dry Plant
(#4703620)
(New Auburn)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
FLS/Wet Plant
(#4703670)
(Barron/Clinton)
|
2
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Clinton Dry Plant
(#4703671)
(Barron/Clinton)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|