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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
x
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Accelerated Filer
o
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Non-Accelerated Filer
o
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Smaller Reporting Company
o
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Focus on business results and total distributions.
We focus on optimizing our business results and maximizing total distributions. The board of directors of our general partner adopted a policy under which distributions for each quarter are equal to the amount of available cash we generate each quarter. In addition, our general partner has a non-economic general partner interest and no incentive distribution rights, and, accordingly, all of our unitholders, including our sponsor, receive 100% of our cash distributions on a pro rata basis.
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Seek contractual cash flow stability.
In our Sand segment, we intend to continue securing long-term take-or-pay, fixed-volume, and efforts-based contracts with existing and new customers in order to cover the substantial majority of our production capacity. Currently, 100% of our permitted production capacity at our four operating dry plant facilities is covered by long-term contracts, and
77%
of our sales in the year ended
December 31, 2014
were to customers currently under contract. As of
December 31, 2014
, we had 6.9 million tons under long-term contract with a weighted average remaining term of four years at our existing facilities, and an additional 1.5 million tons under contract that are committed to future facilities. In our Fuel segment, our contract structure is designed to capture a stable margin, as the price differential between the refined products indices at which we purchase transmix and wholesale fuel and the sales price of the refined products fluctuates in a narrow range. In addition, we typically resell our refined products within 7 to 10 days after acquiring our transmix, wholesale fuel and other feedstock supply, which reduces our exposure to fluctuations in the
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Capitalize on compelling industry fundamentals.
We believe the frac sand market offers attractive long-term growth fundamentals, and we expect to continue to position ourselves as a producer of coarse, high-quality “Northern White” frac sand located in Wisconsin's Jordan, St. Peter, Mt. Simon and Wonewoc formations. Over the past several years, the demand for frac sand in the United States and Canada has grown significantly, primarily as a result of increased horizontal drilling, technological advances that allowed for the development of many unconventional resource formations, increased proppant use per well and cost advantages over other proppants such as resin coated sand and ceramic alternatives. In particular, the demand for coarse Northern White sand, such as the type we mine and sell from our Wisconsin facilities, is very strong among end users who are focused on the extraction of oil and liquids-rich natural gas. We believe frac sand supply will continue to be constrained by a variety of factors, including but not limited to: (i) the difficulty in finding reserves suitable for use as frac sand, which are largely limited to select areas of the United States and which must meet the technical specifications of the American Petroleum Institute (“API”); (ii) challenges associated with locating contiguous reserves of frac sand sufficient to justify the capital investment required to develop a mine and processing plant; (iii) securing necessary local, state and federal permits required for operations; and (iv) the ability of producers to provide comprehensive logistics and delivery solutions for customers. We further believe that as customers continue to refine their approach to the frac sand market, they will continue to gravitate toward the leading producers of frac sand, including Emerge Energy, which should give us the opportunity to strengthen our market position.
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Capitalize on organic growth opportunities and optimize existing assets.
We intend to focus on organic growth opportunities that complement our existing asset base or provide attractive returns in new geographic areas or business lines. In our Sand segment, we have three Northern White dry plant facilities operating at or near capacity, while our facility in Kosse, Texas is running at well over half capacity. We are also constructing a fifth production complex in Wisconsin from which we expect to begin selling sand in the second half of 2015. In addition, we continue to work on other greenfield expansion opportunities. In our Fuel segment, we believe there are several opportunities to contract additional transmix supplies, which we can process using existing excess capacity, and increase both wholesale and terminal volumes. We are also planning to build hydrotreaters at our two fuel terminals to allow us to process low sulfur transmix into ultra-low sulfur diesel.
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Access new and adjacent markets using existing capabilities.
We are exploring and will continue to explore opportunities to expand our businesses into new markets by leveraging our existing operations and our historical experiences. In our Sand segment, we will continue to pursue opportunities created by the demand for our reserves and to use available surplus processing and storage capacity in order to meet the needs of our customers. We also developed a total supply chain solution for our customers, designed to deliver sand anywhere from the railcar at the plant to within 60 miles of the wellhead. We believe this supply chain solution provides our customers with a streamlined order process that yields a lower total delivered product cost while generating incremental earnings for us and enabling us to reach a broader set of customers. For example, given our multiple railroad, trucking and barging logistics capabilities, we have started to explore potential sales opportunities in Central and South American countries. We have also partnered with dedicated logistics partners in Mexico in anticipation of that market opening up to Northern White frac sand over the next several years. If such opportunities materialize, we would expect to select our customers in those countries by employing the same disciplined financial criteria that we have used with respect to our existing customers. In our Fuel segment, we built the capability to blend additives into our refined products, which allows us to handle branded petroleum products in addition to unbranded products, and which we believe was critical to allow us to source new terminaling customers in the past two years. We also intend to leverage our existing customer relationships to expand our footprint in Dallas-Fort Worth and Birmingham and their adjacent markets.
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Grow business through strategic and accretive business or asset acquisitions.
We plan to selectively pursue accretive acquisitions in our areas of operation that we believe will allow us to realize operational efficiencies by capitalizing on our existing infrastructure, personnel and commercial relationships in energy services, and we may also seek acquisitions in new geographic areas or complementary business lines. For example, in 2014 we acquired a mine and wet plant from a supplier that have both significantly decreased our operating costs and allowed us to take market share from our competition. We have identified several highly attractive frac sand deposits and developments in properties adjacent to or in close proximity to our existing Wisconsin operations, allowing for the opportunity to contract additional reserves and additional finished product capacity. We also believe that we can replicate our transmix, wholesale and terminal business activities successfully in other regions of the United States.
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Maintain financial strength and flexibility.
We intend to maintain financial strength and flexibility to enable us to pursue our growth strategy, including acquisitions, organic growth and asset optimization opportunities as they arise. As of
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High quality, strategically located assets.
We currently operate several scalable frac sand production facilities in and around Barron County, Wisconsin and Kosse, Texas. Our facilities in Wisconsin are supported by approximately
105.5 million
tons of proven recoverable sand reserves and our facility in Texas is supported by approximately
27.8 million
tons of proven recoverable sand reserves. We believe that our Wisconsin reserves provide us access to a disproportionate amount of coarse sand (16/30, 20/40 and 30/50 mesh sands) compared to other Northern White deposits located in Wisconsin's Jordan, Mt. Simon, St. Peter and Wonewoc formations. Our sample boring data and production data indicated that our Wisconsin reserves contain deposits of nearly 35% 40 mesh or coarser substrate, with our Barron reserves being comprised of more than 60% 50 mesh or coarser substrate. We are also one of a select number of mine operators that can offer commercial amounts of 16/30 mesh sand, the coarsest grade of widely-used frac sand on the market, of which we believe we are the market's largest supplier. Our access to coarse sand provides us with lower processing costs relative to mines with finer sand reserves and enables us to better serve the current levels of high demand for coarse frac sand that is related to increased hydraulic fracturing activities focused on the recovery of oil and liquids-rich gas in the United States.
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Stable cash flows.
In our Sand segment, we currently sell our products primarily under long-term supply agreements under which our customers commit for a specified term to purchase a minimum volume of sand annually at a pre-determined price. A portion of our supply agreements are take-or-pay contracts under which the customer will be obligated to pay us an amount designed to compensate us for lost margins for the applicable contract year on any minimum annual volumes that are not purchased by that customer. Total sales to customers currently under long-term contracts, including take-or-pay, fixed-volume and efforts-based contracts, accounted for
77%
of our total Sand segment sales in
2014
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Intrinsic logistics advantage.
In our Sand segment, the logistics capabilities of our Wisconsin facilities enable us to serve all major United States and Canadian oil and natural gas producing basins, as well as provide us with economical access to Mexico and South America. Our New Auburn facility has 4.5 miles of on-site rail track linked to a rail line owned by Union Pacific and our Barron facility has nearly nine miles of on-site rail track tied into a Canadian National rail line. Between our two Wisconsin rail yards, we have storage space for over 1,100 railcars. We also utilize a third rail loadout facility near our production facilities that has direct access to four class one rail lines: the BNSF, the Canadian National, the Canadian Pacific, and the Union Pacific. As of
December 31, 2014
, we had a total of
5,099
railcars in our fleet, including
1,764
dedicated customer cars and
3,335
railcars under lease with a weighted average remaining term of 4.4 years. We have another
2,423
railcars under order for delivery in 2015 and an additional
2,459
railcars on order for delivery in 2016 and early 2017. As of
December 31, 2014
, we had 13 transload facilities in North America, each of which is positioned to serve a number of our target markets, and over half of which are capable of receiving unit trains.
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Low cost operating structure.
We believe that our operations are characterized by an overall low cost structure, which permits us to capture attractive margins in the industries in which we operate. Our low cost structure is a result of the following key attributes:
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close proximity of our silica reserves to our processing plants, which reduces operating costs;
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recovery rates as high as 99% at our mines and plants, which also reduces operating costs;
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expertise in designing, building, maintaining and operating advanced frac sand processing, storage and loading facilities and transmix processing and storage assets;
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a large proportion of the costs we incur in our Sand segment are only incurred when we produce saleable frac sand;
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proximity to major sand and fuel logistics infrastructure, minimizing transportation and fuel costs and headcount needs;
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mineral royalty expenses that were less than 1% of our Sand revenues in
2014
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enclosed dry plant operations which allow full run rates in winter months, increasing plant utilization; and
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a diversified and growing customer base spread across nearly every major shale play in North America.
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Significant organic growth capacity.
We commenced operations at our Arland facility in December 2014, and plan to bring another facility in Wisconsin online in the second half of 2015. Once this facility is online, we will have 9.4 million tons of permitted production capacity, of which 87% is currently under contract. We expect to produce and sell the remaining capacity to continue to establish new customer relationships through new long‑term contracts and to enter into spot sales at favorable market prices. We will also continue to add additional capacity as market conditions and specific customer demand build. We believe that this capacity will continue to position us well to attract customers currently relying on other frac sand producers when those customers have the opportunity to renegotiate their sand supply contracts or seek out a new supplier.
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Strong reputation with our customers, suppliers and other constituencies.
Our management and operating teams have developed longstanding relationships with our customers, suppliers and other constituencies. We currently sell to the twelve largest North American hydraulic fracturing service providers. Based on our track record of dependability, timely delivery and high-quality products that consistently meet customer specifications, we believe that we are well positioned to secure additional contracted commitments in the future, and that our product mix and customer service will continue to benefit our reputation within the frac sand industry. Further, we believe that these relationships will continue to benefit us in weaker markets relative to our peers. In our Fuel segment, we have established long-term supply relationships with major refining, midstream and marketing companies that provide us with a steady source of supply at competitive prices.
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Ability to identify and respond to changing market dynamics.
We believe we have designed our assets and business model to permit us to adapt to changing market conditions. In our Sand segment, we have historically sought coarser reserves of Northern White sand than those sought by our competition, while our production at our Wisconsin facilities can optimize our production mix so that up to 20% of our production volume can fluctuate between coarse and fine sands. This optimization does not significantly impact our production yields or costs, yet we can still meet all API specifications, thereby allowing us the flexibility to respond efficiently to shifts in pricing and customer demand dynamics. We have also identified opportunities to utilize excess dry plant capacity at our Kosse, Texas frac sand processing facility to provide additional product offerings to our customers in the southwestern United States. We have significant reserves of fine mesh sand and believe that we will be well positioned to capture opportunities created by changing market trends in the relative prices of crude oil and dry natural gas. We have concentrated our frac sand sales efforts in the most economical plays for producers, which should allow us to better withstand environments when oil and gas prices fall. Finally, we use a partnering model in our transload facilities, which allows us to relocate our transload facilities, often with the same operator, to remain close to the epicenter of drilling without necessitating large capital investment.
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Experienced management team with industry specific operating and technical expertise.
The top three management team members of our Sand segment have more than 75 years of combined industry experience. They have managed numerous frac sand mining and processing plants, successfully led acquisitions in the industry and developed multiple greenfield industrial minerals mining and processing operations. Most recently, this management team identified our existing Wisconsin facilities and designed, permitted and commenced each facility's operations within 12 months. We believe that our customers value our dedication to customer service, our reliable delivery, and our focus on high-quality product and that these give us a competitive advantage in the market. In addition, because of the experience of our staff, we believe that we are able to operate our sand facilities at a much lower per-ton overhead than our competition.
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Wet Plant
Location (1)
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Proven Recoverable Reserves
(Millions of Tons) (2)
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Lease Expiration Date (3)
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Plant Capacity
(Thousands of Tons)
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2014 Production
(Thousands of Tons)
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New Auburn
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27.8
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March 2036
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2,000
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1,332
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Thompson Hills
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49.6
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December 2037
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1,600
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322
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FLS Mine
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13.7
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July 2037
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1,200
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1,189
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Church Road
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7.0
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N/A
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1,200
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378
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LP Mine
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7.4
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March 2038
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1,000
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1,005
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Kosse, TX
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27.8
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N/A
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1,600
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306
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Dry Plant Location (1)
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On-site Railcar
Storage Capacity (4)
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Plant Capacity
(Thousands of Tons)
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2014 Production Volumes
(Thousands of Tons)
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Arland
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N/A
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2,500
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124
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Barron
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650 cars
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2,400
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2,224
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New Auburn
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420 cars
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1,400
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1,394
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Kosse, TX
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N/A
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600
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299
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(1)
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All facilities are located in Wisconsin, except for our Kosse facility.
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(2)
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Reserves are estimated as of
December 31, 2014
by third-party independent engineering firms based on core drilling results and in accordance with the SEC's definitions of proven recoverable reserves and related rules for companies engaged in significant mining activities and represent marketable finished product.
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(3)
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We own the land and mineral rights at our Church Road mine and the mineral rights at our Kosse mine.
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(4)
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We transload sand produced at Arland to rail loadouts at New Auburn, Barron, and a third location in Minnesota.
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Transload Location by Basin
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Transload Sites as of December 31, 2014
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Transload Sites Capable of Receiving Unit Trains
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2014 Volume Sold
(Thousands of Tons)
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Bakken Shale
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1
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1
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154.1
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Eagle Ford Shale
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1
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1
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83.6
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Haynesville Shale
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1
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1
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—
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Marcellus / Utica Shales
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4
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—
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339.6
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Mid-Continent Basin
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1
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1
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46.9
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Permian Basin
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2
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—
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92.7
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Western Canadian Sedimentary Basin
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3
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1
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284.8
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Total
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13
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5
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1,001.7
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Plant Location
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Transmix Processing Capacity
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Fuel From Transmix Sold
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Wholesale Fuel Volume Sold
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Terminal Tankage Capacity
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Terminal Throughput Volume
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(Volumes in thousands of gallons)
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Dallas-Fort Worth, TX
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107,310
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78,515
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27,418
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11,990
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102,942
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Birmingham, AL
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76,650
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38,096
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120,335
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21,966
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107,723
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general and administrative costs related to corporate overhead, such as headquarters facilities and personnel, as well as equity-based compensation;
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certain other operating costs such as IPO transaction-related; and
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non-operating items such as interest, other income and income taxes.
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the level of production of, demand for, and price of frac sand and oil, natural gas, gasoline, diesel, biodiesel and other refined products, particularly in the markets we serve;
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the fees we charge, and the margins we realize, from our frac sand and fuel products sales and the other services we provide;
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changes in laws and regulations (or the interpretation thereof) related to the mining and oil and natural gas industries, silica dust exposure or the environment;
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the level of competition from other companies;
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the cost and time required to execute organic growth opportunities;
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difficulty collecting receivables; and
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prevailing global and regional economic and regulatory conditions, and their impact on our suppliers and customers.
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the levels of our maintenance capital expenditures and growth capital expenditures;
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the level of our operating costs and expenses;
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our debt service requirements and other liabilities;
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fluctuations in our working capital needs;
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restrictions contained in our revolving credit facility and other debt agreements to which we are a party;
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the cost of acquisitions, if any;
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fluctuations in interest rates;
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our ability to borrow funds and access capital markets; and
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the amount of cash reserves established by our general partner.
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changes in the price and availability of transportation;
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inability to obtain necessary production equipment or replacement parts;
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inclement or hazardous weather conditions, including flooding, and the physical impacts of climate change;
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unusual or unexpected geological formations or pressures;
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unanticipated ground, grade or water conditions;
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inability to acquire or maintain necessary permits or mining or water rights;
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labor disputes and disputes with our excavation contractors;
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late delivery of supplies;
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changes in the price and availability of natural gas or electricity that we use as fuel sources for our frac sand plants and equipment;
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technical difficulties or failures;
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cave-ins or similar pit wall failures;
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environmental hazards, such as unauthorized spills, releases and discharges of wastes, tank ruptures and emissions of unpermitted levels of pollutants;
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industrial accidents;
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changes in laws and regulations (or the interpretation thereof) related to the mining and oil and natural gas industries, silica dust exposure or the environment;
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inability of our customers or distribution partners to take delivery;
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reduction in the amount of water available for processing;
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fires, explosions or other accidents; and
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facility shutdowns in response to environmental regulatory actions.
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develop new business and enter into contracts with new customers;
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retain our existing customers and maintain or expand the level of services we provide them;
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identify and obtain additional frac sand reserves;
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recruit and train qualified personnel and retain valued employees;
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expand our geographic presence;
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effectively manage our costs and expenses, including costs and expenses related to growth;
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consummate accretive acquisitions;
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obtain required debt or equity financing for our existing and new operations;
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meet customer-specific contract requirements or pre-qualifications;
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obtain permits from federal, state and local regulatory authorities; and
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make assumptions about mineral reserves, future production, sales, capital expenditures, operating expenses and costs, including synergies.
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our ability to obtain additional financing, if necessary, for operating working capital, capital expenditures, acquisitions or other purposes may be impaired by our debt level, or such financing may not be available on favorable terms;
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we need a portion of our cash flow to make payments on our indebtedness, reducing the funds that would otherwise be available for operations, future business opportunities and distributions; and
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our debt level makes us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally.
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grant liens;
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incur additional indebtedness;
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engage in a merger, consolidation or dissolution;
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enter into transactions with affiliates;
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sell or otherwise dispose of assets, businesses and operations;
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materially alter the character of our business as conducted at the closing of this offering; and
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make acquisitions, investments and capital expenditures.
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geological and mining conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience;
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assumptions concerning future prices of frac sand products, operating costs, mining technology improvements, development costs and reclamation costs; and
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assumptions concerning future effects of regulation, including our ability to obtain required permits and the imposition of taxes by governmental agencies.
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neither our partnership agreement nor any other agreement requires Insight Equity to pursue a business strategy that favors us or utilizes our assets or dictates what markets to pursue or grow;
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our general partner is allowed to take into account the interests of parties other than us, such as Insight Equity, in resolving conflicts of interest;
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our partnership agreement replaces the fiduciary duties that would otherwise be owed by our general partner with contractual standards governing its duties, limits our general partner's liabilities and restricts the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of its fiduciary duty;
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our partnership agreement provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning that it subjectively believed that the decision was in the best interests of our partnership, and, except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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except in limited circumstances, our general partner has the power and authority to conduct our business without unitholder approval;
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our general partner determines the amount and timing of asset purchases and sales, capital expenditures, borrowings, issuances of additional partnership securities and the creation, reduction or increase of reserves, each of which can affect the amount of cash that is distributed to our unitholders;
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our general partner determines which of the costs it incurs on our behalf are reimbursable by us;
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our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered to us or from entering into additional contractual arrangements with any of these entities on our behalf;
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our general partner intends to limit its liability regarding our obligations;
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our general partner may exercise its right to call and purchase all of the common units not owned by it and its affiliates if they own more than 80% of the common units;
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our general partner controls the enforcement of its and its affiliates' obligations to us; and
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our general partner decides whether to retain separate counsel, accountants or others to perform services for us.
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how to allocate business opportunities among us and its affiliates;
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whether to exercise its limited call right;
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whether to seek approval of the resolution of a conflict of interest by the conflicts committee of the board of directors of our general partner;
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how to exercise its voting rights with respect to the units it owns; and
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whether or not to consent to any merger or consolidation of the partnership or amendment to the partnership agreement.
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provides that whenever our general partner makes a determination or takes, or declines to take, any other action in its capacity as our general partner, our general partner is required to make such determination, or take or decline to take such other action, in good faith, meaning it subjectively believed that the decision was in the best interest of our partnership, and except as specifically provided by our partnership agreement, will not be subject to any other or different standard imposed by our partnership agreement, Delaware law, or any other law, rule or regulation, or at equity;
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provides that our general partner will not have any liability to us or our unitholders for decisions made in its capacity as a general partner so long as such decisions are made in good faith;
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provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or their assignees resulting from any act or omission unless there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that our general partner or its officers and directors, as the case may be, acted in bad faith or engaged in fraud or willful misconduct or, in the case of a criminal matter, acted with knowledge that the conduct was unlawful; and
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provides that our general partner will not be in breach of its obligations under our partnership agreement (including any duties to us or our unitholders) if a transaction with an affiliate or the resolution of a conflict of interest is:
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approved by the conflicts committee of the board of directors of our general partner, although our general partner is not obligated to seek such approval;
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approved by the vote of a majority of the outstanding common units, excluding any common units owned by our general partner or any of its affiliates;
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determined by the board of directors of our general partner to be on terms no less favorable to us than those generally being provided to or available from unrelated third parties; or
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determined by the board of directors of our general partner to be “fair and reasonable” to us, taking into account the totality of the relationships among the parties involved, including other transactions that may be particularly favorable or advantageous to us.
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our existing unitholders' proportionate ownership interest in us will decrease;
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the amount of cash available for distribution on each unit may decrease;
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the ratio of taxable income to distributions may increase;
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the relative voting strength of each previously outstanding unit may be diminished; and
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the market price of the common units may decline.
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we were conducting business in a state but had not complied with that particular state's partnership statute; or
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•
|
your right to act with other unitholders to remove or replace our general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constitute “control” of our business.
|
•
|
Mineral Reserves;
|
•
|
Mines and Wet Plants;
|
•
|
Dry Plant Facilities;
|
•
|
Transportation Logistics and Infrastructure;
|
•
|
Dallas-Fort Worth Facility; and
|
•
|
Birmingham Facility.
|
•
|
Sand segment - Ft. Worth, Texas;
|
•
|
Fuel Segment - Birmingham, Alabama and Arlington, Texas; and
|
•
|
Corporate - Southlake, Texas.
|
Quarter Ended
|
|
High Price
|
|
Low Price
|
|
Distributions Declared
Per Unit
|
||||
June 30, 2013
|
|
$
|
21.44
|
|
|
$
|
16.44
|
|
|
N/A
|
September 30, 2013
|
|
$
|
33.00
|
|
|
$
|
20.06
|
|
|
$0.37
|
December 31, 2013
|
|
$
|
45.03
|
|
|
$
|
29.99
|
|
|
$0.86
|
|
|
|
|
|
|
|
||||
March 31, 2014
|
|
$
|
62.69
|
|
|
$
|
42.28
|
|
|
$1.00
|
June 30, 2014
|
|
$
|
116.99
|
|
|
$
|
59.60
|
|
|
$1.13
|
September 30, 2014
|
|
$
|
145.72
|
|
|
$
|
101.11
|
|
|
$1.17
|
December 31, 2014
|
|
$
|
118.71
|
|
|
$
|
39.90
|
|
|
$1.38
|
•
|
Our IPO in May 2013 resulted in:
|
•
|
net proceeds of $116.2 million;
|
•
|
non-recurring charges of $11.0 million;
|
•
|
our ability to repay substantially all of our pre-existing long-term debt at that time and refinance at more favorable terms; and
|
•
|
on-going general and administrative costs subsequent to our IPO related to compliance with statutory and other requirements of a publicly traded limited partnership.
|
•
|
The financial position and results of operations of Direct Fuels were included in the consolidated financial statements from and as of the date of acquisition, May 14, 2013. Our acquisition of Direct Fuels expanded our Fuel segment's operations, gained new customers, improved our earnings, and increased our markets through a larger geographical presence.
|
•
|
During 2012 and 2014, our Sand segment incurred significant growth capital expenditures to keep pace with rapidly increasing demand for our Northern White frac sand.
|
|
Year Ended December 31,
|
||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||
|
($ in thousands, except per unit data)
|
||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
1,111,254
|
|
|
$
|
873,255
|
|
|
$
|
624,096
|
|
|
$
|
377,488
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
950,006
|
|
|
767,911
|
|
|
575,408
|
|
|
359,822
|
|
||||
Depreciation, depletion and amortization
|
24,803
|
|
|
20,828
|
|
|
9,119
|
|
|
6,880
|
|
||||
Selling, general and administrative expenses
|
38,723
|
|
|
26,835
|
|
|
10,256
|
|
|
9,221
|
|
||||
IPO transaction-related costs
|
—
|
|
|
10,966
|
|
|
—
|
|
|
—
|
|
||||
Impairment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
762
|
|
||||
Income from operations
|
97,722
|
|
|
46,715
|
|
|
29,313
|
|
|
803
|
|
||||
Interest expense, net
|
7,394
|
|
|
10,586
|
|
|
11,055
|
|
|
3,371
|
|
||||
Loss (gain) on extinguishment of debt
|
—
|
|
|
907
|
|
|
377
|
|
|
(472
|
)
|
||||
Gain on extinguishment of trade payable
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,212
|
)
|
||||
Other
|
611
|
|
|
(334
|
)
|
|
605
|
|
|
(300
|
)
|
||||
Income (loss) before provision for income taxes
|
89,717
|
|
|
35,556
|
|
|
17,276
|
|
|
(584
|
)
|
||||
Provision for income taxes
|
638
|
|
|
386
|
|
|
81
|
|
|
101
|
|
||||
Net income (loss)
|
89,079
|
|
|
35,170
|
|
|
$
|
17,195
|
|
|
$
|
(685
|
)
|
||
Less Predecessor net income before May 14, 2013
|
—
|
|
|
13,124
|
|
|
|
|
|
||||||
Post-IPO net income
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
|
|
|
||||
Earnings per common unit (basic)
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
|
|
||||
Earnings per common unit (diluted)
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
|
|
||||
Balance Sheet Data (at year end):
|
|
|
|
|
|
|
|
||||||||
Property, plant and equipment, net
|
$
|
238,657
|
|
|
$
|
146,131
|
|
|
$
|
131,414
|
|
|
$
|
88,056
|
|
Total assets
|
$
|
436,968
|
|
|
$
|
323,016
|
|
|
$
|
195,789
|
|
|
$
|
127,580
|
|
Long-term debt
|
$
|
222,904
|
|
|
$
|
97,511
|
|
|
$
|
145,938
|
|
|
$
|
99,506
|
|
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
$
|
86,161
|
|
|
$
|
58,036
|
|
|
$
|
1,137
|
|
|
$
|
(3,606
|
)
|
Investing activities
|
$
|
(88,172
|
)
|
|
$
|
(38,009
|
)
|
|
$
|
(39,075
|
)
|
|
$
|
(14,754
|
)
|
Financing activities
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
$
|
32,884
|
|
|
$
|
19,617
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
||||||||
Maintenance (1)
|
$
|
(3,240
|
)
|
|
$
|
(2,394
|
)
|
|
$
|
(2,520
|
)
|
|
$
|
(974
|
)
|
Growth (2)
|
(74,644
|
)
|
|
(18,975
|
)
|
|
(37,945
|
)
|
|
(14,204
|
)
|
||||
Total
|
$
|
(77,884
|
)
|
|
$
|
(21,369
|
)
|
|
$
|
(40,465
|
)
|
|
$
|
(15,178
|
)
|
Other Financial Data:
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common unit
|
$
|
4.68
|
|
|
$
|
1.23
|
|
|
|
|
|
||||
Adjusted EBITDA (3)
|
$
|
131,866
|
|
|
$
|
85,191
|
|
|
$
|
38,574
|
|
|
$
|
9,281
|
|
(1)
|
Maintenance capital expenditures are capital expenditures required to maintain, over the long term, our asset base, operating income or operating capacity. The maintenance capital expenditure amounts set forth above are unaudited.
|
(2)
|
Growth capital expenditures are capital expenditures made to increase, over the long term, our asset base, operating income or operating capacity. The growth capital expenditure amounts set forth above are unaudited.
|
(3)
|
See “Adjusted EBITDA” below for a definition of Adjusted EBITDA and a reconciliation to net income (loss).
|
|
Quarter
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
($ in thousands, except per unit data)
|
||||||||||||||
2014:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
274,081
|
|
|
$
|
298,273
|
|
|
$
|
296,338
|
|
|
$
|
242,562
|
|
Operating income
|
20,040
|
|
|
22,173
|
|
|
28,592
|
|
|
26,917
|
|
||||
Net income
|
18,486
|
|
|
20,092
|
|
|
26,083
|
|
|
24,418
|
|
||||
Earnings per common unit (basic) (2)
|
$
|
0.77
|
|
|
$
|
0.84
|
|
|
$
|
1.08
|
|
|
$
|
1.01
|
|
Earnings per common unit (diluted) (2)
|
$
|
0.77
|
|
|
$
|
0.84
|
|
|
$
|
1.08
|
|
|
$
|
1.01
|
|
Cash dividends declared per common unit (3)
|
$
|
1.00
|
|
|
$
|
1.13
|
|
|
$
|
1.17
|
|
|
$
|
1.38
|
|
|
|
|
|
|
|
|
|
||||||||
2013:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
152,055
|
|
|
$
|
204,929
|
|
|
$
|
270,241
|
|
|
$
|
246,030
|
|
Operating income
|
14,114
|
|
|
197
|
|
|
17,102
|
|
|
15,302
|
|
||||
Net income (loss)
|
9,913
|
|
|
(4,138
|
)
|
|
15,404
|
|
|
13,991
|
|
||||
Net income through May 14, 2013 (1)
|
$
|
9,913
|
|
|
$
|
3,211
|
|
|
|
|
|
||||
Net income (loss) subsequent to May 14, 2013 (1)
|
|
|
$
|
(7,349
|
)
|
|
$
|
15,404
|
|
|
$
|
13,991
|
|
||
Earnings per common unit (basic) (2)
|
|
|
$
|
(0.32
|
)
|
|
$
|
0.64
|
|
|
$
|
0.58
|
|
||
Earnings per common unit (diluted) (2)
|
|
|
$
|
(0.32
|
)
|
|
$
|
0.64
|
|
|
$
|
0.58
|
|
||
Cash dividends declared per common unit (3)
|
|
|
$
|
—
|
|
|
$
|
0.37
|
|
|
$
|
0.86
|
|
(1)
|
Prior to May 14, 2013, our financial statements consist of the combined results of SSS and AEC. Subsequent to the IPO, we have also included the operations of Direct Fuels, which was purchased on May 14, 2013. We accounted for this acquisition as a business combination.
|
(2)
|
Earnings per common unit are based on the results of operations subsequent to our IPO on May 14, 2013.
|
(3)
|
Distributions related to the earnings of one quarter are declared and paid in the subsequent quarter.
|
•
|
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.
|
|
Year Ended December 31, 2014
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Net income (loss)
|
$
|
108,956
|
|
|
$
|
6,377
|
|
|
$
|
(26,254
|
)
|
|
$
|
89,079
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
7,394
|
|
|
7,394
|
|
||||
Other loss
|
—
|
|
|
—
|
|
|
611
|
|
|
611
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
638
|
|
|
638
|
|
||||
Operating income (loss)
|
108,956
|
|
|
6,377
|
|
|
(17,611
|
)
|
|
97,722
|
|
||||
Depreciation, depletion and amortization
|
12,777
|
|
|
11,998
|
|
|
28
|
|
|
24,803
|
|
||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
9,042
|
|
|
9,042
|
|
||||
Loss (gain) on disposal of equipment
|
19
|
|
|
(11
|
)
|
|
—
|
|
|
8
|
|
||||
Provision for doubtful accounts
|
103
|
|
|
150
|
|
|
—
|
|
|
253
|
|
||||
Accretion of asset retirement obligations
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
||||
Adjusted EBITDA
|
$
|
121,893
|
|
|
$
|
18,514
|
|
|
$
|
(8,541
|
)
|
|
$
|
131,866
|
|
|
Year Ended December 31, 2013
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Net income (loss)
|
$
|
55,338
|
|
|
$
|
12,566
|
|
|
$
|
(32,734
|
)
|
|
$
|
35,170
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
10,586
|
|
|
10,586
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
907
|
|
|
907
|
|
||||
Other income
|
—
|
|
|
—
|
|
|
(334
|
)
|
|
(334
|
)
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
386
|
|
|
386
|
|
||||
Operating income (loss)
|
55,338
|
|
|
12,566
|
|
|
(21,189
|
)
|
|
46,715
|
|
||||
Depreciation, depletion and amortization
|
10,458
|
|
|
10,369
|
|
|
1
|
|
|
20,828
|
|
||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
10,966
|
|
||||
Equity-based compensation expense
|
—
|
|
|
—
|
|
|
5,734
|
|
|
5,734
|
|
||||
Loss (gain) on disposal of equipment
|
773
|
|
|
(18
|
)
|
|
—
|
|
|
755
|
|
||||
Provision for doubtful accounts
|
51
|
|
|
139
|
|
|
—
|
|
|
190
|
|
||||
Accretion of asset retirement obligations
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Adjusted EBITDA
|
$
|
66,623
|
|
|
$
|
23,056
|
|
|
$
|
(4,488
|
)
|
|
$
|
85,191
|
|
|
Year Ended December 31, 2012
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Net income (loss)
|
$
|
27,384
|
|
|
$
|
2,011
|
|
|
$
|
(12,200
|
)
|
|
$
|
17,195
|
|
Interest expense, net
|
—
|
|
|
—
|
|
|
11,055
|
|
|
11,055
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
377
|
|
|
377
|
|
||||
Other income
|
—
|
|
|
—
|
|
|
605
|
|
|
605
|
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
81
|
|
|
81
|
|
||||
Operating income (loss)
|
27,384
|
|
|
2,011
|
|
|
(82
|
)
|
|
29,313
|
|
||||
Depreciation, depletion and amortization
|
6,377
|
|
|
2,742
|
|
|
—
|
|
|
9,119
|
|
||||
Loss (gain) on disposal of equipment
|
(33
|
)
|
|
5
|
|
|
—
|
|
|
(28
|
)
|
||||
Provision for doubtful accounts
|
57
|
|
|
113
|
|
|
—
|
|
|
170
|
|
||||
Adjusted EBITDA
|
$
|
33,785
|
|
|
$
|
4,871
|
|
|
$
|
(82
|
)
|
|
$
|
38,574
|
|
|
Year Ended December 31, 2011
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Net income (loss)
|
$
|
(1,846
|
)
|
|
$
|
2,649
|
|
|
$
|
(1,488
|
)
|
|
$
|
(685
|
)
|
Interest expense, net
|
—
|
|
|
—
|
|
|
3,371
|
|
|
3,371
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
(472
|
)
|
|
(472
|
)
|
||||
Other income
|
—
|
|
|
—
|
|
|
(300
|
)
|
|
(300
|
)
|
||||
Provision for income taxes
|
—
|
|
|
—
|
|
|
101
|
|
|
101
|
|
||||
Gain on extinguishment of trade payable
|
—
|
|
|
—
|
|
|
(1,212
|
)
|
|
(1,212
|
)
|
||||
Operating income (loss)
|
(1,846
|
)
|
|
2,649
|
|
|
—
|
|
|
803
|
|
||||
Depreciation, depletion and amortization
|
4,022
|
|
|
2,858
|
|
|
—
|
|
|
6,880
|
|
||||
Loss (gain) on disposal of equipment
|
364
|
|
|
(111
|
)
|
|
—
|
|
|
253
|
|
||||
Impairment of assets
|
762
|
|
|
—
|
|
|
—
|
|
|
762
|
|
||||
Provision for doubtful accounts
|
11
|
|
|
—
|
|
|
—
|
|
|
11
|
|
||||
Equipment relocation costs
|
572
|
|
|
—
|
|
|
—
|
|
|
572
|
|
||||
Adjusted EBITDA
|
$
|
3,885
|
|
|
$
|
5,396
|
|
|
$
|
—
|
|
|
$
|
9,281
|
|
•
|
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; 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.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Revenues
|
$
|
1,111,254
|
|
|
$
|
873,255
|
|
|
$
|
624,096
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
950,006
|
|
|
767,911
|
|
|
575,408
|
|
|||
Depreciation, depletion and amortization
|
24,803
|
|
|
20,828
|
|
|
9,119
|
|
|||
Selling, general and administrative expenses
|
38,723
|
|
|
26,835
|
|
|
10,256
|
|
|||
IPO transaction-related costs
|
—
|
|
|
10,966
|
|
|
—
|
|
|||
Total operating expenses
|
1,013,532
|
|
|
826,540
|
|
|
594,783
|
|
|||
Operating income
|
97,722
|
|
|
46,715
|
|
|
29,313
|
|
|||
Other expense (income):
|
|
|
|
|
|
||||||
Interest expense
|
7,394
|
|
|
10,586
|
|
|
11,055
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
377
|
|
|||
Other expense (income)
|
611
|
|
|
(334
|
)
|
|
605
|
|
|||
Total other expense
|
8,005
|
|
|
11,159
|
|
|
12,037
|
|
|||
Income before provision income for taxes
|
89,717
|
|
|
35,556
|
|
|
17,276
|
|
|||
Provision for income taxes
|
638
|
|
|
386
|
|
|
81
|
|
|||
Net income
|
$
|
89,079
|
|
|
$
|
35,170
|
|
|
$
|
17,195
|
|
Adjusted EBITDA (a)
|
$
|
131,866
|
|
|
$
|
85,191
|
|
|
$
|
38,574
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
substantial growth of our Sand segment through addition of a dry plant in Wisconsin in each of 2011, 2012 and 2014, which significantly increased our overall production and profitability;
|
•
|
the acquisition of Direct Fuels to substantially increase our Fuel segment in 2013;
|
•
|
our IPO in 2013, which brought these two segments together for the first time and allowed us to refinance our debt at more favorable terms going forward;
|
•
|
development of a network of sand transload sites in 2013 and 2014; and
|
•
|
a steep decline in the market prices for fuel in late 2014, impacting our Sand and Fuel segments.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Revenues
|
$
|
341,836
|
|
|
$
|
167,768
|
|
|
$
|
66,697
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
204,282
|
|
|
91,416
|
|
|
27,405
|
|
|||
Depreciation, depletion and amortization
|
12,777
|
|
|
10,458
|
|
|
6,377
|
|
|||
Selling, general and administrative expenses
|
15,821
|
|
|
10,556
|
|
|
5,531
|
|
|||
Operating income
|
$
|
108,956
|
|
|
$
|
55,338
|
|
|
$
|
27,384
|
|
Adjusted EBITDA (a)
|
$
|
121,893
|
|
|
$
|
66,623
|
|
|
$
|
33,785
|
|
|
|
|
|
|
|
||||||
Total tons of sand sold (in thousands)
|
4,306
|
|
|
2,651
|
|
|
1,222
|
|
|||
Tons of sand produced by dry plant (in thousands):
|
|
|
|
|
|
||||||
Arland, Wisconsin facility
|
124
|
|
|
—
|
|
|
—
|
|
|||
Barron, Wisconsin facility
|
2,224
|
|
|
1,334
|
|
|
18
|
|
|||
New Auburn, Wisconsin facility
|
1,394
|
|
|
1,330
|
|
|
1,171
|
|
|||
Kosse, Texas facility
|
299
|
|
|
115
|
|
|
149
|
|
|||
Total
|
4,041
|
|
|
2,779
|
|
|
1,338
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
an estimated $88.4 million increase for higher markups related to transportation for increased sales through transload sites;
|
•
|
$78.6 million increase in sales of Northern White sand (excluding estimated transportation markups), relating primarily to a 58% increase in volumes sold; and
|
•
|
$7.1 million increase in sales of native Texas sand (from our Kosse plant) due to a 160% increase in volumes sold.
|
•
|
$81.8 million increased cost of transportation of finished sand, due to expansion of our transload system and significant shipments to these distant locations, and primarily including:
|
•
|
$56.7 million increased rail shipping costs;
|
•
|
$15.5 million increased railcar lease expense; and
|
•
|
$9.4 million increased transload service expense;
|
•
|
$22.5 million increased cost of produced sand, due to a
62.4%
increase in total sand sold; and
|
•
|
$3.2 million increased utilities expenses for higher utilization of our various plants.
|
•
|
$3.4 million increase for employee-related costs, primarily incentive compensation due to greatly increased segment profits; and
|
•
|
$1.4 million increase for insurance and professional services; and
|
•
|
$0.4 million increase for software support and other information technology needs;
|
•
|
$97.0 million increase for the Barron plant due to:
|
•
|
a full year of production after its December 2012 opening; and
|
•
|
an estimated $34 million for higher markups related to sales from transload sites; and
|
•
|
$5.5 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.
|
•
|
$1.4 million decrease for the Kosse plant due primarily to decreased volumes as drilling activity shifted away from the nearby shale plays.
|
•
|
$28.9 million increase in cost of produced sand, due to purchasing sand for the new Wisconsin plants;
|
•
|
$28.6 million increase in cost of transportation of sand, mainly for rail freight and additional railcars to transport sand from our plants to the transload sites; and
|
•
|
$3.6 million increase in mining costs related to the new Arland mine.
|
•
|
$3.2 million increase for the Barron facility;
|
•
|
$0.5 million increase for SSS corporate office, which was established in 2012; and
|
•
|
$0.4 million increase for the New Auburn facility.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Revenues
|
$
|
769,418
|
|
|
$
|
705,487
|
|
|
$
|
557,399
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
745,724
|
|
|
676,495
|
|
|
548,003
|
|
|||
Depreciation, depletion and amortization
|
11,998
|
|
|
10,369
|
|
|
2,742
|
|
|||
Selling, general and administrative expenses
|
5,319
|
|
|
6,057
|
|
|
4,643
|
|
|||
Operating income
|
$
|
6,377
|
|
|
$
|
12,566
|
|
|
$
|
2,011
|
|
Adjusted EBITDA (a)
|
$
|
18,514
|
|
|
$
|
23,056
|
|
|
$
|
4,871
|
|
|
|
|
|
|
|
||||||
Volume of refined fuels sold (gallons in thousands)
|
264,364
|
|
|
224,484
|
|
|
176,451
|
|
|||
Volume of terminal throughput (gallons in thousands)
|
210,665
|
|
|
207,280
|
|
|
182,573
|
|
|||
Volume of transmix refined (gallons in thousands)
|
116,611
|
|
|
91,813
|
|
|
23,992
|
|
|||
Refined transmix as a percent of total refined fuels sold
|
44.1
|
%
|
|
40.9
|
%
|
|
13.6
|
%
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
$115.9 million increase due to increased volumes, mainly for inclusion of a full year of Direct Fuels’ operations in 2014, offset by lower volumes sold in the last half of 2014 when prices had dropped;
|
•
|
$54.7 million decrease in sales prices due primarily to drastic reduction in the market price of fuel late in 2014; and
|
•
|
$3.1 million increase in excise and similar taxes.
|
•
|
$109.6 million increase due to increased volumes, mainly for inclusion of a full year of Direct Fuels’ operations in 2014;
|
•
|
$44.3 million decrease in fuel purchase prices due primarily to drastic reduction in the market price of fuel late in 2014, particularly in the fourth quarter; and
|
•
|
$3.1 million increase in excise and similar taxes.
|
•
|
$218.2 million for Direct Fuels' incremental revenues (May 14, 2013 through December 31, 2013);
|
•
|
$25.8 million increased sales of diesel fuel; and
|
•
|
$5.8 million increase in excise and similar taxes; offset by
|
•
|
$101.0 million reduced revenues due to constrained gasoline supplies in the Birmingham market.
|
•
|
$209.1 million of Direct Fuels' incremental cost of goods sold (May 14, 2013 through December 31, 2013);
|
•
|
$23.9 million increase in diesel fuel costs;
|
•
|
$5.8 million increase in excise and similar taxes; and
|
•
|
$1.3 million increase in costs associated with plant operations; offset by
|
•
|
$109.6 million decrease for reduced gasoline purchases due to constrained supplies in the Birmingham market.
|
•
|
$6.8 million in amortization of intangible assets; and
|
•
|
$0.8 million of depreciation.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Depreciation, depletion and amortization
|
$
|
28
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Selling, general and administrative expenses
|
17,583
|
|
|
10,222
|
|
|
82
|
|
|||
IPO transaction-related costs
|
—
|
|
|
10,966
|
|
|
—
|
|
|||
Operating loss
|
(17,611
|
)
|
|
(21,189
|
)
|
|
(82
|
)
|
|||
Other expense (income):
|
|
|
|
|
|
||||||
Interest expense, net
|
7,394
|
|
|
10,586
|
|
|
11,055
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
377
|
|
|||
Other
|
611
|
|
|
(334
|
)
|
|
605
|
|
|||
Income (loss) before provision for income taxes
|
(25,616
|
)
|
|
(32,348
|
)
|
|
(12,119
|
)
|
|||
Provision for income taxes
|
638
|
|
|
386
|
|
|
81
|
|
|||
Unallocated corporate loss
|
$
|
(26,254
|
)
|
|
$
|
(32,734
|
)
|
|
$
|
(12,200
|
)
|
Adjusted EBITDA (a)
|
$
|
(8,541
|
)
|
|
$
|
(4,488
|
)
|
|
$
|
(82
|
)
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
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% based on our total leverage ratio;
|
•
|
increase the sublimit for the issuance of letters of credit to $30 million;
|
•
|
revise financial covenants as discussed below; and
|
•
|
extend the maturity date to June 27, 2019.
|
•
|
an interest coverage ratio (as defined in the Credit Agreement) of not less than 3.00 to 1.00; and
|
•
|
a total leverage ratio (as defined in the Credit Agreement) of not greater than 3.00 to 1.00. The requirement to maintain the total leverage ratio is subject an increase to 3.50 to 1.00 in connection with certain permitted acquisitions.
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Cash flows from operating activities
|
$
|
86,161
|
|
|
$
|
58,036
|
|
|
$
|
1,137
|
|
Cash flows from investing activities
|
$
|
(88,172
|
)
|
|
$
|
(38,009
|
)
|
|
$
|
(39,075
|
)
|
Cash flows from financing activities
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
$
|
32,884
|
|
Cash and cash equivalents at beginning of period
|
$
|
2,167
|
|
|
$
|
1,467
|
|
|
$
|
6,521
|
|
Cash and cash equivalents at end of period
|
$
|
6,876
|
|
|
$
|
2,167
|
|
|
$
|
1,467
|
|
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Proceeds from IPO, net of offering costs
|
$
|
—
|
|
|
$
|
116,574
|
|
|
$
|
(354
|
)
|
Net debt proceeds (payments)
|
127,874
|
|
|
(71,523
|
)
|
|
33,454
|
|
|||
Distributions to owners
|
(112,992
|
)
|
|
(49,167
|
)
|
|
—
|
|
|||
Distribution to Direct Fuels' owners
|
—
|
|
|
(11,500
|
)
|
|
—
|
|
|||
Other
|
(8,162
|
)
|
|
(3,711
|
)
|
|
(216
|
)
|
|||
Total
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
$
|
32,884
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
> 5 Years
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||
Long-term debt (1)
|
$
|
252,181
|
|
|
$
|
7,485
|
|
|
$
|
13,697
|
|
|
$
|
230,999
|
|
|
$
|
—
|
|
Railcar leases (2)
|
383,350
|
|
|
45,474
|
|
|
111,488
|
|
|
95,558
|
|
|
130,830
|
|
|||||
Other operating leases (3)
|
6,263
|
|
|
1,745
|
|
|
2,113
|
|
|
667
|
|
|
1,738
|
|
|||||
Purchase commitments (4)
|
172,351
|
|
|
22,114
|
|
|
42,548
|
|
|
38,402
|
|
|
69,287
|
|
|||||
Minimum royalty payments (5)
|
28,413
|
|
|
1,180
|
|
|
2,392
|
|
|
2,435
|
|
|
22,406
|
|
|||||
Capital lease obligations
|
1,030
|
|
|
968
|
|
|
62
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
843,588
|
|
|
$
|
78,966
|
|
|
$
|
172,300
|
|
|
$
|
368,061
|
|
|
$
|
224,261
|
|
(1)
|
Assumes balances outstanding as of 12/31/14 will be paid at maturity and includes interest using interest rates in effect at 12/31/14.
|
(2)
|
Includes minimum amounts payable under various operating leases for railcars as well as estimated costs to transport leased railcars from the manufacturer to our site for initial placement in service.
|
(3)
|
Includes lease agreements for land, facilities and equipment.
|
(4)
|
Includes minimum amounts payable under a business acquisition agreement, long-term rail transportation agreements, and other purchase commitments.
|
(5)
|
Represents minimum royalty payments for various sand mining locations. The amounts paid will differ based on amounts extracted.
|
•
|
changes in laws and regulations that limit the estimated economic life of an asset;
|
•
|
changes in technology that render an asset obsolete;
|
•
|
changes in expected salvage values; or
|
•
|
significant changes in the forecast life of proved reserves of applicable oil- and gas-producing basins, if any.
|
Emerge Energy Services LP Consolidated Financial Statements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues (1)
|
$
|
1,111,254
|
|
|
$
|
873,255
|
|
|
$
|
624,096
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Cost of goods sold (excluding depreciation, depletion and amortization) (1)
|
950,006
|
|
|
767,911
|
|
|
575,408
|
|
|||
Depreciation, depletion and amortization
|
24,803
|
|
|
20,828
|
|
|
9,119
|
|
|||
Selling, general and administrative expenses
|
38,723
|
|
|
26,835
|
|
|
10,256
|
|
|||
IPO transaction-related costs
|
—
|
|
|
10,966
|
|
|
—
|
|
|||
Total operating expenses
|
1,013,532
|
|
|
826,540
|
|
|
594,783
|
|
|||
Income from operations
|
97,722
|
|
|
46,715
|
|
|
29,313
|
|
|||
Other expense (income):
|
|
|
|
|
|
||||||
Interest expense, net
|
7,394
|
|
|
10,586
|
|
|
11,055
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
377
|
|
|||
Other expense (income)
|
611
|
|
|
(334
|
)
|
|
605
|
|
|||
Total other expense
|
8,005
|
|
|
11,159
|
|
|
12,037
|
|
|||
Income before provision for income taxes
|
89,717
|
|
|
35,556
|
|
|
17,276
|
|
|||
Provision for income taxes
|
638
|
|
|
386
|
|
|
81
|
|
|||
Net income
|
89,079
|
|
|
35,170
|
|
|
$
|
17,195
|
|
||
Less Predecessor net income before May 14, 2013
|
—
|
|
|
13,124
|
|
|
|
||||
Post-IPO net income
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
|
||
Earnings per common unit (basic) (2)
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
||
Earnings per common unit (diluted) (2)
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
||
Weighted average number of common units outstanding including participating securities (basic) (2)
|
24,070,418
|
|
|
24,015,562
|
|
|
|
||||
Weighted average number of common units outstanding (diluted) (2)
|
24,076,437
|
|
|
24,021,957
|
|
|
|
||||
(1) Fuel revenues and cost of goods sold include excise taxes and similar taxes
|
$
|
50,116
|
|
|
$
|
47,007
|
|
|
$
|
37,849
|
|
(2) See Note 14.
|
|
|
|
|
|
|
Limited Partner
Common Units |
|
General Partner
(non-economic interest) |
|
Predecessor
|
|
Total Partners'
Equity |
||||||||
Balance at December 31, 2011
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(7,780
|
)
|
|
$
|
(7,780
|
)
|
Capital contributions
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Net income (loss)
|
(81
|
)
|
|
—
|
|
|
17,276
|
|
|
17,195
|
|
||||
Balance at December 31, 2012
|
(79
|
)
|
|
—
|
|
|
9,496
|
|
|
9,417
|
|
||||
Net income (loss) from January 1, 2013 through May 13, 2013
|
(97
|
)
|
|
—
|
|
|
13,221
|
|
|
13,124
|
|
||||
Balance at May 13, 2013
|
(176
|
)
|
|
—
|
|
|
22,717
|
|
|
22,541
|
|
||||
Net income from May 14, 2013 through December 31, 2013
|
22,046
|
|
|
—
|
|
|
—
|
|
|
22,046
|
|
||||
Proceeds from IPO, net of offering costs
|
116,220
|
|
|
—
|
|
|
—
|
|
|
116,220
|
|
||||
Contribution of Predecessor net assets in exchange for common units
|
22,717
|
|
|
—
|
|
|
(22,717
|
)
|
|
—
|
|
||||
Common units issued for business acquired
|
53,721
|
|
|
—
|
|
|
—
|
|
|
53,721
|
|
||||
Equity-based compensation expense
|
5,734
|
|
|
—
|
|
|
—
|
|
|
5,734
|
|
||||
Distribution to prior owners including over commitment proceeds
|
(19,628
|
)
|
|
—
|
|
|
—
|
|
|
(19,628
|
)
|
||||
Redemption of original limited partner interest
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Distributions paid
|
(29,539
|
)
|
|
—
|
|
|
—
|
|
|
(29,539
|
)
|
||||
Distribution equivalent rights accrued
|
(372
|
)
|
|
—
|
|
|
—
|
|
|
(372
|
)
|
||||
Balance at December 31, 2013
|
170,721
|
|
|
—
|
|
|
—
|
|
|
170,721
|
|
||||
Net income
|
89,079
|
|
|
—
|
|
|
—
|
|
|
89,079
|
|
||||
Equity-based compensation
|
9,194
|
|
|
—
|
|
|
—
|
|
|
9,194
|
|
||||
Distributions paid
|
(112,651
|
)
|
|
—
|
|
|
—
|
|
|
(112,651
|
)
|
||||
Distribution equivalent rights accrued
|
(1,164
|
)
|
|
—
|
|
|
—
|
|
|
(1,164
|
)
|
||||
Other
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||
Balance at December 31, 2014
|
$
|
155,189
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
155,189
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
89,079
|
|
|
$
|
35,170
|
|
|
$
|
17,195
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation, depletion and amortization
|
24,803
|
|
|
20,828
|
|
|
9,119
|
|
|||
Equity-based compensation expense
|
9,042
|
|
|
5,734
|
|
|
—
|
|
|||
Interest paid in-kind
|
—
|
|
|
3,202
|
|
|
743
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
907
|
|
|
377
|
|
|||
Provision for doubtful accounts
|
253
|
|
|
190
|
|
|
170
|
|
|||
Loss (gain) on disposal of assets
|
8
|
|
|
755
|
|
|
(28
|
)
|
|||
Amortization of debt discount/premium and deferred financing costs
|
969
|
|
|
937
|
|
|
636
|
|
|||
Loss on termination of sand supply agreement
|
689
|
|
|
—
|
|
|
—
|
|
|||
Unrealized loss on derivative instruments
|
669
|
|
|
(247
|
)
|
|
—
|
|
|||
Other non-cash
|
38
|
|
|
(244
|
)
|
|
—
|
|
|||
Changes in operating assets and liabilities, net of business acquired:
|
|
|
|
|
|
||||||
Restricted cash and equivalents
|
6,188
|
|
|
(6,188
|
)
|
|
—
|
|
|||
Accounts receivable
|
(26,328
|
)
|
|
(17,374
|
)
|
|
(19,815
|
)
|
|||
Inventories
|
9,044
|
|
|
(11,451
|
)
|
|
(11,751
|
)
|
|||
Prepaid expenses and other current assets
|
(5,104
|
)
|
|
5,064
|
|
|
(1,863
|
)
|
|||
Accounts payable and accrued liabilities
|
(14,971
|
)
|
|
20,871
|
|
|
6,354
|
|
|||
Other assets
|
(8,218
|
)
|
|
(118
|
)
|
|
—
|
|
|||
Net cash provided by operating activities
|
86,161
|
|
|
58,036
|
|
|
1,137
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of property, plant and equipment
|
(77,884
|
)
|
|
(21,369
|
)
|
|
(40,465
|
)
|
|||
Business acquisitions, net of cash acquired
|
(11,000
|
)
|
|
(16,687
|
)
|
|
—
|
|
|||
Proceeds from disposals of assets
|
335
|
|
|
35
|
|
|
1,378
|
|
|||
Collection of notes receivable
|
377
|
|
|
12
|
|
|
12
|
|
|||
Net cash used in investing activities
|
(88,172
|
)
|
|
(38,009
|
)
|
|
(39,075
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from IPO including over commitment
|
—
|
|
|
122,221
|
|
|
—
|
|
|||
IPO offering costs
|
—
|
|
|
(5,647
|
)
|
|
(354
|
)
|
|||
Proceeds from line of credit borrowings
|
371,657
|
|
|
134,180
|
|
|
56,150
|
|
|||
Repayments of line of credit borrowings
|
(243,603
|
)
|
|
(61,619
|
)
|
|
(49,000
|
)
|
|||
Repayment of Direct Fuels' debt
|
—
|
|
|
(21,673
|
)
|
|
—
|
|
|||
Proceeds from other long-term debt
|
—
|
|
|
81
|
|
|
31,290
|
|
|||
Repayments of other long-term debt
|
(180
|
)
|
|
(118,640
|
)
|
|
(3,591
|
)
|
|||
Distributions to unitholders
|
(112,992
|
)
|
|
(29,539
|
)
|
|
—
|
|
|||
Distributions to Predecessor owners
|
—
|
|
|
(19,628
|
)
|
|
—
|
|
|||
Pre-IPO dividends paid (Direct Fuels)
|
—
|
|
|
(11,500
|
)
|
|
—
|
|
|||
Payment of financing costs
|
(2,342
|
)
|
|
(3,709
|
)
|
|
(216
|
)
|
|||
Payments on capital lease obligation
|
(5,831
|
)
|
|
(3,507
|
)
|
|
(1,395
|
)
|
|||
Repayments of other debt
|
—
|
|
|
(345
|
)
|
|
—
|
|
|||
Redemption of general partner interest
|
—
|
|
|
(2
|
)
|
|
—
|
|
|||
Other financing activities
|
11
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
6,720
|
|
|
(19,327
|
)
|
|
32,884
|
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
||||||
Net increase (decrease)
|
4,709
|
|
|
700
|
|
|
(5,054
|
)
|
|||
Balance at beginning of year
|
2,167
|
|
|
1,467
|
|
|
6,521
|
|
|||
Balance at end of year
|
$
|
6,876
|
|
|
$
|
2,167
|
|
|
$
|
1,467
|
|
|
Useful Lives (in Years)
|
Building and land improvements including assets under capital lease
|
10 – 39
|
Mineral reserves
|
N/A*
|
Tanks and equipment
|
7 – 40
|
Railroad and related improvements
|
20 – 40
|
Machinery and equipment
|
5 – 10
|
Plant equipment including assets under capital lease
|
5 – 7
|
Industrial vehicles
|
3 – 7
|
Furniture, office equipment and software
|
3 – 7
|
Leasehold improvements
|
3 – 5 or lease term, whichever is less
|
•
|
The Sand segment consists of the production and sale of various grades of industrial sand primarily used in the extraction of oil and natural gas, as well as the production of building products and foundry materials.
|
•
|
The Fuel segment operates
two
terminals and
two
transmix processing facilities that are located in the Dallas-Fort Worth, Texas area and Birmingham, Alabama. In addition to refining transmix, the Fuel segment sells a suite of complementary fuel products and services, including third-party terminaling services, the sale of wholesale petroleum products, certain reclamation services (which consist primarily of tank cleaning services) and blending of renewable fuels.
|
Total purchase price
|
$
|
98,277
|
|
Fair value of assets and liabilities acquired:
|
|
||
Cash
|
6,197
|
|
|
Accounts receivable
|
9,845
|
|
|
Other current assets
|
13,146
|
|
|
Property, plant and equipment
|
14,897
|
|
|
Intangible assets
|
45,080
|
|
|
Goodwill
|
29,264
|
|
|
Total assets acquired
|
118,429
|
|
|
Less accounts payable and accrued liabilities
|
8,652
|
|
|
Less dividend payable
|
11,500
|
|
|
Total current liabilities
|
20,152
|
|
|
Net assets acquired
|
$
|
98,277
|
|
|
As of December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
($ in thousands)
|
||||||
Sand work in process
|
$
|
14,413
|
|
|
$
|
9,523
|
|
Refined fuels
|
8,031
|
|
|
15,049
|
|
||
Sand finished goods
|
7,582
|
|
|
4,431
|
|
||
Fuel raw materials and supplies
|
2,157
|
|
|
12,304
|
|
||
Sand raw materials and supplies
|
95
|
|
|
13
|
|
||
Total inventory
|
$
|
32,278
|
|
|
$
|
41,320
|
|
|
As of December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
($ in thousands)
|
||||||
Machinery and equipment (1)
|
$
|
146,951
|
|
|
$
|
115,629
|
|
Buildings and improvements (1)
|
51,027
|
|
|
31,819
|
|
||
Land and improvements (1)
|
37,461
|
|
|
20,314
|
|
||
Mineral reserves
|
30,181
|
|
|
10,800
|
|
||
Construction in progress
|
24,172
|
|
|
3,405
|
|
||
Capitalized reclamation costs
|
2,332
|
|
|
1,398
|
|
||
Total cost
|
292,124
|
|
|
183,365
|
|
||
Accumulated depreciation and depletion
|
53,467
|
|
|
37,234
|
|
||
Net property, plant and equipment
|
$
|
238,657
|
|
|
$
|
146,131
|
|
(1)
|
Includes assets under capital lease
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
||||||
|
($ in thousands)
|
||||||||||
December 31, 2014:
|
|
|
|
|
|
||||||
Trade names
|
$
|
46
|
|
|
$
|
20
|
|
|
$
|
26
|
|
Customer relationships
|
43,922
|
|
|
15,293
|
|
|
28,629
|
|
|||
Supply and transportation agreements
|
3,330
|
|
|
1,769
|
|
|
1,561
|
|
|||
Non-compete agreement
|
1,550
|
|
|
608
|
|
|
942
|
|
|||
Total
|
$
|
48,848
|
|
|
$
|
17,690
|
|
|
$
|
31,158
|
|
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
|
|
Year Ending December 31,
|
($ in thousands)
|
||
2015
|
$
|
6,958
|
|
2016
|
5,804
|
|
|
2017
|
4,382
|
|
|
2018
|
3,165
|
|
|
2019
|
2,520
|
|
|
As of December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
($ in thousands)
|
||||||
Sales, excise, property and income taxes
|
$
|
5,002
|
|
|
$
|
2,659
|
|
Salaries and other employee-related
|
4,048
|
|
|
2,701
|
|
||
Construction
|
3,379
|
|
|
—
|
|
||
Logistics
|
3,185
|
|
|
860
|
|
||
Current portion of business acquisition obligations
|
2,702
|
|
|
—
|
|
||
Deferred compensation
|
1,341
|
|
|
6,740
|
|
||
Deferred revenue
|
127
|
|
|
3,131
|
|
||
Other
|
4,627
|
|
|
1,183
|
|
||
Total accrued liabilities
|
$
|
24,411
|
|
|
$
|
17,274
|
|
|
As of December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
($ in thousands)
|
||||||
Revolving credit facility
|
$
|
221,864
|
|
|
$
|
93,809
|
|
Other notes
|
53
|
|
|
233
|
|
||
Total debt
|
221,917
|
|
|
94,042
|
|
||
Less current portion
|
53
|
|
|
233
|
|
||
Long-term portion
|
$
|
221,864
|
|
|
$
|
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%
based on our total leverage ratio;
|
•
|
increase the sublimit for the issuance of letters of credit to
$30 million
;
|
•
|
revise financial covenants as discussed below; and
|
•
|
extend the maturity date to June 27, 2019.
|
•
|
an interest coverage ratio (as defined in the Credit Agreement) of not less than
3.00
to 1.00; and
|
•
|
a total leverage ratio (as defined in the Credit Agreement) of not greater than
3.00
to 1.00. The requirement to maintain the total leverage ratio is subject an increase to
3.50
to 1.00 in connection with certain permitted acquisitions.
|
|
Railcar Leases (1)
|
|
Other Operating Leases
|
|
Royalty Commitments
|
|
Purchase Commitments (2)
|
|
Capital Lease Obligations
|
||||||||||
|
($ in thousands)
|
||||||||||||||||||
Year ending December 31,
|
|
|
|
|
|
|
|
|
|
||||||||||
2015
|
$
|
45,474
|
|
|
$
|
1,745
|
|
|
$
|
1,180
|
|
|
$
|
22,114
|
|
|
$
|
968
|
|
2016
|
57,637
|
|
|
1,337
|
|
|
1,191
|
|
|
23,168
|
|
|
62
|
|
|||||
2017
|
53,851
|
|
|
776
|
|
|
1,201
|
|
|
19,380
|
|
|
—
|
|
|||||
2018
|
50,509
|
|
|
419
|
|
|
1,212
|
|
|
19,560
|
|
|
—
|
|
|||||
2019
|
45,049
|
|
|
248
|
|
|
1,223
|
|
|
18,842
|
|
|
—
|
|
|||||
Thereafter
|
130,830
|
|
|
1,738
|
|
|
22,406
|
|
|
69,287
|
|
|
—
|
|
|||||
Total
|
$
|
383,350
|
|
|
$
|
6,263
|
|
|
$
|
28,413
|
|
|
172,351
|
|
|
1,030
|
|
||
Less amount representing interest
|
|
|
|
|
|
|
(1,865
|
)
|
|
(43
|
)
|
||||||||
Total less interest
|
|
|
|
|
|
|
$
|
170,486
|
|
|
$
|
987
|
|
(1)
|
Includes minimum amounts payable under various operating leases as well estimated costs necessary to transport leased railcars from the manufacturer to our site for initial placement in service for those railcars to be delivered in the future.
|
(2)
|
Includes various obligations for services as well as estimated payments for business acquisition obligation, inclusive of expected contingent consideration, based on forecasted volumes.
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Balances for the year ended December 31:
|
|
|
|
|
|
||||||
Wages and employee-related costs (1)
|
$
|
26,875
|
|
|
$
|
17,366
|
|
|
$
|
—
|
|
Interest expense (2)
|
—
|
|
|
1,915
|
|
|
1,379
|
|
|||
IPO transaction-related cost reimbursements (3)
|
—
|
|
|
1,643
|
|
|
—
|
|
|||
General and administrative expense reimbursements (3)
|
75
|
|
|
180
|
|
|
186
|
|
|||
Consulting services (4)
|
—
|
|
|
112
|
|
|
374
|
|
|||
Lease expense
|
25
|
|
|
24
|
|
|
24
|
|
|||
|
|
|
|
|
|
||||||
Balances as of December 31:
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
181
|
|
|
$
|
124
|
|
|
$
|
—
|
|
Accounts payable and accrued liabilities
|
704
|
|
|
515
|
|
|
370
|
|
|||
Long-term debt (2)
|
—
|
|
|
—
|
|
|
25,036
|
|
(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 certain IPO transaction-related costs and other general and administrative costs.
|
(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
|
|
Granted
|
6,710
|
|
|
3,815
|
|
|
2,895
|
|
|
118.49
|
|
|
Vested
|
(499,281
|
)
|
|
(488,627
|
)
|
|
(10,654
|
)
|
|
17.01
|
|
|
Forfeitures
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Outstanding at December 31, 2014
|
605,664
|
|
|
602,836
|
|
|
2,828
|
|
|
$
|
18.12
|
|
|
Year Ended
December 31, 2013 |
||
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
|
1,601
|
|
|
Total IPO transaction-related expenses
|
$
|
10,966
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Federal and state income tax expense for Distributor
|
$
|
378
|
|
|
$
|
188
|
|
|
$
|
—
|
|
Texas margin tax
|
260
|
|
|
198
|
|
|
81
|
|
|||
Total provision for income taxes
|
$
|
638
|
|
|
$
|
386
|
|
|
81
|
|
|
|||||||
|
Year ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
($ in thousands except per unit data)
|
||||||
Post-IPO net income
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
|
|
|
||||
Basic earnings per unit:
|
|
|
|
||||
Weighted average common units outstanding
|
23,527,469
|
|
|
23,219,680
|
|
||
Weighted average phantom units deemed participating securities
|
542,949
|
|
|
795,882
|
|
||
Total
|
24,070,418
|
|
|
24,015,562
|
|
||
Earnings per common unit (basic)
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
|
|
|
||||
Diluted earnings per unit:
|
|
|
|
||||
Weighted average common units outstanding
|
23,527,469
|
|
|
23,219,680
|
|
||
Weighted average phantom units deemed participating securities
|
542,949
|
|
|
795,882
|
|
||
Weighted average potentially dilutive units outstanding
|
6,019
|
|
|
6,395
|
|
||
Total
|
24,076,437
|
|
|
24,021,957
|
|
||
Earnings per common unit (diluted)
|
$
|
3.70
|
|
|
$
|
0.92
|
|
•
|
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.
|
|
Year Ended December 31, 2014
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Revenues
|
$
|
341,836
|
|
|
$
|
769,418
|
|
|
$
|
—
|
|
|
$
|
1,111,254
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
204,282
|
|
|
745,724
|
|
|
—
|
|
|
950,006
|
|
||||
Depreciation, depletion and amortization
|
12,777
|
|
|
11,998
|
|
|
28
|
|
|
24,803
|
|
||||
Selling, general and administrative expenses
|
15,821
|
|
|
5,319
|
|
|
17,583
|
|
|
38,723
|
|
||||
Operating income (loss)
|
$
|
108,956
|
|
|
$
|
6,377
|
|
|
$
|
(17,611
|
)
|
|
$
|
97,722
|
|
Capital expenditures
|
$
|
76,473
|
|
|
$
|
1,086
|
|
|
$
|
325
|
|
|
$
|
77,884
|
|
Total assets (at year end)
|
$
|
284,330
|
|
|
$
|
142,354
|
|
|
$
|
10,284
|
|
|
$
|
436,968
|
|
|
Year Ended December 31, 2013
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Revenues
|
$
|
167,768
|
|
|
$
|
705,487
|
|
|
$
|
—
|
|
|
$
|
873,255
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
91,416
|
|
|
676,495
|
|
|
—
|
|
|
767,911
|
|
||||
Depreciation, depletion and amortization
|
10,458
|
|
|
10,369
|
|
|
1
|
|
|
20,828
|
|
||||
Selling, general and administrative expenses
|
10,556
|
|
|
6,057
|
|
|
10,222
|
|
|
26,835
|
|
||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
10,966
|
|
|
10,966
|
|
||||
Operating income (loss)
|
$
|
55,338
|
|
|
$
|
12,566
|
|
|
$
|
(21,189
|
)
|
|
$
|
46,715
|
|
Capital expenditures
|
$
|
20,406
|
|
|
$
|
931
|
|
|
$
|
32
|
|
|
$
|
21,369
|
|
Total assets (at year end)
|
$
|
138,847
|
|
|
$
|
172,833
|
|
|
$
|
11,336
|
|
|
$
|
323,016
|
|
|
Year Ended December 31, 2012
|
||||||||||||||
|
Sand Segment
|
|
Fuel Segment
|
|
Corporate
|
|
Total
|
||||||||
|
($ in thousands)
|
||||||||||||||
Revenues
|
$
|
66,697
|
|
|
$
|
557,399
|
|
|
$
|
—
|
|
|
$
|
624,096
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
27,405
|
|
|
548,003
|
|
|
—
|
|
|
575,408
|
|
||||
Depreciation, depletion and amortization
|
6,377
|
|
|
2,742
|
|
|
—
|
|
|
9,119
|
|
||||
Selling, general and administrative expenses
|
5,531
|
|
|
4,643
|
|
|
82
|
|
|
10,256
|
|
||||
Operating income (loss)
|
$
|
27,384
|
|
|
$
|
2,011
|
|
|
$
|
(82
|
)
|
|
$
|
29,313
|
|
Capital expenditures
|
$
|
39,062
|
|
|
$
|
1,403
|
|
|
$
|
—
|
|
|
$
|
40,465
|
|
Total assets (at year end)
|
$
|
121,498
|
|
|
$
|
74,289
|
|
|
$
|
2
|
|
|
$
|
195,789
|
|
•
|
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
|
|
$20,000,000
|
|
1.21875%
|
|
1 Month LIBOR
|
|
December 31, 2014
|
|
December 31, 2013
|
|
Classification
|
||||
|
($ in thousands)
|
|
|
||||||
Derivative assets:
|
|
|
|
|
|
||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
247
|
|
|
Prepaid expenses and other current assets
|
Commodity derivative contracts
|
$
|
—
|
|
|
$
|
66
|
|
|
Prepaid expenses and other current assets
|
Derivative liabilities:
|
|
|
|
|
|
||||
Interest rate swaps
|
$
|
422
|
|
|
$
|
—
|
|
|
Accrued liabilities
|
|
|
Year Ended December 31,
|
|
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
|
Classification
|
||||||
|
|
(income (expense), $ in thousands)
|
|
|
||||||||||
Interest rate swaps
|
|
$
|
(804
|
)
|
|
$
|
247
|
|
|
$
|
—
|
|
|
Interest expense, net
|
Commodity derivative contracts
|
|
1,819
|
|
|
540
|
|
|
(1,383
|
)
|
|
Cost of goods sold
|
|||
|
|
$
|
1,015
|
|
|
$
|
787
|
|
|
$
|
(1,383
|
)
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
($ in thousands)
|
||||||||||
Cash paid for interest
|
$
|
5,972
|
|
|
$
|
6,058
|
|
|
$
|
10,889
|
|
Cash paid for income taxes, net of refunds
|
$
|
423
|
|
|
$
|
159
|
|
|
$
|
68
|
|
Purchases of PP&E accrued but not paid at year-end
|
$
|
5,238
|
|
|
$
|
1,641
|
|
|
$
|
9,455
|
|
Purchases of PP&E accrued in a prior period and paid in the current period
|
$
|
1,641
|
|
|
$
|
9,455
|
|
|
$
|
—
|
|
Distribution equivalent rights accrued, net of payments
|
$
|
1,164
|
|
|
$
|
372
|
|
|
$
|
—
|
|
Capitalized reclamation costs, net of amounts acquired in business combination
|
$
|
706
|
|
|
$
|
721
|
|
|
$
|
258
|
|
Deferred compensation expense
|
$
|
122
|
|
|
$
|
6,368
|
|
|
$
|
—
|
|
Issuance of common units to acquire Direct Fuels
|
$
|
—
|
|
|
$
|
53,721
|
|
|
$
|
—
|
|
Customer advances offset against accounts receivable
|
$
|
—
|
|
|
$
|
4,043
|
|
|
$
|
10,091
|
|
Costs and long-term debt paid directly by lenders
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
44,541
|
|
Public offering costs accrued and not paid
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,787
|
|
Recognition of a direct financing lease receivable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,700
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and the board of directors of our general partner; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
•
|
perform a qualitative and quantitative administrative headcount and competency gap analysis to determine the most appropriate level of staffing necessary to manage the complexity and quantity of transactions to successfully perform the required control activities in a manner that positions us to respond to external and internal demands;
|
•
|
expand our complement of qualified accounting, monitoring, and information technology staff consistent with administrative headcount and competency gap analysis;
|
•
|
where appropriate, incorporate training of information technology and accounting personnel to improve competencies and understanding of policies established by management and the board of directors of our general partner; and
|
•
|
increase managerial monitoring activities over remediation efforts in the areas of information technology general controls, Sand segment procurement and general accounting controls related to capital expenditures and railcar lease acquisition costs to assure compliance with policies, procedures, and processes established by management and the board of directors of our general partner.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
Age
|
|
Position
|
|
Ted W. Beneski
|
58
|
|
|
Chairman of the Board and Director
|
Rick Shearer
|
64
|
|
|
Chief Executive Officer
|
Warren B. Bonham
|
52
|
|
|
Vice President and Director
|
Robert Lane
|
43
|
|
|
Chief Financial Officer
|
Richard DeShazo
|
64
|
|
|
Chief Accounting Officer
|
Kevin Clark
|
58
|
|
|
Independent Director
|
Peter Jones
|
57
|
|
|
Independent Director
|
Francis Kelly
|
58
|
|
|
Independent Director
|
Kevin McCarthy
|
54
|
|
|
Independent Director
|
Eliot Kerlin
|
40
|
|
|
Director
|
Victor L. Vescovo
|
49
|
|
|
Director
|
ITEM 11.
|
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
Rick Shearer, Chief Executive Officer of Emerge Energy Services GP LLC, our general partner;
|
•
|
Robert Lane, Chief Financial Officer of our general partner;
|
•
|
Warren Bonham, Vice President of our general partner; and
|
•
|
Richard DeShazo, Chief Accounting Officer of our general partner.
|
•
|
align officer and unitholder interests by providing a portion of total compensation opportunities for senior management in the form of equity awards and bonuses awarded based on the board of directors of our general partner’s review of company and individual performance; and
|
•
|
ensure executive officer compensation is competitive within the marketplace in which we compete for executive talent by relying on the board of directors of our general partner’s judgment, expertise and personal experience with other similar companies.
|
•
|
Base salary: compensation for ongoing services throughout the year.
|
•
|
Annual performance-based compensation and discretionary bonuses: annual incentive bonus based on the achievement of pre-established targets and/or discretionary objectives, each to recognize and reward achievement of corporate and individual performance.
|
•
|
Long-term incentive compensation programs: equity compensation to provide an incentive to our named executive officers to manage us from the perspective of an owner with an equity stake in the business.
|
•
|
Severance and change in control benefits: remuneration paid to certain executives in the event of a qualifying termination of employment and/or change in control.
|
Named Executive Officer
|
|
2014 Annual Base Salary
|
Rick Shearer
|
|
$425,000
|
Robert Lane (1)
|
|
$275,000
|
Warren Bonham
|
|
$200,000
|
Richard DeShazo
|
|
$234,000
|
Named Executive Officer
|
|
Adjusted EBITDA
|
|
Payout (as a percentage of base salary) (1)
|
Rick Shearer
|
|
|
|
|
Threshold
|
|
$65,000,000
|
|
5%
|
Target
|
|
$85,000,000
|
|
80%
|
Maximum
|
|
$157,000,000
|
|
350%
|
Robert Lane (1)
|
|
|
|
|
Threshold
|
|
$83,000,000
|
|
10%
|
Target
|
|
$99,000,000
|
|
50%
|
Maximum
|
|
$147,000,000
|
|
170%
|
Warren Bonham
|
|
|
|
|
Threshold
|
|
$7,070,000
|
|
10%
|
Target
|
|
$10,070,000
|
|
40%
|
Maximum
|
|
$19,070,000
|
|
130%
|
Richard DeShazo
|
|
|
|
|
Threshold
|
|
$83,000,000
|
|
9%
|
Target
|
|
$99,000,000
|
|
45%
|
Maximum
|
|
$147,000,000
|
|
153%
|
(1)
|
For purposes of calculating Mr. Lane’s annual incentive bonus, the company used Mr. Lane’s base salary actually paid in 2014 of $270,620.
|
Named Executive Officer
|
|
2014 Bonus
|
|
2014 Bonus (as percentage of base salary)
|
Rick Shearer
|
|
$928,886
|
|
219%
|
Robert Lane
|
|
$384,178
|
|
142%
|
Warren Bonham
|
|
$35,727
|
|
18%
|
Richard DeShazo
|
|
$298,972
|
|
128%
|
Name and Principal Position
|
|
Salary
($)
|
|
Bonus
($)(1)
|
|
Stock Awards
($)(2)
|
|
Non-Equity
Incentive Plan
Compensation ($)(3)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
||||||
Rick Shearer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2014
|
|
425,000
|
|
|
—
|
|
|
—
|
|
|
928,886
|
|
|
17,877
|
|
|
1,371,763
|
|
2013
|
|
312,940
|
|
|
—
|
|
|
9,019,996
|
|
|
4,653,499
|
|
|
11,582
|
|
|
13,998,017
|
|
2012
|
|
245,456
|
|
|
200,000
|
|
|
—
|
|
|
—
|
|
|
10,267
|
|
|
455,723
|
|
Robert Lane
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2014
|
|
270,620
|
|
|
—
|
|
|
550,000(5)
|
|
|
384,178
|
|
|
28,193
|
|
|
1,232,991
|
|
2013
|
|
256,000
|
|
|
153,000
|
|
|
—
|
|
|
—
|
|
|
22,083
|
|
|
431,083
|
|
2012
|
|
34,462
|
|
|
44,989
|
|
|
—
|
|
|
—
|
|
|
2,223
|
|
|
81,674
|
|
Warren Bonham
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2014
|
|
200,000
|
|
|
200,000
|
|
|
—
|
|
|
35,727
|
|
|
3,500
|
|
|
439,227
|
|
2013
|
|
136,577
|
|
|
1,130,080
|
|
|
2,049,996
|
|
|
—
|
|
|
—
|
|
|
3,316,653
|
|
2012
|
|
149,543
|
|
|
—
|
|
|
—
|
|
|
116,436
|
|
|
8,643
|
|
|
274,622
|
|
Richard DeShazo (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2014
|
|
234,000
|
|
|
—
|
|
|
—
|
|
|
298,972
|
|
|
27,506
|
|
|
560,478
|
|
(1)
|
For 2014, Mr. Bonham was paid a discretionary annual bonus of $200,000 that was awarded based on his individual performance. Mr. Bonham’s discretionary annual bonus earned in 2014 was paid in 2015.
|
(2)
|
The amounts illustrated in this column reflect the aggregate grant date fair value of phantom unit awards made in 2014. The values are calculated in accordance with GAAP. For a discussion of the assumptions used to calculate the value of all phantom unit awards made to named executive officers, refer to Note 11 to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2014.
|
(3)
|
For 2014, the amounts include annual incentive bonuses earned in connection with the achievement of pre-established adjusted EBITDA targets. Mr. Shearer’s bonus was determined based on adjusted EBITDA results for SSS; Messrs. Lane’s and DeShazo’s bonuses were determined based on adjusted EBITDA results for Emerge; and Mr. Bonham’s bonus was determined based on adjusted EBITDA results for Direct Fuels. Annual incentive bonuses earned in 2014 were paid to the named executive officers in 2015.
|
(4)
|
For 2014, the amount for Mr. Shearer includes $16,227 for 401(k) plan matching contributions and health savings account matching contributions of $1,650. For Mr. Lane, includes $7,293 for health insurance premium reimbursements, 401(k) matching contributions totaling $17,500 and health savings account matching contributions of $3,400. For Mr. Bonham, includes $3,500 for an executive physical. For Mr. DeShazo, includes $4,500 for health insurance premium reimbursements, 401(k) matching contributions totaling $21,356 and heath savings account matching contributions of $1,650.
|
(5)
|
Consists of two phantom unit awards, one of which the board of directors of our general partner approved on December 31, 2014 and the other of which will be approved on December 31, 2015. The grant date of each phantom unit award for purposes of ASC Topic 718 is August 29, 2014, the date on which the terms of each award became known.
|
(6)
|
Mr. DeShazo was not a “named executive officer” of the company in 2012 or 2013.
|
Name
|
|
Grant Date
|
|
|
|
|
Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1)
|
|
All Other Stock Awards: Number of Units (#)
|
|
Grant Date Fair Value of Stock Awards ($)
|
||||||||||
|
Approval Date
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum ($)
|
|
|||||||||||
Rick Shearer
|
|
—
|
|
|
—
|
|
|
21,250
|
|
|
340,000
|
|
|
1,487,500
|
|
|
—
|
|
|
—
|
|
Robert Lane
|
|
—
|
|
|
—
|
|
|
27,062
|
|
|
135,310
|
|
|
460,054
|
|
|
—
|
|
|
—
|
|
|
|
8/29/2014
|
|
|
8/5/2014
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,815
|
|
|
550,000
|
|
Warren Bonham
|
|
—
|
|
|
—
|
|
|
20,000
|
|
|
80,000
|
|
|
260,000
|
|
|
—
|
|
|
—
|
|
Richard DeShazo
|
|
—
|
|
|
—
|
|
|
21,060
|
|
|
105,300
|
|
|
358,020
|
|
|
—
|
|
|
—
|
|
(1)
|
Amounts shown in these columns represent each named executive officer’s non-discretionary incentive bonus opportunity under our 2014 bonus programs. The “Target” amount represents the named executive officer’s target bonus if the performance goal under the applicable bonus program was achieved at the target levels, and the “Threshold” and “Maximum” amounts represent the named executive officer’s minimum and maximum bonuses, respectively, if the performance goal under the applicable bonus program was achieved at the minimum or the maximum percentage levels.
|
(2)
|
Consists of two phantom units awards, one of which the board of directors of our general partner approved on August 5, 2014. The grant date of each phantom unit award for purposes of ASC Topic 718 is August 29, 2014, the date on which the terms of each award became known.
|
Name
|
|
Grant
Date
|
|
Number of Units
That Have Not
Vested
(#)
|
|
Market Value
of Units That Have Not
Vested
($)(1)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Units
That Have Not
Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or Payout Value of Unearned
Units That Have
Not Vested
($)(2)
|
||||
Rick Shearer
|
|
5/14/13 (3)
|
|
265,294
|
|
|
14,325,876
|
|
|
—
|
|
|
—
|
|
Robert Lane
|
|
8/29/14 (4)
|
|
3,815
|
|
|
206,010
|
|
|
—
|
|
|
—
|
|
Warren Bonham
|
|
5/14/13 (5)
|
|
—
|
|
|
—
|
|
|
82,974
|
|
|
4,970,972
|
|
Richard DeShazo
|
|
5/14/13 (5)
|
|
—
|
|
|
—
|
|
|
19,837
|
|
|
1,188,435
|
|
(1)
|
The market value of phantom units that have not vested is calculated based on the closing trading price of our common units as reported on the New York Stock Exchange on December 31, 2014 ($54.00).
|
(2)
|
The payout value for Messrs. Bonham and DeShazo includes $490,376 and $117,237, respectively, of outstanding DERs that were accrued as of December 31, 2014 and will be paid once the underlying phantom unit award and associated DERs vest.
|
(3)
|
This phantom unit award vests, subject to continued service, in equal 50% installments on each of the first two anniversaries of the grant date. In addition, this phantom unit award may be subject to accelerated vesting immediately prior to a change in control or upon a qualifying termination of service.
|
(4)
|
Consists of two phantom unit awards that will vest in full on December 31, 2015, subject to Mr. Lane’s continued employment. In addition, these phantom unit awards may be subject to accelerated vesting immediately prior to a change in control.
|
(5)
|
These phantom unit awards vest subject to continued service, based on the achievement of performance, in pro-rated installments in connection with the sale or disposition of common units held by Insight Equity based on the ratio of common units sold or disposed of by Insight Equity as compared to the total number of common units held by Insight Equity immediately following the completion of our IPO. In addition, these phantom unit awards may be subject to accelerated vesting immediately prior to a change in control. The number of units that have not vested, as shown in the table, assumes a payout of the unvested portion of each phantom unit award.
|
Name
|
|
Number of Units Acquired on Vesting
(#)
|
|
Value Realized on Vesting
($)(1)
|
Rick Shearer
|
|
265,294
|
|
22,523,461
|
Robert Lane
|
|
—
|
|
—
|
Warren Bonham
|
|
37,614
|
|
4,003,696
|
Richard DeShazo
|
|
8,987
|
|
956,589
|
(1)
|
Represents the product of the number of phantom units which vested and the closing price of our common units on the vesting date. Mr. Shearer’s phantom units are accompanied by tandem DERs, which were vested as of the date of grant (May 14, 2013). The values include (i) $1,806,652 distributed in 2014 to Mr. Shearer related to his DERs and (ii) $126,383 and, $30,196 of accumulated DERs distributed to Messrs. Bonham and DeShazo, respectively, related to the vesting of the underlying phantom units.
|
Name
|
|
Executive Contributions in Last FY
($)
|
|
Registrant Contributions in Last FY
($)
|
|
Aggregate Earnings in Last FY
($)
|
|
Aggregate Withdrawals/ Distributions
($)
|
|
Aggregate Balance at Last FYE
($)
|
Rick Shearer
|
|
—
|
|
—
|
|
—
|
|
4,130,586(1)
|
|
—
|
Robert Lane
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Warren Bonham
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
Richard DeShazo
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
(1)
|
In 2013, Mr. Shearer participated in a long-term incentive compensation program maintained by SSS, referred to as the Shearer LTIC, pursuant to which Mr. Shearer was eligible to receive a cash bonus based on “net cash proceeds” received in connection with an “ultimate sale transaction” of SSS (each, as defined in the Shearer LTIC). In connection with our IPO, our general partner terminated the Shearer LTIC and in connection therewith, agreed to place $4,270,731 in a Rabbi Trust with Mr. Shearer as the sole beneficiary of the trust. In 2013, we distributed $140,145 to cover employment-related taxes associated with the termination of the Shearer LTIC. In May 2014, all funds in the Rabbi Trust were distributed to Mr. Shearer, and the Rabbi Trust was terminated.
|
Name
|
|
Termination Due to Death or Disability
($)
|
|
Change in Control (No Termination)
($)
|
|
Qualifying Termination (Not in Connection with Change of Control)
($)
|
|
Qualifying Termination
(In Connection with Change of Control)
($)
|
||||
Rick Shearer
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Cash Severance
|
|
—
|
|
|
—
|
|
|
850,000
|
|
|
850,000
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
14,325,876
|
|
|
14,325,876
|
|
|
14,325,876
|
|
|
14,325,876
|
|
Total
|
|
14,325,876
|
|
|
14,325,876
|
|
|
15,175,876
|
|
|
15,175,876
|
|
Robert Lane
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
275,000
|
|
|
618,750
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
146,096
|
|
|
146,096
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
102,978
|
|
|
—
|
|
|
102,978
|
|
Total
|
|
—
|
|
|
102,978
|
|
|
421,096
|
|
|
867,824
|
|
Warren Bonham
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Cash Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
4,970,972
|
|
|
—
|
|
|
4,970,972
|
|
Total
|
|
—
|
|
|
4,970,972
|
|
|
—
|
|
|
4,970,972
|
|
Richard DeShazo
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
234,000
|
|
|
234,000
|
|
Bonus Severance
|
|
—
|
|
|
—
|
|
|
105,300
|
|
|
105,300
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
1,188,435
|
|
|
—
|
|
|
1,188,435
|
|
Total
|
|
—
|
|
|
1,188,435
|
|
|
339,300
|
|
|
1,527,735
|
|
Name (1)
|
|
Fees Earned in
Cash
($)(2)
|
|
Stock Awards
($)(3)
|
|
Total
($)
|
Kevin Clark
|
|
62,500
|
|
61,827
|
|
124,327
|
Peter Jones (4)
|
|
35,000
|
|
61,827
|
|
96,827
|
Francis J. Kelly, III
|
|
62,500
|
|
61,827
|
|
124,327
|
Kevin McCarthy
|
|
50,000
|
|
61,827
|
|
111,827
|
(1)
|
Only non-employee directors who are not affiliated with us, our general partner or certain Insight Equity affiliates are eligible to receive cash and/or equity compensation pursuant to the Director Plan.
|
(2)
|
The amounts shown in this column include the annual retainer and any individual retainers for serving as the chair or non-chair committee member, in each case earned in 2014.
|
(3)
|
The amounts shown in this column reflect the aggregate grant date fair value of restricted units awards granted in 2014, calculated in accordance with financial accounting standards. For a discussion of the assumptions used to calculate the value of all restricted unit awards made to directors, refer to Note 11 to our financial statements included in this Annual Report on Form 10-K for the period ended December 31, 2014. The total number of restricted units outstanding as of the end of the 2014 fiscal year for each non-employee director was 707.
|
(4)
|
Mr. Jones joined the board of directors of our general partner in May 2014.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS
|
•
|
each person who is known to us to beneficially own 5% or more of such units to be outstanding;
|
•
|
our general partner;
|
•
|
each of the directors and named executive officers of our general partner; and
|
•
|
all of the directors and executive officers of our general partner as a group.
|
Name of Beneficial Owner
|
|
Common Units Beneficially
Owned
|
|
Percentage of
Common Units
to be Beneficially
Owned
|
|
Insight Equity (1)
|
|
7,168,545
|
|
|
30.2%
|
Goldman Sachs Asset Management, L.P. (2)
|
|
3,011,858
|
|
|
12.7%
|
Susquehanna Financial Group, LLLP (3)
|
|
1,340,225
|
|
|
5.7%
|
Ted W. Beneski (4)
|
|
563,374
|
|
|
2.4%
|
Rick Shearer
|
|
100,119
|
|
|
*
|
Victor L. Vescovo
|
|
129,752
|
|
|
*
|
Warren B. Bonham
|
|
6,899
|
|
|
*
|
Robert Lane
|
|
2,100
|
|
|
*
|
Richard DeShazo
|
|
1,350
|
|
|
*
|
Kevin McCarthy (5)
|
|
4,236
|
|
|
*
|
Francis J. Kelly III (5)
|
|
4,236
|
|
|
*
|
Kevin Clark (5)
|
|
3,015
|
|
|
*
|
Eliot E. Kerlin, Jr.
|
|
2,408
|
|
|
*
|
Peter Jones (5)
|
|
774
|
|
|
*
|
All directors and officers as a group (11 persons)
|
|
7,986,808
|
|
|
33.7%
|
(1)
|
As described elsewhere in this prospectus, Ted W. Beneski and Victor L. Vescovo are the controlling equity owners of Insight Equity, which owns a controlling interest in Emerge Holdings, the entity which owns Emerge Energy Services GP, LLC. Messrs. Beneski and Vescovo, by virtue of being controlling equity owners of Insight Equity, may be deemed to beneficially own the units held by Insight Equity. Messrs. Beneski and Vescovo disclaim beneficial ownership of the units held by Insight Equity except to the extent of their pecuniary interest therein.
|
(2)
|
Goldman Sachs Asset Management, L.P. filed with the SEC a Schedule 13G/A, dated February 13, 2015. Based on this Schedule 13G/A, Goldman Sachs Asset Management, L.P. has shared voting power and shared dispositive power with respect to 3,011,858 units. The address of Goldman Sachs Asset Management, L.P. is 200 West Street, New York, NY 10282.
|
(3)
|
Susquehanna Financial Group, LLLP file with the SEC a Schedule 13G dated February 13, 2015. Based on this Schedule 13G, Susquehanna Financial Group, LLLP has shared voting and shared dispositive power of 1,340,225 units. The address of Susquehanna Financial Group, LLLP is 401 E. City Avenue, Suite 220, Bala Cynwyd, PA 19004.
|
(4)
|
Amounts do not include 27,522 units for which Mr. Beneski disclaims beneficial ownership, which are held in irrevocable trust accounts in favor of his sons. Mr. Beneski is the trustee of each trust account.
|
(5)
|
Includes unvested restricted units granted to our independent directors. Such units are deemed beneficially owned because the units will vest on May 14, 2015, the second anniversary of our initial public offering, which is less than 60 days from the Ownership Reference Date.
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in
Column(a))
|
||||
|
|
(a)(1)
|
|
(b)
|
|
(c)(2)
|
||||
Equity compensation plans approved by security holders
|
|
602,836
|
|
|
$
|
—
|
|
|
1,217,023
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
602,836
|
|
|
$
|
—
|
|
|
1,217,023
|
|
(1)
|
The amounts in column (a) of this table reflect only phantom units that have been granted (but not yet issued) under the LTIP. No unit options have been granted. Our LTIP was approved by our partners (general and limited) prior to our IPO. No value is shown in column (b) of the table, since the phantom units do not have an exercise, or strike, price.
|
(2)
|
The LTIP was adopted by the Emerge Energy Services GP LLC Board of Directors in connection with the closing of our IPO in May 2013, and provides for awards of options, restricted units, phantom units, distribution equivalent rights, substitute awards, unit appreciation rights, unit awards, profits interest units and other unit-based awards to be available for employees, consultants and directors of our general partner and any affiliates who perform services for Emerge Energy Services LP.
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
|
|
|
|
|
Post-IPO Stage
|
|
|
|
|
|
|
|
|
|
Distributions of available cash to our general partner and its affiliates
|
|
We make cash distributions pro rata to the holders of our common units, including affiliates of our general partner, as the holders of an aggregate of 7,168,545 common units.
|
||
|
|
|
||
Payments to our general partner and its affiliates
|
|
Our general partner does not receive a management fee or other compensation for its management of us. Our general partner and its affiliates are reimbursed for expenses incurred on our behalf. Our partnership agreement provides that our general partner determines the amount of these expenses.
|
||
|
|
|
||
Withdrawal or removal of our general partner
|
|
If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests.
|
||
Liquidation Stage
|
|
|
|
|
|
|
|
|
|
Liquidation
|
|
Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their particular capital account balances.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES
|
|
|
Year Ended December 31,
|
||||||
|
|
2014
|
|
2013
|
||||
|
|
($ in thousands)
|
||||||
Audit fees (1)
|
|
$
|
1,825
|
|
|
$
|
1,836
|
|
Audit-related fees (2)
|
|
68
|
|
|
227
|
|
||
Tax fees (3)
|
|
4
|
|
|
24
|
|
||
Total
|
|
$
|
1,897
|
|
|
$
|
2,087
|
|
(1)
|
Consists primarily of services provided in connection with the audit of the annual financial statements, audit of internal control over financial reporting, review of quarterly financial statements, services related to offering documents and advice on accounting policies.
|
(2)
|
Consists primarily of services performed related to business combinations.
|
(3)
|
Represents fees for professional services in connection with tax compliance and planning.
|
•
|
the external auditors' internal quality-control procedures;
|
•
|
any material issues raised by the most recent internal quality-control review, or peer review, of the external auditors;
|
•
|
the independence of the external auditors;
|
•
|
the aggregate fees billed by the external auditors for each of the previous two fiscal years; and
|
•
|
the rotation of the external auditors' lead partner.
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)(1).
|
Financial Statements
. See “Index to Financial Statements” on page 64.
|
(a)(2).
|
Financial Statement Schedules
. Other schedules are omitted because they are not required or applicable, or the required information is included in our consolidated financial statements or related notes.
|
(a)(3).
|
Exhibits
. See “Index to Exhibits.”
|
|
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)
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Rick Shearer
|
|
Chief Executive Officer
|
|
March 2, 2015
|
Rick Shearer
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ Robert Lane
|
|
Chief Financial Officer
|
|
March 2, 2015
|
Robert Lane
|
|
(principal financial officer and
principal accounting officer)
|
|
|
|
|
|
|
|
/s/ Ted W. Beneski
|
|
Chairman of the Board and
|
|
March 2, 2015
|
Ted W. Beneski
|
|
Director
|
|
|
|
|
|
|
|
/s/ Warren B. Bonham
|
|
Director
|
|
March 2, 2015
|
Warren B. Bonham
|
|
|
|
|
|
|
|
|
|
/s/ Kevin Clark
|
|
Director
|
|
March 2, 2015
|
Kevin Clark
|
|
|
|
|
|
|
|
|
|
/s/ Peter Jones
|
|
Director
|
|
March 2, 2015
|
Peter Jones
|
|
|
|
|
|
|
|
|
|
/s/ Francis Kelly
|
|
Director
|
|
March 2, 2015
|
Francis Kelly
|
|
|
|
|
|
|
|
|
|
/s/ Eliot Kerlin
|
|
Director
|
|
March 2, 2015
|
Eliot Kerlin
|
|
|
|
|
|
|
|
|
|
/s/ Kevin McCarthy
|
|
Director
|
|
March 2, 2015
|
Kevin McCarthy
|
|
|
|
|
|
|
|
|
|
/s/ Victor L. Vescovo
|
|
Director
|
|
March 2, 2015
|
Victor L. Vescovo
|
|
|
|
|
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).
|
|
|
|
4.1
|
|
Registration Rights Agreement, dated as of May 14, 2013, by and among Emerge Energy Services LP, AEC Resources LLC, Ted W. Beneski, Superior Silica Resources LLC, Kayne Anderson Development Company and LBC Sub V, LLC (incorporated by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.1
|
|
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).
|
|
|
|
10.2
|
|
Administrative Services Agreement, dated as of May 14, 2013, by and among Emerge Energy Services LP, Emerge Energy Services GP LLC and Insight Equity Management Company LLC (incorporated by reference to Exhibit 10.6 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.3#
|
|
Emerge Energy Services LP 2013 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.4#*
|
|
Emerge Energy Services LP Director Compensation Program.
|
|
|
|
10.5#
|
|
Form of Emerge Energy Services LP 2013 Long-Term Incentive Plan Phantom Unit Agreement (Performance-Vesting Agreement) (incorporated by reference to Exhibit 10.7 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.6#
|
|
Form of Emerge Energy Services LP 2013 Long-Term Incentive Plan Phantom Unit Agreement (Time-Vesting Agreement) (incorporated by reference to Exhibit 10.8 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
10.7#
|
|
Amended Employment Letter, dated May 29, 2013, between Emerge Energy Services GP LLC and Rick Shearer (incorporated by reference to Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.8#
|
|
Letter Agreement, dated May 29, 2013, between Emerge Energy Services GP LLC and Rick Shearer (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.9#
|
|
Letter Agreement, dated May 29, 2013, between Emerge Energy Services GP LLC and Jim Walker (incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.10#
|
|
Employment Letter, dated October 25, 2012, between Emerge Energy Services LP and Robert Lane (incorporated by reference to Exhibit 10.4 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
Exhibit
Number
|
|
Description
|
10.11#
|
|
Amendment to Employment Letter, dated May 29, 2013, between Emerge Energy Services GP LLC and Robert Lane (incorporated by reference to Exhibit 10.4 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.12#
|
|
Second Amendment to Employment Letter, dated August 5, 2014, between Emerge Energy Services GP LLC and Robert Lane (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on August 11, 2014).
|
|
|
|
10.13#
|
|
Employment Letter, dated May 29, 2013, between Emerge Energy Services GP LLC and Dick DeShazo (incorporated by reference to Exhibit 10.5 to the Registrant's Current Report on Form 8-K, filed with the SEC on June 4, 2013).
|
|
|
|
10.14 †
|
|
Sand Supply Agreement, dated as of May 31, 2011, between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.5 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.15 †
|
|
Sand Supply Agreement, dated as of March 31, 2011, between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.6 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.16 †
|
|
Amendment to Sand Supply Agreement, dated as of November 15, 2012 between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.11 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.17 †
|
|
Second Amendment to Sand Supply Agreement, dated as of June 10, 2014, between Superior Silica Sands LLC and Schlumberger Technology Corporation (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q, filed with the SEC on November 7, 2014).
|
|
|
|
10.18 †
|
|
Memorandum of Understanding, dated May 9, 2012, between Canadian National Railway Company and Superior Silica Sands LLC (incorporated by reference to Exhibit 10.9 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.19 †
|
|
Wet Sand Services Agreement, dated April 7, 2011, by and between Superior Silica Sands LLC and Fred Weber, Inc. (incorporated by reference to Exhibit 10.10 to the Registrant's Registration Statement on Form S-1, Registration No. 333-187487).
|
|
|
|
10.20
|
|
Contribution, Conveyance and Assumption Agreement, dated as of May 14, 2013, by and among Emerge Energy Services GP LLC, Emerge Energy Services LP, Emerge Energy Services Operating LLC, Emerge Energy Services Holdings LLC, and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on May 20, 2013).
|
|
|
|
21.1*
|
|
List of Subsidiaries of Emerge Energy Services LP.
|
|
|
|
23.1*
|
|
Consent of BDO USA, LLP.
|
|
|
|
23.2*
|
|
Consent of Cooper Engineering Company, Inc.
|
|
|
|
23.3*
|
|
Consent of Westward Environmental, Inc.
|
|
|
|
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.
|
|
†
|
Certain portions have been omitted pursuant to a confidential treatment request. Omitted information has been separately filed with the Securities and Exchange Commission.
|
Director:
|
|
$50,000
|
|
Chair of any Board committee, other than a special committee:
|
|
$10,000
|
|
Member (other than Chair) of any Board committee, other than a special committee:
|
|
$2,500
|
|
Annual Restricted Unit Grant:
|
Each Director who is serving on the Board as of an anniversary of the IPO shall be granted Restricted Units with a value of $75,000 on such date (the “
Annual Restricted Unit Grant
”).
The Annual Restricted Unit Grant shall be granted on the date of the applicable anniversary of the IPO, and shall vest in full on the first (1
st
) anniversary of the date of grant, subject to continued service through the vesting date.
|
Initial Restricted Unit Grant:
|
Each Director who is initially elected or appointed to serve on the Board after the IPO shall be granted Restricted Units with a value equal to the product of (i) $75,000 on the date of such initial election or appointment multiplied by (ii) the fraction obtained by dividing (A) (1) twelve minus (2) the number of full months elapsed between the date of the immediately preceding anniversary of the IPO and the date of such initial election or appointment by (B) twelve (the “
Initial Restricted Unit Grant
”).
The Initial Restricted Unit Grant shall be granted on the date of the applicable Director’s initial election or appointment to serve on the Board and shall vest in full on the anniversary of the IPO immediately following the applicable grant date, subject to continued service through the vesting date.
|
Name of Subsidiary
|
|
Jurisdiction of Organization
|
Allied Energy Company LLC
|
|
Alabama
|
Allied Renewable Energy, LLC
|
|
Delaware
|
Direct Fuels LLC
|
|
Delaware
|
Emerge Energy Services Operating LLC
|
|
Delaware
|
Emerge Energy Distributors Inc.
|
|
Delaware
|
Superior Silica Sands LLC
|
|
Texas
|
|
|
|
|
|
Westward Environmental, Inc.
|
|
|
||
s/s Tommy Mathews, PG 5321
|
|
|
|
|
Tommy Mathews, PG, REM
President
TX License No. 5321
Firm No. 50112
|
|
|
|
|
|
|
Date: March 2, 2015
|
/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: March 2, 2015
|
/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: March 2, 2015
|
|
|
|
|
|
|
|
|
|
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: March 2, 2015
|
|
|
|
|
|
|
|
|
|
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)
|
1
|
—
|
—
|
—
|
—
|
$397
|
—
|
No
|
No
|
2
|
2
|
2
|
Chippewa Sand
(#4703607)
(New Auburn Wet Plant)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Dry Plant
(#4703620)
(New Auburn)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Arland Dry Plant
(#4703662)
(Midwest FracSep0909)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
FLS Mine/Wet Plant
(#4703670)
(Barron/Clinton)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Clinton Dry Plant
(#4703671)
(Barron/Clinton)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
LP Mine Site and Wet Plant
(#4703707) |
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Thompson Hills
(#4703718)
|
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Arland Dry Plant
(#4703720) |
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|
Independence Mine
(#4703728) |
—
|
—
|
—
|
—
|
—
|
$—
|
—
|
No
|
No
|
—
|
—
|
—
|