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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Emerge Energy Services LP Common Units Representing Limited Partner Interests | NYSE:EMES | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.2099 | 0.00 | 01:00:00 |
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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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5600 Clearfork Main Street, Suite 400, Fort Worth, Texas 76109
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(817) 618-4020
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(Address of principal executive offices)
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(Registrant’s telephone number, including area code)
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Title of Each Class
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Name of Each Exchange On Which Registered
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Common Units Representing Limited Partner Interests
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New York Stock Exchange
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Large-Accelerated Filer
o
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Accelerated Filer
x
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Non-Accelerated Filer
o
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Smaller Reporting Company
o
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Emerging Growth Company
o
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•
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Capitalize on the current market recovery.
After two years of a prolonged energy market downturn, the North American oil and gas market exhibited a strong recovery in 2017 as energy prices rebounded significantly, prompting upstream companies to increase spending for drilling and completion activity. Frac sand market demand rebounded dramatically in 2017 to approximately 77 million tons compared to 39 million tons in 2016, and our frac sand sales volume grew from approximately 2 million tons in 2016 to over 5 million tons in 2017.
With oil prices currently around $60 per barrel compared to below $30 per barrel for periods during the downturn, energy companies are expecting 2018 to be another year of sustained high investment. Additionally, the amount of proppant pumped downhole per horizontal well continues to increase at a high rate over the last several years, as the average proppant used per well in 2017 was nearly four times the amount used 2012. Oil and gas producers are continuing to realize improved hydrocarbon production and greater financial returns with the adoption of higher frac sand loadings per well, and we expect this trend to continue in 2018 based on published industry research and discussions with customers.
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•
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Expansion of Sand Resources.
We are continually focused on growing our resource base and responding to the changing needs of the market and our customers. Over the past few years, the adoption of in-basin sand by oil and gas companies has increased. Although in-basin sand is typically lower quality than northern white sand, some oil and gas companies have determined that in-basin sand has adequate physical properties for a portion of their well designs, and the delivered cost advantages of in-basin sand can economically justify its usage. This trend has caused us to become a more diversified supplier of high quality northern white sand and in-basin sand. On April 12, 2017, we acquired our San Antonio operations for $20 million. This site is located 25 miles south of San Antonio, Texas and is within 40-75 miles of the drilling and completion activity in the Eagle Ford basin, which is currently the second most active shale play in the United States. This facility previously produced and sold construction, foundry and sports sands, but did not serve the energy markets. We upgraded the existing operations for conversion into frac sand production and commenced frac sand production in July 2017. As part of our in-basin expansion strategy, we began construction of a new wet and dry plant on the San Antonio site in October 2017. These additional plants are targeted to be operational by the second quarter of 2018. Our San Antonio reserves contain American Petroleum Institute (“API”) specification, strategic reserves that bolster our presence with in-basin local sands and balance our portfolio of northern white to local sands.
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•
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Focus on profitability and improving financial condition.
We are applying financial discipline to all aspects of our business, with the primary goals of maximizing profits, controlling costs, prudently deploying capital for growth projects, and generating positive cash flow. We are constantly focused on lowering our production costs by efficiently operating our mines and dry plants, investing in operational projects that offer high returns, minimizing waste, and working closely with third-party contractors and vendors. Even when our operations are running at near full capacity as is the case in the current market environment, we continually seek to find the lowest cost combinations of sand source, production location, and transportation providers wherever possible. Furthermore, we routinely negotiate price concessions and purchase commitment amendments from our major vendors, such as railcar lessors, rail transportation providers, mine operators, transload facility operations, and professional service providers.
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•
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Build long-term customer relationships and execute on customer contracts.
We seek to develop long-term customer relationships by providing a secure source of sand supply for our customers with a high level of service. We are constantly working to secure or renew long-term take-or-pay, fixed-volume, and efforts-based contracts with existing and new customers in order to cover the majority of our production capacity. In 2017, total sales to customers under long-term contracts, including efforts-based, fixed-volume, and take-or-pay arrangements, accounted for 52% of our sand sales volumes. As of
December 31, 2017
, we had 5.8 million tons under long-term contract, primarily efforts-based arrangements, with a weighted average remaining of 3.5 years.
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•
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Introduce new products serving our core end users.
We intend to increase our presence and market share in frac sand end markets that we believe are poised for growth. In September 2015, we introduced a unique, technically advanced proppant to the oil and gas industry and began selling the product in 2016. This dustless proppant, brand named SandGuard™, improves the handling, in-basin management, and job-site implementation of the hydraulic fracturing of oil and gas wells. Silica sands can potentially release dust particles into the air that are harmful to personnel when exposed in large quantities, so mechanical dust collection systems act to remove silica dust from the workplace. In March 2016, Occupational Health and Safety Administration (“OSHA”) published a final rule establishing a more stringent permissible limit for exposure to respirable crystalline silica and other provisions to protect employees, such as requirements for exposure assessment, methods for controlling exposure, respiratory protection, medical surveillance, hazard communication, and recordkeeping. This final rule became effective in June 2016, with compliance required by September 2017 for the construction industry and June 2018 for general industry and maritime. For operations in the oil and gas industry, compliance is required by June 2018, except for engineering controls, which have a compliance date of June
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•
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Distributions.
While the Second Amended and Restated Revolving Credit Agreement and the Second Lien Note Purchase Agreement prohibit distributions in 2018, the board of directors of our general partner remains committed to resuming distributions as our financial condition allows.
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•
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High quality, strategically located assets.
We currently operate several scalable frac sand production facilities in and around Barron County, Wisconsin, Kosse, Texas, and San Antonio, Texas. Our facilities in Wisconsin are supported by
70.7 million
tons of proven recoverable sand reserves; our facility in Kosse, Texas is supported by
26.8 million
tons of proven recoverable sand reserves; and our facility in San Antonio, Texas is supported by
47.6 million
tons of proven recoverable frac sand reserves and
18.6 million
tons of probable frac sand reserves. We believe that our Wisconsin and Texas reserves provide us access to a balanced amount of coarse sand (16/30, 20/40, and 30/50 mesh sands) and fine sand (40/70 and 100 mesh) compared to other frac sand producers. Our sample boring data and production data indicate 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. Our mine deposits in Wisconsin can be targeted to extract finer grades when the market dictates such demand, as is the current trend. Also, our Kosse, TX and San Antonio, TX operations primarily consist of fine sand product, which affords us significant flexibility of serving our customers with their desired product type. With the recent shift of some customers electing to use lower cost, in-basin sands, we have a diversified mix of product types to meet any needs of our customer base. Our Texas operations provide us in-basin local sands to satisfy customers who prefer such sand for economic reasons, while our three dry plants and five mines in Wisconsin provide high-quality northern white sand for those customers favoring quality over cost.
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•
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Logistics.
The logistics capabilities of our Wisconsin facilities enable us to serve the 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 is connected to a rail line owned by Union Pacific (“UP”), and our Barron facility is connected to the Canadian National (“CN”) rail line. Our Wisconsin plants are also located in close proximity to the Burlington Northern Santa Fe Railway (“BNSF”) rail line. Additionally, our San Antonio facility is located on the UP mainline. Although we expect to sell all of the San Antonio plant’s output in the Eagle Ford basin, the rail access affords us significant flexibility if we chose to ship sand to other basins. Between our two Wisconsin rail yards and our San Antonio site, we have storage space for 1,080 railcars. Our Barron and New Auburn dry plant facilities can accommodate unit trains. As of
December 31, 2017
, we had a total of
5,199
railcars in our fleet, including
76
dedicated customer cars and
5,123
railcars under lease with a weighted average remaining term of 4.3 years. As of
December 31, 2017
, we had
14
transload facilities in North America, each of which is positioned to serve a number of our target markets.
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•
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Competitive operating cost structure.
We believe that our operations are characterized by an overall cost structure which allows us to capture attractive margins in the industries in which we operate. Our competitive cost structure is a result of the following key attributes:
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close proximity of our silica sand reserves to our processing plants, which reduces operating costs;
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•
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close proximity of our in-basin sand operations (Kosse and San Antonio, TX) to oil and gas producing regions;
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•
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expertise in designing, building, maintaining and operating advanced frac sand processing, storage and loading facilities;
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a large proportion of the costs we incur in our production of sand are only incurred when we produce saleable frac sand;
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open dialogue with key vendors, allowing for cost reductions;
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•
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proximity to major sand and logistics infrastructure, minimizing transportation and fuel costs and headcount needs;
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competitive mineral royalty expenses;
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•
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enclosed dry plant operations which allow full run rates during winter months, thereby increasing plant utilization; and
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•
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a diversified and growing customer base spread across nearly every major shale play in North America.
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•
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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. 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.
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•
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Experienced management team with industry specific operating and technical expertise.
Our senior management team has extensive industry experience in managing and operating industrial mineral production facilities. They have managed numerous frac sand mining and processing plants, successfully led acquisitions in the industry and developed multiple greenfield industrial mineral processing facilities. We believe that our customers value our commitment to customer service, our reliable delivery, and our focus on high-quality product.
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Wet Plant
Location
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Proven Recoverable Reserves
(Millions of Tons) (1)
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Lease Expiration Date (2)
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Annual Plant Capacity
(Thousands of Tons)
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2017 Production (Thousands of Tons)
|
Auburn
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|
16.4
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March 2036
|
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2,000
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1,276
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Thompson Hills
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38.2
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December 2037
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1,600
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|
1,394
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FLS Mine
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7.9
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July 2037
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1,400
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1,496
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Church Road
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4.4
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N/A
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1,200
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924
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LP Mine
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3.8
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March 2038
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1,200
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1,163
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San Antonio, TX (4)
|
|
47.6
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N/A
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600
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77
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Kosse, TX
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26.8
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N/A
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1,600
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|
321
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Dry Plant Location (1)
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On-site Railcar
Storage Capacity (3)
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Annual Plant Capacity
(Thousands of Tons)
|
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2017 Production Volumes
(Thousands of Tons) |
Arland
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N/A
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|
2,500
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1,800
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Barron
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650 cars
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|
2,400
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|
2,081
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New Auburn
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420 cars
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|
1,400
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|
1,272
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San Antonio, TX
|
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10
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|
300
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50
|
Kosse, TX
|
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N/A
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|
600
|
|
231
|
(1)
|
Reserves are estimated as of
December 31, 2017
, by third-party independent engineering firms based on core drilling results and in accordance with the SEC’s definition of proven recoverable reserves and related rules for companies engaged in significant mining activities and represent marketable finished product.
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(2)
|
We own the land and mineral rights at our Church Road, Kosse, and San Antonio mines.
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(3)
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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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(4)
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San Antonio facility also has
18.6 million
tons of probable frac sand reserves.
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Transload Location by Basin
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Transload Sites as of December 31, 2017
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Transload Sites Capable of Receiving Unit Trains
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2017 Volume Sold
(Thousands of Tons)
|
|||
Bakken Shale
|
|
1
|
|
|
1
|
|
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309
|
|
Barnett Shale
|
|
1
|
|
|
—
|
|
|
2
|
|
Eagle Ford Shale
|
|
1
|
|
|
1
|
|
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514
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|
Haynesville Shale
|
|
1
|
|
|
1
|
|
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65
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|
Marcellus / Utica Shales
|
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2
|
|
|
1
|
|
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154
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|
Mid-Continent Basin
|
|
1
|
|
|
1
|
|
|
128
|
|
Permian Basin
|
|
3
|
|
|
2
|
|
|
540
|
|
Western Canadian Sedimentary Basin
|
|
3
|
|
|
—
|
|
|
358
|
|
Export to South America
|
|
1
|
|
|
—
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|
|
14
|
|
Total tons sold through transloads active at December 31, 2017
|
|
14
|
|
|
7
|
|
|
2,084
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Tons sold through transloads not active at December 31, 2017
|
|
|
|
|
|
364
|
|
||
Tons sold through transloads in 2017
|
|
|
|
|
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2,448
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•
|
the level of production of, demand for, and price of frac sand, particularly in the markets we serve;
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•
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the fees we charge, and the margins we realize, from our frac sand sales and the other services we provide;
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•
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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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•
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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, the purchase agreement that governs our second lien notes and any 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;
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make acquisitions, investments and capital expenditures; and
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make distributions to our unitholders.
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refinancing or restructuring all or a portion of our debt;
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obtaining alternative financing;
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selling assets;
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reducing or delaying capital investments;
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seeking to raise additional capital; or
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revising or delaying our strategic plans.
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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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•
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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.
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Mineral Reserves;
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Mines and Wet Plants;
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Dry Plant Facilities; and
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Transportation Logistics and Infrastructure.
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Quarter Ended
|
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High Price
|
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Low Price
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Distributions Declared
Per Unit
|
||||
March 31, 2016
|
|
$
|
6.63
|
|
|
$
|
1.97
|
|
|
$—
|
June 30, 2016
|
|
$
|
13.80
|
|
|
$
|
3.00
|
|
|
$—
|
September 30, 2016
|
|
$
|
14.60
|
|
|
$
|
8.12
|
|
|
$—
|
December 31, 2016
|
|
$
|
15.75
|
|
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$
|
8.90
|
|
|
$—
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|
|
|
|
|
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|
||||
March 31, 2017
|
|
$
|
24.45
|
|
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$
|
11.11
|
|
|
$—
|
June 30, 2017
|
|
$
|
15.05
|
|
|
$
|
7.72
|
|
|
$—
|
September 30, 2017
|
|
$
|
9.90
|
|
|
$
|
5.65
|
|
|
$—
|
December 31, 2017
|
|
$
|
9.40
|
|
|
$
|
6.72
|
|
|
$—
|
•
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Our IPO in May 2013 resulted in:
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•
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net proceeds of $116.2 million;
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•
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non-recurring charges of $11.0 million;
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•
|
our ability to repay substantially all of our pre-existing long-term debt at that time and refinance at more favorable terms; and
|
•
|
on-going general and administrative costs subsequent to our IPO related to compliance with statutory and other requirements of a publicly traded limited partnership.
|
•
|
Prior to May 14, 2013, our financial statements consist of the combined results of SSS and AEC. Subsequent to the IPO, we have also included the operations of Direct Fuels, which was purchased on May 14, 2013.
|
•
|
During 2012 and 2014, our Sand segment incurred significant growth capital expenditures to keep pace with rapidly increasing demand for our northern white frac sand.
|
•
|
Following the sale of our Fuel business in August 2016, the results of operations of the Fuel business have been classified as discontinued operations for all periods presented. We now operate our continuing business in a single sand business. We report silica sand operations as our continuing operations and fuel operations as our discontinued operations. We have revised the results of all prior periods to reflect our continuing and discontinued operations.
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ in thousands, except per unit data)
|
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
$
|
364,302
|
|
|
$
|
128,399
|
|
|
$
|
269,518
|
|
|
$
|
341,836
|
|
|
$
|
167,768
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
304,279
|
|
|
173,907
|
|
|
209,161
|
|
|
204,282
|
|
|
91,416
|
|
|
|||||
Depreciation, depletion and amortization
|
21,899
|
|
|
19,126
|
|
|
17,897
|
|
|
12,805
|
|
|
10,459
|
|
|
|||||
Selling, general and administrative expenses
|
26,796
|
|
|
20,951
|
|
|
27,551
|
|
|
32,231
|
|
|
20,025
|
|
|
|||||
Contract and project terminations
|
—
|
|
|
4,011
|
|
|
10,652
|
|
|
—
|
|
|
—
|
|
|
|||||
IPO transaction-related costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,966
|
|
|
|||||
Total operating expenses
|
352,974
|
|
|
217,995
|
|
|
265,261
|
|
|
249,318
|
|
|
132,866
|
|
|
|||||
Income (loss) from operations
|
11,328
|
|
|
(89,596
|
)
|
|
4,257
|
|
|
92,518
|
|
|
34,902
|
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest expense, net
|
19,171
|
|
|
21,339
|
|
|
11,216
|
|
|
6,343
|
|
|
8,793
|
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
907
|
|
|
|||||
Other expense (income)
|
(4,207
|
)
|
|
2,471
|
|
|
(34
|
)
|
|
649
|
|
|
(116
|
)
|
|
|||||
Total other expense
|
14,964
|
|
|
23,810
|
|
|
11,182
|
|
|
6,992
|
|
|
9,584
|
|
|
|||||
Income (loss) from continuing operations before provision for income taxes
|
(3,636
|
)
|
|
(113,406
|
)
|
|
(6,925
|
)
|
|
85,526
|
|
|
25,318
|
|
|
|||||
Provision (benefit) for income taxes
|
71
|
|
|
(191
|
)
|
|
258
|
|
|
205
|
|
|
120
|
|
|
|||||
Net income (loss) from continuing operations
|
(3,707
|
)
|
|
(113,215
|
)
|
|
(7,183
|
)
|
|
85,321
|
|
|
25,198
|
|
|
|||||
Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from discontinued operations, net of taxes
|
(3,125
|
)
|
|
8,746
|
|
|
(2,228
|
)
|
|
3,758
|
|
|
9,972
|
|
|
Gain on sale of discontinued operations
|
—
|
|
|
31,699
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Total income (loss) from discontinued operations, net of tax
|
(3,125
|
)
|
|
40,445
|
|
|
(2,228
|
)
|
|
3,758
|
|
|
9,972
|
|
|
|||||
Net income (loss)
|
(6,832
|
)
|
|
(72,770
|
)
|
|
(9,411
|
)
|
|
89,079
|
|
|
35,170
|
|
|
|||||
Less Predecessor net income before May 14, 2013
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,124
|
|
|
|||||
Post-IPO net income (loss)
|
$
|
(6,832
|
)
|
|
$
|
(72,770
|
)
|
|
$
|
(9,411
|
)
|
|
$
|
89,079
|
|
|
$
|
22,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per common unit (1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per common unit from continuing operations
|
$
|
(0.12
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
3.54
|
|
|
$
|
0.60
|
|
|
Earnings (loss) per common unit from discontinued operations
|
(0.11
|
)
|
|
1.63
|
|
|
(0.09
|
)
|
|
0.16
|
|
|
0.32
|
|
|
|||||
Basic earnings (loss) per common unit (1)
|
$
|
(0.23
|
)
|
|
$
|
(2.92
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) per common unit from continuing operations
|
$
|
(0.12
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
3.54
|
|
|
$
|
0.60
|
|
|
Earnings (loss) per common unit from discontinued operations
|
(0.11
|
)
|
|
1.63
|
|
|
(0.09
|
)
|
|
0.16
|
|
|
0.32
|
|
|
|||||
Diluted earnings (loss) per common unit (1)
|
$
|
(0.23
|
)
|
|
$
|
(2.92
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
3.70
|
|
|
$
|
0.92
|
|
|
Balance Sheet Data (at year end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment, net
|
$
|
185,970
|
|
|
$
|
165,855
|
|
|
$
|
179,520
|
|
|
$
|
188,545
|
|
|
$
|
93,362
|
|
|
Total assets
|
$
|
308,892
|
|
|
$
|
249,904
|
|
|
$
|
420,048
|
|
|
$
|
432,127
|
|
|
$
|
319,547
|
|
|
Long-term debt
|
$
|
176,351
|
|
|
$
|
134,012
|
|
|
$
|
295,938
|
|
|
$
|
217,023
|
|
|
$
|
90,340
|
|
|
Statement of Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
(2,103
|
)
|
|
$
|
(47,326
|
)
|
|
$
|
47,325
|
|
|
$
|
86,161
|
|
|
$
|
58,036
|
|
|
Investing activities
|
$
|
(27,667
|
)
|
|
$
|
140,541
|
|
|
$
|
(33,674
|
)
|
|
$
|
(88,172
|
)
|
|
$
|
(38,009
|
)
|
|
Financing activities
|
$
|
35,495
|
|
|
$
|
(114,081
|
)
|
|
$
|
343
|
|
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Maintenance (2)
|
$
|
(1,540
|
)
|
|
$
|
(1,808
|
)
|
|
$
|
(2,344
|
)
|
|
$
|
(3,240
|
)
|
|
$
|
(2,394
|
)
|
|
Growth (3)
|
(5,908
|
)
|
|
(11,715
|
)
|
|
(33,130
|
)
|
|
(74,644
|
)
|
|
(18,975
|
)
|
|
|||||
Total
|
$
|
(7,448
|
)
|
|
$
|
(13,523
|
)
|
|
$
|
(35,474
|
)
|
|
$
|
(77,884
|
)
|
|
$
|
(21,369
|
)
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common unit (4)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3.08
|
|
|
$
|
4.68
|
|
|
$
|
1.23
|
|
|
Adjusted EBITDA (5)
|
$
|
44,983
|
|
|
$
|
(37,354
|
)
|
|
$
|
50,704
|
|
|
$
|
132,827
|
|
|
$
|
86,467
|
|
|
(1)
|
Earnings per common unit are based on the results of operations subsequent to our IPO on May 14, 2013.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
Distributions related to the earnings of one quarter are declared and paid in the subsequent quarter.
|
(5)
|
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)
|
|
||||||||||||||
2017:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
75,344
|
|
|
$
|
82,602
|
|
|
$
|
103,215
|
|
|
$
|
103,141
|
|
|
Operating income (loss)
|
$
|
(7,501
|
)
|
|
$
|
(1,351
|
)
|
|
$
|
9,596
|
|
|
$
|
10,584
|
|
|
Net income (loss) from continuing operations
|
$
|
(11,390
|
)
|
|
$
|
(3,425
|
)
|
|
$
|
5,482
|
|
|
$
|
5,626
|
|
|
Total income (loss) from discontinued operations, net of tax
|
$
|
—
|
|
|
$
|
(2,657
|
)
|
|
$
|
(468
|
)
|
|
$
|
—
|
|
|
Net income (loss)
|
$
|
(11,390
|
)
|
|
$
|
(6,082
|
)
|
|
$
|
5,014
|
|
|
$
|
5,626
|
|
|
Basic earnings (loss) per common unit
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.38
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.19
|
|
|
$
|
0.19
|
|
|
Discontinued operations
|
—
|
|
|
(0.09
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
||||
Basic earnings (loss) per common unit
|
$
|
(0.38
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
0.17
|
|
|
$
|
0.19
|
|
|
Diluted earnings (loss) per common unit
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(0.38
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
Discontinued operations
|
—
|
|
|
(0.09
|
)
|
|
(0.02
|
)
|
|
—
|
|
|
||||
Diluted earnings (loss) per common unit
|
$
|
(0.38
|
)
|
|
$
|
(0.30
|
)
|
|
$
|
0.16
|
|
|
$
|
0.18
|
|
|
Cash dividends declared per common unit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2016:
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
29,670
|
|
|
$
|
24,825
|
|
|
$
|
31,285
|
|
|
$
|
42,619
|
|
|
Operating income (loss)
|
$
|
(29,828
|
)
|
|
$
|
(22,868
|
)
|
|
$
|
(18,574
|
)
|
|
$
|
(18,326
|
)
|
|
Net income (loss) from continuing operations
|
$
|
(34,441
|
)
|
|
$
|
(28,150
|
)
|
|
$
|
(29,955
|
)
|
|
$
|
(20,669
|
)
|
|
Total income (loss) from discontinued operations, net of tax
|
$
|
226
|
|
|
$
|
5,253
|
|
|
$
|
35,072
|
|
|
$
|
(106
|
)
|
|
Net income (loss)
|
$
|
(34,215
|
)
|
|
$
|
(22,897
|
)
|
|
$
|
5,117
|
|
|
$
|
(20,775
|
)
|
|
Basic earnings (loss) per common unit
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(1.42
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(0.77
|
)
|
|
Discontinued operations
|
0.01
|
|
|
0.22
|
|
|
1.45
|
|
|
—
|
|
|
||||
Basic earnings (loss) per common unit
|
$
|
(1.41
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
0.21
|
|
|
$
|
(0.77
|
)
|
|
Diluted earnings (loss) per common unit
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
$
|
(1.42
|
)
|
|
$
|
(1.17
|
)
|
|
$
|
(1.24
|
)
|
|
$
|
(0.80
|
)
|
|
Discontinued operations
|
0.01
|
|
|
0.22
|
|
|
1.45
|
|
|
—
|
|
|
||||
Diluted earnings (loss) per common unit
|
$
|
(1.41
|
)
|
|
$
|
(0.95
|
)
|
|
$
|
0.21
|
|
|
$
|
(0.80
|
)
|
|
Cash dividends declared per common unit
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
•
|
our debt covenant compliance. Adjusted EBITDA is a key component of critical covenants to our Credit Agreement;
|
•
|
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.
|
|
Continuing
|
|
Discontinued
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Year Ended December 31, 2017
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||
Net income (loss)
|
$
|
(3,707
|
)
|
|
$
|
(3,125
|
)
|
|
$
|
(6,832
|
)
|
|
Interest expense, net
|
19,171
|
|
|
—
|
|
|
19,171
|
|
|
|||
Depreciation, depletion and amortization
|
21,899
|
|
|
—
|
|
|
21,899
|
|
|
|||
Provision for income taxes
|
71
|
|
|
—
|
|
|
71
|
|
|
|||
EBITDA
|
37,434
|
|
|
(3,125
|
)
|
|
34,309
|
|
|
|||
Equity-based compensation expense
|
1,423
|
|
|
—
|
|
|
1,423
|
|
|
|||
Reduction in escrow receivable
|
—
|
|
|
3,125
|
|
|
3,125
|
|
|
|||
Provision for doubtful accounts
|
17
|
|
|
—
|
|
|
17
|
|
|
|||
Accretion expense
|
113
|
|
|
—
|
|
|
113
|
|
|
|||
Retirement of assets
|
60
|
|
|
—
|
|
|
60
|
|
|
|||
Other state and local taxes
|
1,896
|
|
|
—
|
|
|
1,896
|
|
|
|||
Non-cash deferred lease expense
|
8,035
|
|
|
—
|
|
|
8,035
|
|
|
|||
Unrealized (gain) loss on fair value of warrants
|
(4,208
|
)
|
|
—
|
|
|
(4,208
|
)
|
|
|||
Other adjustments allowable under our existing credit agreement
|
213
|
|
|
—
|
|
|
213
|
|
|
|||
Adjusted EBITDA
|
$
|
44,983
|
|
|
$
|
—
|
|
|
$
|
44,983
|
|
|
|
Continuing
|
|
Discontinued
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Year Ended December 31, 2016
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||
Net income (loss)
|
$
|
(113,215
|
)
|
|
$
|
40,445
|
|
|
$
|
(72,770
|
)
|
|
Interest expense, net
|
21,339
|
|
|
1,727
|
|
|
23,066
|
|
|
|||
Depreciation, depletion and amortization
|
19,126
|
|
|
2,354
|
|
|
21,480
|
|
|
|||
Provision (benefit) for income taxes
|
(191
|
)
|
|
19
|
|
|
(172
|
)
|
|
|||
EBITDA
|
(72,941
|
)
|
|
44,545
|
|
|
(28,396
|
)
|
|
|||
Equity-based compensation expense
|
388
|
|
|
331
|
|
|
719
|
|
|
|||
Write-down of sand inventory
|
5,394
|
|
|
—
|
|
|
5,394
|
|
|
|||
Contract and project terminations
|
4,011
|
|
|
—
|
|
|
4,011
|
|
|
|||
Provision for doubtful accounts
|
1,684
|
|
|
(469
|
)
|
|
1,215
|
|
|
|||
Accretion expense
|
119
|
|
|
—
|
|
|
119
|
|
|
|||
Retirement of assets
|
559
|
|
|
67
|
|
|
626
|
|
|
|||
Reduction in force
|
76
|
|
|
—
|
|
|
76
|
|
|
|||
Other state and local taxes
|
1,824
|
|
|
296
|
|
|
2,120
|
|
|
|||
Non-cash deferred lease expense
|
5,758
|
|
|
—
|
|
|
5,758
|
|
|
|||
Unrealized (gain) loss on fair value of warrants
|
2,090
|
|
|
—
|
|
|
2,090
|
|
|
|||
Non-capitalized cost of private placement
|
404
|
|
|
—
|
|
|
404
|
|
|
|||
Gain on sale of discontinued operations, net of tax
|
—
|
|
|
(31,699
|
)
|
|
(31,699
|
)
|
|
|||
Other adjustments allowable under our existing credit agreement
|
209
|
|
|
—
|
|
|
209
|
|
|
|||
Adjusted EBITDA
|
$
|
(50,425
|
)
|
|
$
|
13,071
|
|
|
$
|
(37,354
|
)
|
|
|
Continuing
|
|
Discontinued
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Year Ended December 31, 2015
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||
Net income (loss)
|
$
|
(7,183
|
)
|
|
$
|
(2,228
|
)
|
|
$
|
(9,411
|
)
|
|
Interest expense, net
|
11,216
|
|
|
1,338
|
|
|
12,554
|
|
|
|||
Depreciation, depletion and amortization
|
17,897
|
|
|
10,544
|
|
|
28,441
|
|
|
|||
Provision for income taxes
|
258
|
|
|
246
|
|
|
504
|
|
|
|||
EBITDA
|
22,188
|
|
|
9,900
|
|
|
32,088
|
|
|
|||
Equity-based compensation expense
|
2,935
|
|
|
597
|
|
|
3,532
|
|
|
|||
Contract and project terminations
|
10,652
|
|
|
—
|
|
|
10,652
|
|
|
|||
Provision for doubtful accounts
|
1,391
|
|
|
150
|
|
|
1,541
|
|
|
|||
Accretion expense
|
110
|
|
|
—
|
|
|
110
|
|
|
|||
Retirement of assets
|
138
|
|
|
8
|
|
|
146
|
|
|
|||
Other state and local taxes
|
1,941
|
|
|
332
|
|
|
2,273
|
|
|
|||
Reduction in force
|
362
|
|
|
—
|
|
|
362
|
|
|
|||
Adjusted EBITDA
|
$
|
39,717
|
|
|
$
|
10,987
|
|
|
$
|
50,704
|
|
|
|
Continuing
|
|
Discontinued
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Year Ended December 31, 2014
|
|
||||||||||
|
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||
Net income (loss)
|
$
|
85,321
|
|
|
$
|
3,758
|
|
|
$
|
89,079
|
|
|
Interest expense, net
|
6,343
|
|
|
1,022
|
|
|
7,365
|
|
|
|||
Depreciation, depletion and amortization
|
12,805
|
|
|
11,998
|
|
|
24,803
|
|
|
|||
Provision for income taxes
|
205
|
|
|
433
|
|
|
638
|
|
|
|||
EBITDA
|
104,674
|
|
|
17,211
|
|
|
121,885
|
|
|
|||
Equity-based compensation expense
|
7,870
|
|
|
1,172
|
|
|
9,042
|
|
|
|||
Provision for doubtful accounts
|
103
|
|
|
150
|
|
|
253
|
|
|
|||
Accretion expense
|
38
|
|
|
—
|
|
|
38
|
|
|
|||
Retirement of assets
|
19
|
|
|
(11
|
)
|
|
8
|
|
|
|||
Other state and local taxes
|
1,224
|
|
|
377
|
|
|
1,601
|
|
|
|||
Adjusted EBITDA
|
$
|
113,928
|
|
|
$
|
18,899
|
|
|
$
|
132,827
|
|
|
|
Continuing
|
|
Discontinued
|
|
Consolidated
|
|
||||||
|
|
|
|
|
|
|
||||||
|
Year Ended December 31, 2013
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||
Net income (loss)
|
$
|
25,198
|
|
|
$
|
9,972
|
|
|
$
|
35,170
|
|
|
Interest expense, net
|
8,793
|
|
|
1,603
|
|
|
10,396
|
|
|
|||
Depreciation, depletion and amortization
|
10,459
|
|
|
10,369
|
|
|
20,828
|
|
|
|||
Provision for income taxes
|
120
|
|
|
266
|
|
|
386
|
|
|
|||
EBITDA
|
44,570
|
|
|
22,210
|
|
|
66,780
|
|
|
|||
Equity-based compensation expense
|
4,982
|
|
|
752
|
|
|
5,734
|
|
|
|||
IPO transaction-related costs
|
10,966
|
|
|
—
|
|
|
10,966
|
|
|
|||
Provision for doubtful accounts
|
51
|
|
|
139
|
|
|
190
|
|
|
|||
Accretion expense
|
3
|
|
|
—
|
|
|
3
|
|
|
|||
Retirement of assets
|
773
|
|
|
(18
|
)
|
|
755
|
|
|
|||
Loss (gain) on extinguishment of debt
|
907
|
|
|
—
|
|
|
907
|
|
|
|||
Other state and local taxes
|
831
|
|
|
301
|
|
|
1,132
|
|
|
|||
Adjusted EBITDA
|
$
|
63,083
|
|
|
$
|
23,384
|
|
|
$
|
86,467
|
|
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||||||||||
Adjusted EBITDA
|
$
|
44,983
|
|
|
$
|
(37,354
|
)
|
|
$
|
50,704
|
|
|
$
|
132,827
|
|
|
$
|
86,467
|
|
|
Interest expense, net
|
(15,497
|
)
|
|
(16,672
|
)
|
|
(11,729
|
)
|
|
(5,727
|
)
|
|
(6,504
|
)
|
|
|||||
Income tax expense
|
(1,967
|
)
|
|
(1,948
|
)
|
|
(2,777
|
)
|
|
(2,239
|
)
|
|
(1,518
|
)
|
|
|||||
Contract and project terminations - non-cash
|
—
|
|
|
(3
|
)
|
|
(307
|
)
|
|
689
|
|
|
(10,966
|
)
|
|
|||||
Reduction in force
|
—
|
|
|
(76
|
)
|
|
(362
|
)
|
|
—
|
|
|
—
|
|
|
|||||
Write-down of sand inventory
|
—
|
|
|
(5,394
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Other adjustments allowable under our existing credit agreement
|
(213
|
)
|
|
(209
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Cost to retire assets
|
19
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Non-cash deferred lease expense
|
(8,035
|
)
|
|
(5,758
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
Change in other operating assets and liabilities
|
(21,393
|
)
|
|
20,079
|
|
|
11,796
|
|
|
(39,389
|
)
|
|
(9,443
|
)
|
|
|||||
Cash flows from operating activities:
|
$
|
(2,103
|
)
|
|
$
|
(47,326
|
)
|
|
$
|
47,325
|
|
|
$
|
86,161
|
|
|
$
|
58,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
$
|
(27,667
|
)
|
|
$
|
140,541
|
|
|
$
|
(33,674
|
)
|
|
$
|
(88,172
|
)
|
|
$
|
(38,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
$
|
35,495
|
|
|
$
|
(114,081
|
)
|
|
$
|
343
|
|
|
$
|
6,720
|
|
|
$
|
(19,327
|
)
|
|
•
|
our debt covenant compliance. Adjusted EBITDA is a key component of critical covenants to our Credit Agreement.
|
•
|
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,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Revenues
|
$
|
364,302
|
|
|
$
|
128,399
|
|
|
$
|
269,518
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
304,279
|
|
|
173,907
|
|
|
209,161
|
|
|
|||
Depreciation, depletion and amortization
|
21,899
|
|
|
19,126
|
|
|
17,897
|
|
|
|||
Selling, general and administrative expenses
|
26,796
|
|
|
20,951
|
|
|
27,551
|
|
|
|||
Contract and project terminations
|
—
|
|
|
4,011
|
|
|
10,652
|
|
|
|||
Total operating expenses
|
352,974
|
|
|
217,995
|
|
|
265,261
|
|
|
|||
Income (loss) from operations
|
11,328
|
|
|
(89,596
|
)
|
|
4,257
|
|
|
|||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|||
Interest expense, net
|
19,171
|
|
|
21,339
|
|
|
11,216
|
|
|
|||
Other expense (income)
|
(4,207
|
)
|
|
2,471
|
|
|
(34
|
)
|
|
|||
Total other expense
|
14,964
|
|
|
23,810
|
|
|
11,182
|
|
|
|||
Income (loss) from continuing operations before provision for income taxes
|
(3,636
|
)
|
|
(113,406
|
)
|
|
(6,925
|
)
|
|
|||
Provision (benefit) for income taxes
|
71
|
|
|
(191
|
)
|
|
258
|
|
|
|||
Net income (loss) from continuing operations
|
(3,707
|
)
|
|
(113,215
|
)
|
|
(7,183
|
)
|
|
|||
Discontinued Operations
|
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations, net of taxes
|
(3,125
|
)
|
|
8,746
|
|
|
(2,228
|
)
|
|
|||
Gain on sale of discontinued operations
|
—
|
|
|
31,699
|
|
|
—
|
|
|
|||
Total income (loss) from discontinued operations, net of tax
|
(3,125
|
)
|
|
40,445
|
|
|
(2,228
|
)
|
|
|||
Net income (loss)
|
$
|
(6,832
|
)
|
|
$
|
(72,770
|
)
|
|
$
|
(9,411
|
)
|
|
Adjusted EBITDA (a)
|
$
|
44,983
|
|
|
$
|
(37,354
|
)
|
|
$
|
50,704
|
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
the market prices for crude oil and refined products began a steep and protracted decline in late 2014 which continued throughout 2015 and 2016 impacting our Sand and Fuel businesses;
|
•
|
In August 2016, we divested our Fuel business to reduce our debt burden and improve liquidity. We recorded a gain of $31.7 million on the sale of the Fuel business.
|
•
|
Commodity prices stabilized in the middle of 2016 leading to an improvement in drilling activity during the third quarter of 2016 and into 2017, thus improving performance in 2017.
|
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Revenues:
|
|
|
|
|
|
|
||||||
Frac sand revenues
|
$
|
359,941
|
|
|
$
|
127,873
|
|
|
$
|
268,806
|
|
|
Non-frac sand revenues
|
4,361
|
|
|
526
|
|
|
712
|
|
|
|||
Total revenues
|
$
|
364,302
|
|
|
$
|
128,399
|
|
|
$
|
269,518
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
304,279
|
|
|
173,907
|
|
|
209,161
|
|
|
|||
Depreciation, depletion and amortization
|
21,899
|
|
|
19,126
|
|
|
17,897
|
|
|
|||
Selling, general and administrative expenses
|
26,796
|
|
|
20,951
|
|
|
27,551
|
|
|
|||
Contract and project terminations
|
—
|
|
|
4,011
|
|
|
10,652
|
|
|
|||
Total operating expenses
|
352,974
|
|
|
217,995
|
|
|
265,261
|
|
|
|||
Operating income (loss)
|
$
|
11,328
|
|
|
$
|
(89,596
|
)
|
|
$
|
4,257
|
|
|
Net income (loss) from continuing operations
|
$
|
(3,707
|
)
|
|
$
|
(113,215
|
)
|
|
$
|
(7,183
|
)
|
|
Adjusted EBITDA (a)
|
$
|
44,983
|
|
|
$
|
(50,425
|
)
|
|
$
|
39,717
|
|
|
|
|
|
|
|
|
|
||||||
Volume of frac sand sold (tons in thousands)
|
5,221
|
|
|
2,134
|
|
|
3,374
|
|
|
|||
Volume of non-frac sand sold (tons in thousands)
|
312
|
|
|
23
|
|
|
18
|
|
|
|||
Total volume of sand sold (tons in thousands)
|
5,533
|
|
|
2,157
|
|
|
3,392
|
|
|
|||
|
|
|
|
|
|
|
||||||
Terminal sand sales (tons in thousands)
|
2,448
|
|
|
1,240
|
|
|
1,425
|
|
|
|||
|
|
|
|
|
|
|
||||||
Volume of frac sand produced by dry plant (tons in thousands):
|
|
|
|
|
|
|
||||||
Arland, Wisconsin facility
|
1,800
|
|
|
186
|
|
|
1,064
|
|
|
|||
Barron, Wisconsin facility
|
2,081
|
|
|
1,588
|
|
|
1,536
|
|
|
|||
New Auburn, Wisconsin facility
|
1,272
|
|
|
352
|
|
|
604
|
|
|
|||
Kosse, Texas facility
|
231
|
|
|
140
|
|
|
277
|
|
|
|||
San Antonio, Texas facility (b)
|
50
|
|
|
—
|
|
|
—
|
|
|
|||
Total volume of frac sand produced
|
5,434
|
|
|
2,266
|
|
|
3,481
|
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
(b)
|
Our San Antonio facility commenced frac sand production in July 2017.
|
•
|
$103.4 million increase in sales of northern white sand (excluding estimated transportation markups), relating primarily to a 147% increase in volumes sold as well as increased pricing in light of market conditions for frac sand;
|
•
|
an estimated $118.6 million increase for significant increases in markups per ton sold through transload sites, along with increased volumes sold through these sites;
|
•
|
$13.9 million increase in sales of native Texas sand due to increased volumes and prices at our Kosse facility and addition of our San Antonio operation in July 2017.
|
•
|
The major components of the $59.9 million increase in the total cost to acquire and produce sand are:
|
•
|
Increased variable costs due to the
157%
increase in total volumes sold;
|
•
|
Idling our most expensive wet plant in 2016; and
|
•
|
Allocation of fixed costs over increased volumes in 2017 impacted the cost per ton.
|
•
|
$68.9 million increase in rail transportation-related expense, primarily due to:
|
•
|
$74.9 million increased rail shipping costs due to higher volumes sold; offset by
|
•
|
$4.2 million decrease in rail lease expense; and
|
•
|
$1.8 million decrease in railcar storage costs as we placed almost all of our stored railcars back into service by year-end 2017.
|
•
|
$6.9 million increase in transload facility expenses; and
|
•
|
$5.4 million write down of sand inventory in the first quarter of 2016. This write-down was attributed to rapidly declining market conditions and a significant decline in prices. In the first quarter of 2016, we had not yet fully implemented our cost reduction strategies and we had sand inventories at higher costs.
|
•
|
$6.0 million increase in employee-related costs due to higher staffing and bonus accruals resulting from better than expected financial results in 2017;
|
•
|
$0.7 million increase in equity-based compensation expense;
|
•
|
$0.3 million increase in employee travel related expense; offset by
|
•
|
$1.7 million decrease in bad debt expense.
|
•
|
$72.9 million decrease in sales of northern white sand (excluding estimated transportation markups and shortfall revenues), relating primarily to a 35% decrease in volumes sold as well as decreased pricing in light of market conditions for frac sand;
|
•
|
an estimated $46.9 million decrease in markups per ton sold through transload sites, net of increased volumes sold through these sites;
|
•
|
$7.5 million decrease in sales of native Texas sand (from our Kosse plant) due to decreased volumes;
|
•
|
$11.1 million of shortfall revenues recognized on take-or-pay customer contracts in 2015. We did not recognize any take-or-pay shortfall revenues in 2016 due to revisions to certain take-or-pay contracts; and
|
•
|
$2.6 million of business interruption insurance proceeds received in 2015 to reimburse us for lost sales during a time of equipment failure in 2014.
|
•
|
$26.9 million decrease in rail transportation-related expense, primarily due to:
|
•
|
$33.3 million decreased rail shipping costs due to decreased volumes sold; offset by
|
•
|
$5.2 million increase in rail lease expense;
|
•
|
$1.8 million increase in transload facility expenses; and
|
•
|
$1.2 million increase in railcar storage costs.
|
•
|
$15.5 million decrease in the total cost to acquire and produce wet and dry sand, due mainly to lower sales volumes and lower-cost sources for wet sand; offset by
|
•
|
$5.4 million write down of sand inventory in the first quarter of 2016. This write-down was attributed to the rapidly declining market conditions and a significant decline in prices. In the first quarter of 2016, we had not yet fully implemented our cost reduction strategies and we had sand inventories at higher costs; and
|
•
|
$1.8 million increase in transload facility expenses.
|
•
|
$2.9 million decrease for employee-related costs, primarily incentive compensation due to greatly decreased profits;
|
•
|
$2.8 million decrease in equity-based compensation expense;
|
•
|
$0.3 million decrease for professional fees; and
|
•
|
$0.3 million decrease in travel related costs.
|
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Revenues
|
$
|
—
|
|
|
$
|
249,558
|
|
|
$
|
442,121
|
|
|
Cost of goods sold (excluding depreciation, depletion and amortization)
|
—
|
|
|
233,025
|
|
|
426,664
|
|
|
|||
Depreciation and amortization
|
—
|
|
|
2,354
|
|
|
10,544
|
|
|
|||
Selling, general and administrative expenses
|
—
|
|
|
3,687
|
|
|
5,568
|
|
|
|||
Interest expense, net
|
—
|
|
|
1,727
|
|
|
1,338
|
|
|
|||
Other
|
3,125
|
|
|
—
|
|
|
(11
|
)
|
|
|||
Income (loss) from discontinued operations before provision for income taxes
|
(3,125
|
)
|
|
8,765
|
|
|
(1,982
|
)
|
|
|||
Provision for income taxes
|
—
|
|
|
19
|
|
|
246
|
|
|
|||
Income (loss) from discontinued operations, net of taxes
|
(3,125
|
)
|
|
8,746
|
|
|
(2,228
|
)
|
|
|||
Gain on sale of discontinued operations
|
—
|
|
|
31,699
|
|
|
—
|
|
|
|||
Total income (loss) from discontinued operations, net of taxes
|
$
|
(3,125
|
)
|
|
$
|
40,445
|
|
|
$
|
(2,228
|
)
|
|
Adjusted EBITDA (a)
|
$
|
—
|
|
|
$
|
13,071
|
|
|
$
|
10,987
|
|
|
|
|
|
|
|
|
|
||||||
Volume of refined fuels sold (gallons in thousands)
|
—
|
|
|
165,422
|
|
|
240,132
|
|
|
|||
Volume of terminal throughput (gallons in thousands)
|
—
|
|
|
82,387
|
|
|
123,180
|
|
|
|||
Volume of transmix refined (gallons in thousands)
|
—
|
|
|
68,326
|
|
|
93,128
|
|
|
|||
Refined transmix as a percent of total refined fuels sold
|
—
|
%
|
|
41.3
|
%
|
|
38.8
|
%
|
|
(a)
|
See Item 6. Selected Financial and Operating Data—Adjusted EBITDA for a discussion of Adjusted EBITDA and a reconciliation to net income (loss).
|
•
|
$120.1 million decrease for lower volumes of fuel sold;
|
•
|
$55.5 million decrease due to lower average fuel sales prices; and
|
•
|
$15.3 million decrease in excise and other transaction taxes. These taxes are offset on a one-to-one basis with excise and similar taxes in cost of goods sold.
|
•
|
$112.6 million decrease for lower volumes of fuel sold due to eight months of operations since the Fuel business was disposed on August 31, 2016;
|
•
|
$61.4 million decrease for lower average fuel purchase prices; and
|
•
|
$15.3 million decrease in excise and other transaction taxes.
|
•
|
a minimum liquidity requirement of $20 million at all times;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a total leverage ratio of a maximum of 5.50:1.00 decreasing quarterly thereafter to 3.00:1.00 for the fiscal quarter ending December 31, 2018 and thereafter;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a minimum fixed charge coverage ratio of 1.10:1.00; and
|
•
|
a limit on capital expenditures, subject to certain availability thresholds
|
•
|
a minimum liquidity requirement of $20 million at all times;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a total leverage ratio of a maximum of 6.00:1.00 decreasing quarterly thereafter to 3.00:1.00 for the fiscal quarter ending March 31, 2019 and thereafter;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a minimum fixed charge coverage ratio of 1.10:1.00, increasing quarterly to 2.00:1.00 for the fiscal quarter ending March 31, 2019 and thereafter; and
|
•
|
a limit on capital expenditures, subject to certain availability thresholds.
|
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Cash flows from operating activities
|
$
|
(2,103
|
)
|
|
$
|
(47,326
|
)
|
|
$
|
47,325
|
|
|
Cash flows from investing activities
|
$
|
(27,667
|
)
|
|
$
|
140,541
|
|
|
$
|
(33,674
|
)
|
|
Cash flows from financing activities
|
$
|
35,495
|
|
|
$
|
(114,081
|
)
|
|
$
|
343
|
|
|
Cash and cash equivalents at beginning of period
|
$
|
4
|
|
|
$
|
20,870
|
|
|
$
|
6,876
|
|
|
Cash and cash equivalents at end of period
|
$
|
5,729
|
|
|
$
|
4
|
|
|
$
|
20,870
|
|
|
|
||||||||||||
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Net debt proceeds (payments)
|
$
|
42,596
|
|
|
$
|
(161,363
|
)
|
|
$
|
79,160
|
|
|
Net proceeds from Public offering
|
—
|
|
|
36,881
|
|
|
—
|
|
|
|||
Net proceeds from private placement
|
—
|
|
|
18,359
|
|
|
—
|
|
|
|||
Distributions to owners
|
—
|
|
|
—
|
|
|
(74,351
|
)
|
|
|||
Other
|
(7,101
|
)
|
|
(7,958
|
)
|
|
(4,466
|
)
|
|
|||
Total
|
$
|
35,495
|
|
|
$
|
(114,081
|
)
|
|
$
|
343
|
|
|
|
Payments Due By Period
|
|
||||||||||||||||||
|
Total
|
|
< 1 Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
> 5 Years
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
($ in thousands)
|
|
||||||||||||||||||
Long-term debt (1)
|
$
|
227,769
|
|
|
$
|
16,851
|
|
|
$
|
165,106
|
|
|
$
|
45,812
|
|
|
$
|
—
|
|
|
Railcar leases (2)
|
423,212
|
|
|
36,641
|
|
|
82,111
|
|
|
92,977
|
|
|
211,483
|
|
|
|||||
Unsecured notes (2)
|
16,607
|
|
|
—
|
|
|
—
|
|
|
16,607
|
|
|
—
|
|
|
|||||
Other operating leases (3)
|
10,488
|
|
|
1,095
|
|
|
1,717
|
|
|
1,647
|
|
|
6,029
|
|
|
|||||
Purchase commitments (4)
|
106,363
|
|
|
25,790
|
|
|
38,491
|
|
|
31,324
|
|
|
10,758
|
|
|
|||||
Minimum royalty payments (5)
|
10,429
|
|
|
572
|
|
|
1,144
|
|
|
1,145
|
|
|
7,568
|
|
|
|||||
Total
|
$
|
794,868
|
|
|
$
|
80,949
|
|
|
$
|
288,569
|
|
|
$
|
189,512
|
|
|
$
|
235,838
|
|
|
(1)
|
Assumes balances outstanding as of December 31, 2017 will be paid at maturity and includes interest using interest rates in effect at December 31, 2017. On January 5, 2018, we entered into a New Revolving Credit Agreement and Second Lien Note Purchase Agreement and paid the outstanding long-term debt balance in full. Complete details of this refinancing is described in Note 11 to our Consolidated Financial Statements
|
(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. During 2016, we completed negotiations with various railcar lessors pursuant to which we terminated a future order of railcars, deferred future railcar deliveries and reduced and deferred payments on existing leases. In exchange for these concessions, we issued at par an Unsecured Promissory Note in the aggregate principal amount of $4 million for contract termination with interest payable in cash or, in certain situations, in-kind, when certain financial metrics have been met. This note bears interest at a rate of five percent per annum and is due and payable within 30 days following the date on which financial statements are publicly available covering the first date on which certain financial metrics have been met. We also issued at par the PIK Note in the aggregate principal amount of $8 million for delivery deferrals. The
|
(3)
|
Includes lease agreements for land, facilities and equipment.
|
(4)
|
Includes minimum amounts payable under a business acquisition agreement, long-term rail transportation agreements, transload facility agreements, asset purchase/construction 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,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
Revenues
|
$
|
364,302
|
|
|
$
|
128,399
|
|
|
$
|
269,518
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|||
Cost of goods sold (excluding depreciation, depletion and amortization)
|
304,279
|
|
|
173,907
|
|
|
209,161
|
|
|
|||
Depreciation, depletion and amortization
|
21,899
|
|
|
19,126
|
|
|
17,897
|
|
|
|||
Selling, general and administrative expenses
|
26,796
|
|
|
20,951
|
|
|
27,551
|
|
|
|||
Contract and project terminations
|
—
|
|
|
4,011
|
|
|
10,652
|
|
|
|||
Total operating expenses
|
352,974
|
|
|
217,995
|
|
|
265,261
|
|
|
|||
Income (loss) from operations
|
11,328
|
|
|
(89,596
|
)
|
|
4,257
|
|
|
|||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|||
Interest expense, net
|
19,171
|
|
|
21,339
|
|
|
11,216
|
|
|
|||
Other expense (income)
|
(4,207
|
)
|
|
2,471
|
|
|
(34
|
)
|
|
|||
Total other expense
|
14,964
|
|
|
23,810
|
|
|
11,182
|
|
|
|||
Income (loss) from continuing operations before provision for income taxes
|
(3,636
|
)
|
|
(113,406
|
)
|
|
(6,925
|
)
|
|
|||
Provision (benefit) for income taxes
|
71
|
|
|
(191
|
)
|
|
258
|
|
|
|||
Net income (loss) from continuing operations
|
(3,707
|
)
|
|
(113,215
|
)
|
|
(7,183
|
)
|
|
|||
Discontinued Operations
|
|
|
|
|
|
|
||||||
Income (loss) from discontinued operations, net of taxes
|
(3,125
|
)
|
|
8,746
|
|
|
(2,228
|
)
|
|
|||
Gain on sale of discontinued operations
|
—
|
|
|
31,699
|
|
|
—
|
|
|
|||
Total income (loss) from discontinued operations, net of tax
|
(3,125
|
)
|
|
40,445
|
|
|
(2,228
|
)
|
|
|||
Net income (loss)
|
$
|
(6,832
|
)
|
|
$
|
(72,770
|
)
|
|
$
|
(9,411
|
)
|
|
|
|
|
|
|
|
|
||||||
Earnings (loss) per common unit (1)
|
|
|
|
|
|
|
||||||
Basic:
|
|
|
|
|
|
|
||||||
Earnings (loss) per common unit from continuing operations
|
$
|
(0.12
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(0.30
|
)
|
|
Earnings (loss) per common unit from discontinued operations
|
(0.11
|
)
|
|
1.63
|
|
|
(0.09
|
)
|
|
|||
Basic earnings (loss) per common unit (1)
|
$
|
(0.23
|
)
|
|
$
|
(2.92
|
)
|
|
$
|
(0.39
|
)
|
|
Diluted:
|
|
|
|
|
|
|
||||||
Earnings (loss) per common unit from continuing operations
|
$
|
(0.12
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(0.30
|
)
|
|
Earnings (loss) per common unit from discontinued operations
|
(0.11
|
)
|
|
1.63
|
|
|
(0.09
|
)
|
|
|||
Diluted earnings (loss) per common unit (1)
|
$
|
(0.23
|
)
|
|
$
|
(2.92
|
)
|
|
$
|
(0.39
|
)
|
|
Weighted average number of common units outstanding including participating securities (basic) (1)
|
30,132,480
|
|
|
24,870,258
|
|
|
23,973,850
|
|
|
|||
Weighted average number of common units outstanding (diluted) (1)
|
30,132,480
|
|
|
24,870,258
|
|
|
23,973,850
|
|
|
|||
(1) See Note 18.
|
|
|
|
|
|
|
|
Limited Partner
Common Units |
|
General Partner
(non-economic interest) |
|
Total Partners'
Equity |
|
Preferred Units
|
|
||||||||
Balance at December 31, 2014
|
$
|
155,189
|
|
|
$
|
—
|
|
|
$
|
155,189
|
|
|
$
|
—
|
|
|
Net income (loss)
|
(9,411
|
)
|
|
—
|
|
|
(9,411
|
)
|
|
—
|
|
|
||||
Equity-based compensation
|
3,654
|
|
|
—
|
|
|
3,654
|
|
|
—
|
|
|
||||
Distributions paid
|
(74,337
|
)
|
|
—
|
|
|
(74,337
|
)
|
|
—
|
|
|
||||
Distribution equivalent rights accrued
|
(632
|
)
|
|
—
|
|
|
(632
|
)
|
|
—
|
|
|
||||
Recovery of short swing profit
|
315
|
|
|
—
|
|
|
315
|
|
|
—
|
|
|
||||
Balance at December 31, 2015
|
74,778
|
|
|
—
|
|
|
74,778
|
|
|
—
|
|
|
||||
Net income (loss)
|
(72,770
|
)
|
|
—
|
|
|
(72,770
|
)
|
|
—
|
|
|
||||
Equity-based compensation
|
719
|
|
|
—
|
|
|
719
|
|
|
—
|
|
|
||||
Net proceeds from issuance of preferred units
|
—
|
|
|
—
|
|
|
—
|
|
|
13,827
|
|
|
||||
Conversion of preferred units
|
6,913
|
|
|
|
|
6,913
|
|
|
(6,913
|
)
|
|
|||||
Net proceeds from public offering
|
36,881
|
|
|
—
|
|
|
36,881
|
|
|
—
|
|
|
||||
Other
|
314
|
|
|
—
|
|
|
314
|
|
|
—
|
|
|
||||
Issuance of warrants
|
907
|
|
|
—
|
|
|
907
|
|
|
—
|
|
|
||||
Balance at December 31, 2016
|
47,742
|
|
|
—
|
|
|
47,742
|
|
|
6,914
|
|
|
||||
Net income (loss)
|
(6,832
|
)
|
|
—
|
|
|
(6,832
|
)
|
|
—
|
|
|
||||
Equity-based compensation
|
1,423
|
|
|
—
|
|
|
1,423
|
|
|
—
|
|
|
||||
Conversion of preferred units
|
6,914
|
|
|
—
|
|
|
6,914
|
|
|
(6,914
|
)
|
|
||||
Other
|
(138
|
)
|
|
—
|
|
|
(138
|
)
|
|
—
|
|
|
||||
Balance at December 31, 2017
|
$
|
49,109
|
|
|
$
|
—
|
|
|
$
|
49,109
|
|
|
$
|
—
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
$
|
(6,832
|
)
|
|
$
|
(72,770
|
)
|
|
$
|
(9,411
|
)
|
|
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization
|
21,899
|
|
|
21,480
|
|
|
28,441
|
|
|
|||
Equity-based compensation expense
|
1,423
|
|
|
719
|
|
|
3,532
|
|
|
|||
Project and contract termination costs - non-cash portion
|
—
|
|
|
4,008
|
|
|
10,345
|
|
|
|||
Unrealized (gain) loss on fair value of warrants
|
(4,208
|
)
|
|
2,090
|
|
|
—
|
|
|
|||
Write-down of escrow receivable
|
3,125
|
|
|
—
|
|
|
—
|
|
|
|||
Provision for doubtful accounts
|
17
|
|
|
1,215
|
|
|
1,541
|
|
|
|||
Loss on disposal of assets
|
79
|
|
|
635
|
|
|
146
|
|
|
|||
Amortization and write-off of deferred financing costs
|
3,901
|
|
|
6,170
|
|
|
1,244
|
|
|
|||
Non-capitalized cost of private placement
|
—
|
|
|
404
|
|
|
—
|
|
|
|||
Write-down of inventory
|
—
|
|
|
5,394
|
|
|
—
|
|
|
|||
Unrealized (gain) loss on derivative instruments
|
(227
|
)
|
|
224
|
|
|
(419
|
)
|
|
|||
Gain on sale of discontinued operations
|
—
|
|
|
(31,699
|
)
|
|
—
|
|
|
|||
Other non-cash
|
113
|
|
|
117
|
|
|
110
|
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(31,865
|
)
|
|
(2,063
|
)
|
|
36,938
|
|
|
|||
Inventories
|
(10,368
|
)
|
|
9,052
|
|
|
(10,341
|
)
|
|
|||
Prepaid expenses and other current assets
|
1,918
|
|
|
2,533
|
|
|
(1,861
|
)
|
|
|||
Accounts payable and accrued liabilities
|
18,014
|
|
|
3,916
|
|
|
(8,592
|
)
|
|
|||
Other assets
|
908
|
|
|
1,249
|
|
|
(4,348
|
)
|
|
|||
Cash flows from operating activities
|
(2,103
|
)
|
|
(47,326
|
)
|
|
47,325
|
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
||||
Purchases of property, plant, equipment and intangible assets
|
(7,448
|
)
|
|
(13,523
|
)
|
|
(35,474
|
)
|
|
|||
Proceeds from disposals of assets
|
211
|
|
|
82
|
|
|
1,787
|
|
|
|||
Asset acquisition
|
(20,430
|
)
|
|
—
|
|
|
—
|
|
|
|||
Proceeds from sale of discontinued operations, net
|
—
|
|
|
153,973
|
|
|
—
|
|
|
|||
Collection of notes receivable
|
—
|
|
|
9
|
|
|
13
|
|
|
|||
Cash flows from investing activities
|
(27,667
|
)
|
|
140,541
|
|
|
(33,674
|
)
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
||||
Net proceeds from private placement
|
—
|
|
|
18,359
|
|
|
—
|
|
|
|||
Net proceeds from public offering
|
—
|
|
|
36,881
|
|
|
—
|
|
|
|||
Proceeds from line of credit borrowings
|
356,262
|
|
|
320,726
|
|
|
284,200
|
|
|
|||
Proceeds from second lien term loan
|
39,597
|
|
|
—
|
|
|
—
|
|
|
|||
Repayments of line of credit borrowings
|
(353,263
|
)
|
|
(482,089
|
)
|
|
(204,000
|
)
|
|
|||
Repayments of other long-term debt
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
|||
Distributions to unitholders
|
—
|
|
|
—
|
|
|
(74,351
|
)
|
|
|||
Payment of business acquisition obligation
|
(2,802
|
)
|
|
(848
|
)
|
|
(2,253
|
)
|
|
|||
Payment of financing costs
|
(4,158
|
)
|
|
(6,733
|
)
|
|
(2,528
|
)
|
|
|||
Payments on capital lease obligation
|
—
|
|
|
—
|
|
|
(987
|
)
|
|
|||
Recovery of short swing profit
|
—
|
|
|
—
|
|
|
315
|
|
|
|||
Other financing activities
|
(141
|
)
|
|
(377
|
)
|
|
—
|
|
|
|||
Cash flows from financing activities
|
35,495
|
|
|
(114,081
|
)
|
|
343
|
|
|
|||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
|
||||
Net increase (decrease)
|
5,725
|
|
|
(20,866
|
)
|
|
13,994
|
|
|
|||
Balance at beginning of year
|
4
|
|
|
20,870
|
|
|
6,876
|
|
|
|||
Balance at end of year
|
$
|
5,729
|
|
|
$
|
4
|
|
|
$
|
20,870
|
|
|
|
Useful Lives (in Years)
|
|
Building and land improvements including assets under capital lease
|
10 – 39
|
|
Mineral reserves
|
N/A*
|
|
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
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||
Customer A
|
20
|
%
|
|
16
|
%
|
|
Customer B
|
17
|
%
|
|
13
|
%
|
|
Customer C
|
13
|
%
|
|
*
|
|
|
Customer D
|
*
|
|
|
22
|
%
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
December 31, 2015
|
|
|||
Customer B
|
18
|
%
|
|
*
|
|
|
*
|
|
|
Customer D
|
17
|
%
|
|
39
|
%
|
|
11
|
%
|
|
Customer C
|
11
|
%
|
|
*
|
|
|
13
|
%
|
|
Customer A
|
*
|
|
|
*
|
|
|
*
|
|
|
Customer E
|
*
|
|
|
12
|
%
|
|
17
|
%
|
|
Customer F
|
*
|
|
|
*
|
|
|
14
|
%
|
|
•
|
Interest on the revolver was allocated to the discontinued operations based on the allocation of debt between sand and fuel business.
|
•
|
Equity-based compensation costs recognized for the Fuel business employees were allocated to discontinued operations.
|
•
|
The taxes paid on behalf of the Fuel business were compiled by review of prior tax filings and payments. These amounts were allocated to discontinued operations.
|
•
|
General corporate overhead costs were not allocated to discontinued operations.
|
•
|
IPO transaction costs were not allocated to discontinued operations.
|
|
Year Ended December 31,
|
|
||||||||||
|
|
|
|
|
|
|
||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
||||||||
|
($ in thousands)
|
|||||||||||
Revenues (1)
|
$
|
—
|
|
|
$
|
249,558
|
|
|
$
|
442,121
|
|
|
Cost of goods sold (excluding depreciation, depletion and amortization) (1)
|
—
|
|
|
233,025
|
|
|
426,664
|
|
|
|||
Depreciation and amortization
|
—
|
|
|
2,354
|
|
|
10,544
|
|
|
|||
Selling, general and administrative expenses
|
—
|
|
|
3,687
|
|
|
5,568
|
|
|
|||
Interest expense, net
|
—
|
|
|
1,727
|
|
|
1,338
|
|
|
|||
Other
|
3,125
|
|
|
—
|
|
|
(11
|
)
|
|
|||
Income (loss) from discontinued operations before provision for income taxes
|
(3,125
|
)
|
|
8,765
|
|
|
(1,982
|
)
|
|
|||
Provision for income taxes
|
—
|
|
|
19
|
|
|
246
|
|
|
|||
Income (loss) from discontinued operations, net of taxes
|
(3,125
|
)
|
|
8,746
|
|
|
(2,228
|
)
|
|
|||
Gain on sale of discontinued operations
|
—
|
|
|
31,699
|
|
|
—
|
|
|
|||
Total income (loss) from discontinued operations, net of taxes
|
$
|
(3,125
|
)
|
|
$
|
40,445
|
|
|
$
|
(2,228
|
)
|
|
|
|
|
|
|
|
|
||||||
(1) Fuel revenues and cost of goods sold include excise taxes and similar taxes:
|
$
|
—
|
|
|
$
|
35,656
|
|
|
$
|
50,939
|
|
|
•
|
$7 million
of the purchase price was withheld as a general escrow associated with certain indemnification obligations. Any unutilized escrow balance, plus any accrued interest thereon, will be paid
54 months
from the closing date;
|
•
|
$4 million
of the purchase price was withheld as a hydrotreater escrow to satisfy any cost overruns of the Birmingham hydrotreater completion. During the
year ended
December 31, 2017
, we wrote off the entire receivable relating to hydrotreator completion delays and cost overruns. This non-cash charge is included in Other expenses in our results of discontinued operations;
|
•
|
$2.25 million
of the purchase price was withheld as the Renewable Fuel Standard (“RFS") escrow account. The entire amount, along with interest thereon, was collected in April 2017; and
|
•
|
$1 million
of the sales purchase was withheld as a pipeline escrow account. Any unutilized escrow balance, along with any accrued interest thereon, will be released with the general escrow.
|
Purchase price
|
$
|
167,736
|
|
|
Adjustments:
|
|
|
||
Working capital true-up
|
3,398
|
|
|
|
Other adjustments
|
(2,911
|
)
|
|
|
General escrow
|
(7,000
|
)
|
|
|
Hydrotreater escrow
|
(4,000
|
)
|
|
|
Other escrow
|
(3,250
|
)
|
|
|
Net proceeds
|
153,973
|
|
|
|
Less:
|
|
|
||
Net book value of assets and liabilities sold
|
(125,317
|
)
|
|
|
Escrow receivable
|
10,597
|
|
|
|
Transaction costs including commissions
|
(7,679
|
)
|
|
|
Other receivables
|
125
|
|
|
|
Gain on sale of Fuel business
|
$
|
31,699
|
|
|
|
As of December 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Sand work in process
|
$
|
14,650
|
|
|
$
|
7,597
|
|
|
Sand finished goods
|
12,914
|
|
|
9,631
|
|
|
||
Sand raw materials and supplies
|
261
|
|
|
229
|
|
|
||
Total inventory
|
$
|
27,825
|
|
|
$
|
17,457
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Prepaid lease assets, current (1)
|
$
|
2,496
|
|
|
$
|
3,408
|
|
|
Prepaid transload services
|
1,274
|
|
|
768
|
|
|
||
Prepaid insurance
|
875
|
|
|
826
|
|
|
||
Escrow receivable, current
|
—
|
|
|
5,253
|
|
|
||
Other
|
1,686
|
|
|
1,119
|
|
|
||
Total
|
$
|
6,331
|
|
|
$
|
11,374
|
|
|
(1)
|
The cost to transport leased railcars from the manufacturer to our site for initial placement in service is capitalized and amortized over the term of the lease (typically
five
to
seven
years). This balance reflects the current portion of these capitalized costs.
|
|
As of December 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Machinery and equipment (1)
|
$
|
92,353
|
|
|
$
|
90,035
|
|
|
Buildings and improvements (1)
|
66,444
|
|
|
66,190
|
|
|
||
Land and improvements (1)
|
45,567
|
|
|
45,065
|
|
|
||
Mineral reserves
|
49,091
|
|
|
30,181
|
|
|
||
Construction in progress
|
15,696
|
|
|
2,249
|
|
|
||
Capitalized reclamation costs
|
2,521
|
|
|
2,445
|
|
|
||
Total cost
|
271,672
|
|
|
236,165
|
|
|
||
Accumulated depreciation and depletion
|
85,702
|
|
|
70,310
|
|
|
||
Net property, plant and equipment
|
$
|
185,970
|
|
|
$
|
165,855
|
|
|
(1)
|
Includes assets under capital lease
|
|
Cost
|
|
Accumulated Amortization
|
|
Net
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
December 31, 2017:
|
|
|
|
|
|
|
||||||
Patents
|
$
|
7,443
|
|
|
$
|
6,188
|
|
|
$
|
1,255
|
|
|
Supply and transportation agreements
|
569
|
|
|
226
|
|
|
343
|
|
|
|||
Non-compete agreement
|
100
|
|
|
34
|
|
|
66
|
|
|
|||
Total
|
$
|
8,112
|
|
|
$
|
6,448
|
|
|
$
|
1,664
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2016:
|
|
|
|
|
|
|
||||||
Patents
|
$
|
7,443
|
|
|
$
|
3,195
|
|
|
$
|
4,248
|
|
|
Supply and transportation agreements
|
569
|
|
|
112
|
|
|
457
|
|
|
|||
Non-compete agreement
|
100
|
|
|
24
|
|
|
76
|
|
|
|||
Total
|
$
|
8,112
|
|
|
$
|
3,331
|
|
|
$
|
4,781
|
|
|
Year Ending December 31,
|
($ in thousands)
|
|
||
2018
|
$
|
1,380
|
|
|
2019
|
130
|
|
|
|
2020
|
130
|
|
|
|
2021
|
16
|
|
|
|
2022
|
8
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Deferred lease asset (1)
|
$
|
8,775
|
|
|
$
|
8,826
|
|
|
Prepaid lease assets, net of current portion (2)
|
7,153
|
|
|
8,616
|
|
|
||
Escrow receivable - non-current (3)
|
5,684
|
|
|
5,459
|
|
|
||
Other
|
2,810
|
|
|
2,429
|
|
|
||
Total
|
$
|
24,422
|
|
|
$
|
25,330
|
|
|
(1)
|
During 2016, we completed negotiations with various railcar lessors pursuant to which we terminated future orders of railcars, deferred future railcar deliveries and reduced and deferred payments on existing leases. The cost of deferring future railcar deliveries was recorded as a deferred lease asset. This asset will be amortized over the terms of the associated leases as those railcars enter service.
|
(2)
|
The cost to transport leased railcars from the manufacturer to our site for initial placement in service is capitalized and amortized over the term of the lease (typically
five
to
seven
years). This balance reflects the non-current portion of these capitalized costs.
|
(3)
|
Non-current receivables are recorded at net present value of estimated recoveries and will be adjusted as contingencies are resolved. See Note 4 to our Consolidated Financial Statements.
|
|
As of December 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Construction
|
$
|
7,122
|
|
|
$
|
—
|
|
|
Salaries and other employee-related
|
4,633
|
|
|
710
|
|
|
||
Sand purchases and royalties
|
4,371
|
|
|
517
|
|
|
||
Accrued interest
|
2,552
|
|
|
641
|
|
|
||
Fuel sale related liabilities
|
2,475
|
|
|
2,784
|
|
|
||
Sales, excise, property and income taxes
|
1,953
|
|
|
136
|
|
|
||
Current portion of business acquisition obligation
|
1,952
|
|
|
1,703
|
|
|
||
Logistics
|
1,838
|
|
|
1,814
|
|
|
||
Deferred compensation
|
848
|
|
|
848
|
|
|
||
Professional fees
|
373
|
|
|
452
|
|
|
||
Current portion of contract termination
|
210
|
|
|
160
|
|
|
||
Other
|
1,391
|
|
|
1,864
|
|
|
||
Total
|
$
|
29,718
|
|
|
$
|
11,629
|
|
|
|
As of December 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
|
($ in thousands)
|
|
||||||
Revolving credit facility - principal
|
$
|
143,700
|
|
|
$
|
140,701
|
|
|
Second lien term loan - principal
|
40,000
|
|
|
—
|
|
|
||
Less: Deferred financing costs, net
|
(7,349
|
)
|
|
(6,689
|
)
|
|
||
Total long-term debt
|
$
|
176,351
|
|
|
$
|
134,012
|
|
|
•
|
a covenant to maintain
$15 million
of excess availability (as defined in the Prior Credit Agreement);
|
•
|
a covenant to limit capital expenditures (as defined in the Prior Credit Agreement) to certain maximum amounts for each quarter through March 31, 2019;
|
•
|
beginning with the quarter ending June 30, 2017, a covenant to generate consolidated EBITDA (as defined in the Prior Credit Agreement) in certain minimum amounts;
|
•
|
beginning with the quarter ending March 31, 2018, a covenant to maintain an interest coverage ratio (as defined in the Prior Credit Agreement) of not less than
2.00
to 1.00, which is scheduled to increase to
3.00
to 1.00 for the fiscal quarter ending March 31, 2019; and
|
•
|
a covenant to raise at least $
31.2 million
of net proceeds from the issuance and sale of common equity by November 30, 2016, which was satisfied by our underwritten sale of common units which closed on November 23, 2016.
|
•
|
a minimum liquidity requirement of
$20 million
at all times;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a total leverage ratio of a maximum of
5.50
:1.00 decreasing quarterly thereafter to
3.00
:1.00 for the fiscal quarter ending December 31, 2018, and thereafter;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a minimum fixed charge coverage ratio of
1.10
:1.00; and
|
•
|
a limit on capital expenditures, subject to certain availability thresholds
|
•
|
beginning with the fiscal quarter ending March 31, 2018, an interest coverage ratio of not less than
1.70
:1.00 increasing quarterly thereafter to
2.55
:1.00 for the fiscal quarter ending March 31, 2019 and thereafter;
|
•
|
beginning with the fiscal quarter ending June 30, 2017, a minimum EBITDA of not less than
$637,500
for such fiscal quarter, increasing quarterly to
$50 million
for the four fiscal quarter period ending June 30, 2019 and thereafter; and
|
•
|
a minimum excess availability of at least
$12.75 million
so long as the Prior Credit Agreement remains in effect.
|
•
|
a minimum liquidity requirement of
$20 million
at all times;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a total leverage ratio of a maximum of
6.00
:1.00 decreasing quarterly thereafter to
3.00
:1.00 for the fiscal quarter ending March 31, 2019 and thereafter;
|
•
|
beginning with the fiscal quarter ending March 31, 2018, a minimum fixed charge coverage ratio of
1.10
:1.00, increasing quarterly to
2.00
:1.00 for the fiscal quarter ending March 31, 2019 and thereafter; and
|
•
|
a limit on capital expenditures, subject to certain availability thresholds.
|
|
December 31, 2017
|
|
December 31, 2016
|
|
||||
|
($ in thousands)
|
|
||||||
|
|
|
|
|
||||
Deferred lease obligation
|
$
|
9,561
|
|
|
$
|
5,858
|
|
|
Long-term promissory note
|
9,370
|
|
|
8,480
|
|
|
||
Contract and project terminations
|
5,348
|
|
|
5,319
|
|
|
||
Stock warrants
|
2,811
|
|
|
7,019
|
|
|
||
Asset retirement obligation
|
2,792
|
|
|
2,647
|
|
|
||
Other
|
—
|
|
|
1,000
|
|
|
||
Total
|
$
|
29,882
|
|
|
$
|
30,323
|
|
|
|
Railcar Leases (1)
|
|
Other Operating Leases (2)
|
|
Royalty Commitments (3)
|
|
Purchase Commitments (4)
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands)
|
|||||||||||||||
Year ending December 31,
|
|
|
|
|
|
|
|
|
||||||||
2018
|
$
|
36,641
|
|
|
$
|
1,095
|
|
|
$
|
572
|
|
|
$
|
25,790
|
|
|
2019
|
39,542
|
|
|
861
|
|
|
572
|
|
|
19,624
|
|
|
||||
2020
|
42,569
|
|
|
856
|
|
|
572
|
|
|
18,867
|
|
|
||||
2021
|
50,769
|
|
|
868
|
|
|
572
|
|
|
16,250
|
|
|
||||
2022
|
42,208
|
|
|
779
|
|
|
572
|
|
|
15,074
|
|
|
||||
Thereafter
|
211,483
|
|
|
6,029
|
|
|
7,568
|
|
|
10,758
|
|
|
||||
Total
|
$
|
423,212
|
|
|
$
|
10,488
|
|
|
$
|
10,428
|
|
|
106,363
|
|
|
|
Less amount representing interest
|
|
|
|
|
|
|
(569
|
)
|
|
|||||||
Total less interest
|
|
|
|
|
|
|
$
|
105,794
|
|
|
(1)
|
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. During 2016, we completed negotiations with various railcar lessors pursuant to which we terminated future order of railcars, deferred future railcar deliveries and reduced and deferred payments on existing leases. We accrued
$4 million
in contract termination charges and
$8 million
for delivery deferrals. These liabilities are included in Accrued liabilities and Other long-term liabilities in our Consolidated Balance Sheets. As part of our debt refinancing described in Note 11 to our Consolidated Financial Statements, we paid
$5.4 million
of these liabilities in January 2018. We also issued warrants to purchase
370,000
common units representing limited partnership interests in the partnership in exchange of these concessions.
|
(2)
|
Includes lease agreements for land, facilities and equipment.
|
(3)
|
Represents minimum royalty payments for various sand mining locations. The amounts paid will differ based on amounts extracted.
|
(4)
|
Includes minimum amounts payable under a business acquisition agreement, long-term rail transportation agreements, transload facility agreements, and other purchase commitments.
|
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Balances for the year ended December 31:
|
|
|
|
|
|
|
||||||
Employee-related and other costs (1)
|
$
|
21,629
|
|
|
$
|
18,010
|
|
|
$
|
27,454
|
|
|
General and administrative expense reimbursements (2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280
|
|
|
Lease expense
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
||||||
Balances as of December 31:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
962
|
|
|
$
|
371
|
|
|
$
|
295
|
|
|
Accounts payable and accrued liabilities
|
$
|
800
|
|
|
$
|
436
|
|
|
$
|
553
|
|
|
(1)
|
We do not have any employees. Our general partner manages our human resource assets, including fringe benefits, other employee-related charges, and other costs. We routinely and regularly reimburse our general partner for any employee-related and other costs paid on our behalf, and report such costs as operating expenses.
|
(2)
|
We paid
$40,000
to one of our independent directors for production of a video clip for investors and press in 2015.
|
|
Total
Units |
|
Phantom
Units |
|
Restricted
Units |
|
Fair Value per Unit
at Award Date |
|
|||||
Outstanding at December 31, 2016
|
289,607
|
|
|
213,851
|
|
|
75,756
|
|
|
$
|
13.09
|
|
|
Granted
|
185,180
|
|
|
162,139
|
|
|
23,041
|
|
|
$
|
9.35
|
|
|
Vested
|
(128,966
|
)
|
|
(53,210
|
)
|
|
(75,756
|
)
|
|
$
|
12.77
|
|
|
Forfeitures
|
(12,000
|
)
|
|
(12,000
|
)
|
|
—
|
|
|
$
|
—
|
|
|
Outstanding at December 31, 2017
|
333,821
|
|
|
310,780
|
|
|
23,041
|
|
|
$
|
13.10
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Texas margin tax
|
$
|
85
|
|
|
$
|
(192
|
)
|
|
$
|
273
|
|
|
Canadian income tax
|
(14
|
)
|
|
1
|
|
|
(15
|
)
|
|
|||
Total provision for income taxes
|
$
|
71
|
|
|
$
|
(191
|
)
|
|
$
|
258
|
|
|
|
||||||||||||
|
Year ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands except per unit data)
|
|
||||||||||
Net income (loss) from continuing operations
|
$
|
(3,707
|
)
|
|
$
|
(113,215
|
)
|
|
$
|
(7,183
|
)
|
|
Net income (loss) from discontinued operations
|
(3,125
|
)
|
|
40,445
|
|
|
(2,228
|
)
|
|
|||
Net Income (loss)
|
$
|
(6,832
|
)
|
|
$
|
(72,770
|
)
|
|
$
|
(9,411
|
)
|
|
|
|
|
|
|
|
|
||||||
Weighted average common units outstanding
|
30,132,480
|
|
|
24,870,258
|
|
|
23,973,850
|
|
|
|||
Weighted average units deemed participating securities
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
Weighted average number of common units outstanding including participating securities (basic)
|
30,132,480
|
|
|
24,870,258
|
|
|
23,973,850
|
|
|
|||
Weighted average potentially dilutive units outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
Weighted average number of common units outstanding (diluted)
|
30,132,480
|
|
|
24,870,258
|
|
|
23,973,850
|
|
|
|||
|
|
|
|
|
|
|
||||||
Basic earnings (loss) per unit:
|
|
|
|
|
|
|
||||||
Earnings (loss) per common unit from continuing operations
|
$
|
(0.12
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(0.30
|
)
|
|
Earnings (loss) per common unit from discontinued operations
|
(0.11
|
)
|
|
1.63
|
|
|
(0.09
|
)
|
|
|||
Basic earnings (loss) per common unit
|
$
|
(0.23
|
)
|
|
$
|
(2.92
|
)
|
|
$
|
(0.39
|
)
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings (loss) per unit:
|
|
|
|
|
|
|
||||||
Earnings (loss) per common unit from continuing operations
|
$
|
(0.12
|
)
|
|
$
|
(4.55
|
)
|
|
$
|
(0.30
|
)
|
|
Earnings (loss) per common unit from discontinued operations
|
(0.11
|
)
|
|
1.63
|
|
|
(0.09
|
)
|
|
|||
Diluted earnings (loss) per common unit
|
$
|
(0.23
|
)
|
|
$
|
(2.92
|
)
|
|
$
|
(0.39
|
)
|
|
•
|
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
|
|
$20,000,000
|
|
1.21875%
|
|
1 Month LIBOR
|
|
December 31, 2017
|
|
December 31, 2016
|
|
Classification
|
|
||||
|
|
|
|
|
|
|
||||
|
($ in thousands)
|
|
|
|
||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
227
|
|
|
Accrued liabilities
|
|
Warrant liability
|
$
|
2,811
|
|
|
$
|
7,019
|
|
|
Other long-term liabilities
|
|
|
|
Year Ended December 31,
|
|
|
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
Classification
|
|
||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
(income (expense), $ in thousands)
|
|
|
|
||||||||||
Interest rate swaps
|
|
$
|
61
|
|
|
$
|
(334
|
)
|
|
$
|
(820
|
)
|
|
Interest expense, net
|
|
Commodity derivative contracts
|
|
—
|
|
|
(557
|
)
|
|
715
|
|
|
Income from discontinued operations
|
|
|||
Warrants
|
|
4,208
|
|
|
(2,090
|
)
|
|
$
|
—
|
|
|
Other (expense) income
|
|
||
|
|
$
|
4,269
|
|
|
$
|
(2,981
|
)
|
|
$
|
(105
|
)
|
|
|
|
|
Year Ended December 31,
|
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
|
||||||
|
|
|
|
|
|
|
||||||
|
($ in thousands)
|
|
||||||||||
Cash paid for interest
|
$
|
14,786
|
|
|
$
|
17,451
|
|
|
$
|
12,755
|
|
|
Cash paid for income taxes, net of refunds
|
$
|
(21
|
)
|
|
$
|
221
|
|
|
$
|
937
|
|
|
Purchases of PP&E and intangible assets accrued but not paid at year-end
|
$
|
12,404
|
|
|
$
|
1,170
|
|
|
$
|
4,364
|
|
|
Purchases of PP&E accrued in a prior period and paid in the current period
|
$
|
170
|
|
|
$
|
3,364
|
|
|
$
|
5,238
|
|
|
Distribution equivalent rights accrued, net of payments
|
$
|
—
|
|
|
$
|
(349
|
)
|
|
$
|
618
|
|
|
Capitalized reclamation costs, net of amounts acquired in business combination
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
113
|
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
•
|
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.
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Name
|
Age
|
|
Position
|
|
Ted W. Beneski
|
61
|
|
|
Chairman of the Board and Director
|
Rick Shearer
|
67
|
|
|
Chief Executive Officer and Director
|
Deborah Deibert
|
53
|
|
|
Chief Financial Officer
|
Warren B. Bonham
|
55
|
|
|
Vice President and Director
|
Nadya Kurani
|
44
|
|
|
Chief Accounting Officer
|
Kevin Clark
|
61
|
|
|
Independent Director
|
Mark Gottfredson
|
60
|
|
|
Independent Director
|
Peter Jones
|
60
|
|
|
Independent Director
|
Francis J. Kelly, III
|
61
|
|
|
Independent Director
|
Eliot E. Kerlin, Jr.
|
43
|
|
|
Director
|
Victor L. Vescovo
|
52
|
|
|
Director
|
ITEM 11.
|
COMPENSATION DISCUSSION AND ANALYSIS
|
•
|
Rick Shearer, Chief Executive Officer of Emerge Energy Services GP LLC, our general partner;
|
•
|
Deborah Deibert, Chief Financial Officer of our general partner;
|
•
|
Warren Bonham, Vice President of our general partner; and
|
•
|
Nadya Kurani, Chief Accounting Officer of our general partner.
|
•
|
align officer and unitholder interests by providing a significant 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
|
|
2017 Annual Base Salary
|
Rick Shearer
|
|
$525,000
|
Deborah Deibert
|
|
$294,010
|
Warren Bonham
|
|
$220,497
|
Nadya Kurani
|
|
$181,507
|
Named Executive Officer
|
|
Adjusted EBITDA
|
|
Payout (as a percentage of base salary)
|
Rick Shearer
|
|
|
|
|
Threshold
|
|
$(10,000,000)
|
|
60%
|
Target
|
|
$—
|
|
80%
|
Deborah Deibert
|
|
|
|
|
Threshold
|
|
$(10,000,000)
|
|
37.5%
|
Target
|
|
$—
|
|
50%
|
Warren Bonham
|
|
|
|
|
Threshold
|
|
$(10,000,000)
|
|
30%
|
Target
|
|
$—
|
|
40%
|
Nadya Kurani
|
|
|
|
|
Threshold
|
|
$(10,000,000)
|
|
30%
|
Target
|
|
$—
|
|
40%
|
Name and Principal Position
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock Awards
($)(1)
|
|
Non-Equity
Incentive Plan
Compensation ($) (2)
|
|
All Other
Compensation
($)(4)
|
|
Total
($)
|
||||||
Rick Shearer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2017
|
|
525,000
|
|
|
—
|
|
|
787,498
|
|
|
891,595
|
|
|
9,794
|
|
|
2,213,887
|
|
2016
|
|
510,961
|
|
|
50,000
|
|
|
787,495
|
|
|
—
|
|
|
15,800
|
|
|
1,364,256
|
|
2015
|
|
475,000
|
|
|
15,000
|
|
|
999,928
|
|
|
—
|
|
|
28,223
|
|
|
1,518,151
|
|
Deborah Deibert
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2017
|
|
293,471
|
|
|
—
|
|
|
166,175
|
|
|
312,069
|
|
|
12,762
|
|
|
784,477
|
|
2016
|
|
273,654
|
|
|
46,666
|
|
|
45,920
|
|
|
—
|
|
|
9,983
|
|
|
376,223
|
|
2015
|
|
206,423
|
|
|
6,750
|
|
|
67,260
|
|
|
—
|
|
|
14,864
|
|
|
295,297
|
|
Warren Bonham
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2017
|
|
220,093
|
|
|
—
|
|
|
—
|
|
|
187,232
|
|
|
2,904
|
|
|
410,229
|
|
2016
|
|
210,000
|
|
|
—
|
|
|
—
|
|
|
51,644
|
|
|
3,130
|
|
|
264,774
|
|
2015
|
|
210,000
|
|
|
—
|
|
|
—
|
|
|
14,151
|
|
|
3,665
|
|
|
227,816
|
|
Nadya Kurani (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Chief Accounting Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2017
|
|
180,872
|
|
|
—
|
|
|
83,088
|
|
|
154,124
|
|
|
9,084
|
|
|
427,168
|
|
2016
|
|
160,385
|
|
|
27,500
|
|
|
22,960
|
|
|
—
|
|
|
7,194
|
|
|
218,039
|
|
(1)
|
The amounts illustrated in this column reflect the aggregate grant date fair value of phantom unit awards made in 2017. 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 16 to our financial statements included in this Annual Report on Form 10-K for the year ended December 31, 2017.
|
(2)
|
For 2017, the amounts include annual incentive bonus earned in connection with the pre-established adjusted EBITDA targets. Annual incentive bonuses earned in 2017 will be paid by March 15, 2018.
|
(3)
|
Ms. Kurani was not a “named executive officer” of the company in 2015.
|
(4)
|
The following table sets forth the amount of each other item of compensation paid to, or on behalf of, our named executive officers in 2017 included in the “All Other Compensation” column. Amounts for each other item of compensation are valued based on the aggregate incremental cost to us, in each case without taking into account the value of any income tax deductions for which we may be eligible.
|
Name
|
|
Company Contributions to 401(k) Plan
($) |
|
Company Contributions to Health Savings Account
($) |
|
Reimbursement for Executive Physical Allowance
($) |
|||
Rick Shearer
|
|
3,644
|
|
|
3,150
|
|
|
3,000
|
|
Deborah Deibert
|
|
9,612
|
|
|
3,150
|
|
|
—
|
|
Warren Bonham
|
|
—
|
|
|
—
|
|
|
2,904
|
|
Nadya Kurani
|
|
5,934
|
|
|
3,150
|
|
|
—
|
|
|
|
|
|
Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1)
|
|
|
|
|
|||||||||
Name
|
|
Grant Date
|
|
Threshold ($)
|
|
Target ($)
|
|
Maximum ($)
|
|
All Other Stock Awards: Number of Units (#) (2)
|
|
Grant Date Fair Value of Stock Awards ($) (3)
|
|||||
Rick Shearer
|
|
—
|
|
$315,000
|
|
$420,000
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Rick Shearer
|
|
12/29/2017
|
|
—
|
|
—
|
|
—
|
|
|
96,389
|
|
|
787,498
|
|
||
Deborah Deibert
|
|
—
|
|
$110,254
|
|
$147,005
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Deborah Deibert
|
|
1/4/2017
|
|
|
|
|
|
—
|
|
|
7,500
|
|
|
94,275
|
|
||
Deborah Deibert
|
|
12/29/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
71,900
|
|
Warren Bonham
|
|
—
|
|
$66,149
|
|
$88,199
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Nadya Kurani
|
|
—
|
|
$54,452
|
|
$72,603
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Nadya Kurani
|
|
1/4/2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,750
|
|
|
47,138
|
|
Nadya Kurani
|
|
12/29/2017
|
|
—
|
|
|
—
|
|
|
|
|
5,000
|
|
|
35,950
|
|
(1)
|
Amounts shown in these columns represent each named executive officer’s non-discretionary incentive bonus opportunity under the 2017 bonus programs in which such officers participated. The “Target” amount represents the named executive officer’s target bonus if the performance goal under the bonus program was achieved at the target level and the “Threshold” amount represents named executive officer’s minimum bonus if the performance goal under the bonus program was achieved at the minimum level. There was no maximum funding level under the 2017 bonus programs.
|
(2)
|
Consists of time-base vesting phantom units awards which the board of directors of our general partner approved in 2017. For details of each award, see “Elements of Executive Compensation - Equity Awards” above.
|
(3)
|
The amounts illustrated in this column reflect the aggregate grant date fair value of phantom unit awards made in 2017. The values are calculated in accordance with GAAP.
|
Name
|
|
Grant
Date
|
|
Number of Units
That Have Not
Vested
(#)
|
|
Market Value
of Units That Have Not
Vested
($)(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
|
|
7/1/2015 (3)
|
|
4,541
|
|
|
32,650
|
|
|
—
|
|
|
—
|
|
|
|
7/1/2015 (4)
|
|
—
|
|
|
—
|
|
|
13,623
|
|
|
97,949
|
|
|
|
11/1/2016 (5)
|
|
30,738
|
|
|
221,006
|
|
|
—
|
|
|
—
|
|
|
|
11/1/2017 (5)
|
|
96,389
|
|
|
693,037
|
|
|
—
|
|
|
—
|
|
Deborah Deibert
|
|
1/1/2015 (6)
|
|
200
|
|
|
1,438
|
|
|
—
|
|
|
—
|
|
|
|
10/26/2015 (6)
|
|
2,333
|
|
|
16,774
|
|
|
—
|
|
|
—
|
|
|
|
2/8/2016 (7)
|
|
7,000
|
|
|
50,330
|
|
|
—
|
|
|
—
|
|
|
|
1/1/2017 (8)
|
|
7,500
|
|
|
53,925
|
|
|
—
|
|
|
—
|
|
|
|
12/29/2017 (8)
|
|
10,000
|
|
|
71,900
|
|
|
—
|
|
|
—
|
|
Warren Bonham
|
|
5/4/2013 (9)
|
|
—
|
|
|
—
|
|
|
82,974
|
|
|
1,342,519
|
|
Nadya Kurani
|
|
2/8/2016 (7)
|
|
3,500
|
|
|
25,165
|
|
|
—
|
|
|
—
|
|
|
|
1/1/2017 (8)
|
|
3,750
|
|
|
26,963
|
|
|
—
|
|
|
—
|
|
|
|
12/29/2017 (8)
|
|
5,000
|
|
|
35,950
|
|
|
—
|
|
|
—
|
|
(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 29, 2017 ($7.19).
|
(2)
|
The payout value for Mr. Bonham includes $745,936 of outstanding DERs that were accrued as of
December 31, 2017
, 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 installments on the first, second and third anniversaries of the vesting commencement date (July 1, 2015). In addition, this phantom unit award may be subject to full or pro-rated accelerated vesting immediately prior to a change in control or upon a qualifying termination of service.
|
(4)
|
This phantom unit award vests based on achievement of the following unit price targets, and subject to continued service: (i) 50% on the date our per-unit closing price equals or exceeds 1.25 times the per-unit closing price on the grant date ($36.70); and (ii) 50% on the date our per-unit closing price equals or exceeds 2.0 times the per-unit closing price on the grant date. In addition, this phantom unit award may be subject to accelerated vesting immediately prior to a change in control.
|
(5)
|
This phantom unit award vests, subject to continued service, in equal installments on the first and second anniversaries of the vesting commencement date (November 1, 2016, with respect to the award granted on November 1, 2016, and November 1, 2017, with respect to the award granted on December 29, 2017). In addition, this phantom unit award may be subject to full or pro-rated accelerated vesting immediately prior to a change in control or upon a qualifying termination of service.
|
(6)
|
These phantom unit awards vest, subject to continued service, in equal installments on the first, second, and third anniversaries of the vesting commencement date (January 1, 2015, with respect to the award granted on January 1, 2015 and October 1, 2015, with respect to the award granted on October 26, 2015). In addition, these phantom unit awards may be subject to accelerated vesting immediately prior to a change in control.
|
(7)
|
These phantom unit awards vest, subject to continued service, in equal installments on the first and second anniversaries of the vesting commencement date (January 1, 2016). In addition, these phantom unit awards may be subject to accelerated vesting immediately prior to a change in control.
|
(8)
|
These phantom unit awards vest, subject to continued service, in equal installments on the first and second anniversaries of the vesting commencement date (January 1, 2017, with respect to the awards granted on January 4, 2017, and January 1, 2018, with respect to the awards granted on December 29, 2017). In addition, these phantom unit awards may be
|
(9)
|
This phantom unit award vests 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, this phantom unit award 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 the phantom unit award.
|
Name
|
|
Number of Units Acquired on Vesting
(#)
|
|
Value Realized on Vesting
($)(1)
|
Rick Shearer
|
|
25,387
|
|
186,980
|
Deborah Deibert
|
|
6,542
|
|
71,537
|
Warren Bonham
|
|
—
|
|
—
|
Nadya Kurani
|
|
2,357
|
|
29,015
|
(1)
|
Represents the product of the number of phantom units which vested and the closing price of our common units on the vesting date.
|
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
|
|
1,050,000
|
|
|
—
|
|
|
1,050,000
|
|
|
1,050,000
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
1,044,642
|
|
|
80,226
|
|
|
1,044,642
|
|
Total
|
|
1,050,000
|
|
|
1,044,642
|
|
|
1,130,226
|
|
|
2,094,642
|
|
Deborah Deibert
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
220,508
|
|
|
220,508
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
194,367
|
|
|
27,159
|
|
|
194,367
|
|
Total
|
|
—
|
|
|
194,367
|
|
|
247,667
|
|
|
414,875
|
|
Warren Bonham
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
Cash Severance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
1,342,519
|
|
|
—
|
|
|
1,342,519
|
|
Total
|
|
—
|
|
|
1,342,519
|
|
|
—
|
|
|
1,342,519
|
|
Nadya Kurani
|
|
|
|
|
|
|
|
|
||||
Cash Severance
|
|
—
|
|
|
—
|
|
|
90,754
|
|
|
90,754
|
|
Phantom Unit Acceleration
|
|
—
|
|
|
88,078
|
|
|
13,580
|
|
|
88,078
|
|
Total
|
|
—
|
|
|
88,078
|
|
|
104,334
|
|
|
178,832
|
|
•
|
the median of the annual total compensation of all of our employees (other than our CEO) was $51,789; and
|
•
|
the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Annual Report on Form 10-K, was
$2,213,887
.
|
(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
2017
.
|
(3)
|
The amounts shown in this column reflect the aggregate grant date fair value of restricted units awards granted in
2017
, calculated in accordance with financial accounting standards. The total number of restricted units outstanding as of the end of the
2017
fiscal year for each non-employee director was 5,760.
|
Members of the Board of Directors of Emerge Energy Services GP LLC
|
||||
Ted W. Beneski
|
|
Warren B. Bonham
|
|
Kevin Clark
|
Mark Gottfredson
|
|
Peter Jones
|
|
Francis J. Kelly, III
|
Eliot Kerlin
|
|
Rick Shearer
|
|
Victor L. Vescovo
|
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
|
|
|
23.1%
|
Ted W. Beneski (2)
|
|
1,172,624
|
|
|
3.8%
|
Rick Shearer
|
|
245,130
|
|
|
*
|
Victor L. Vescovo
|
|
139,752
|
|
|
*
|
Warren B. Bonham
|
|
6,899
|
|
|
*
|
Deborah Deibert
|
|
15,744
|
|
|
*
|
Mark Gottfredson
|
|
100,080
|
|
|
*
|
Francis J. Kelly III
|
|
25,224
|
|
|
*
|
Kevin Clark
|
|
27,703
|
|
|
*
|
Eliot E. Kerlin, Jr.
|
|
2,408
|
|
|
*
|
Peter Jones
|
|
21,762
|
|
|
*
|
Nadya Kurani
|
|
5,976
|
|
|
*
|
All directors and officers as a group (11 persons)
|
|
8,931,847
|
|
|
|
(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)
|
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.
|
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
|
|
333,821
|
|
|
$
|
—
|
|
|
1,063,548
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
333,821
|
|
|
$
|
—
|
|
|
1,063,548
|
|
(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,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
|
|
|
||||
|
|
($ in thousands)
|
||||||
Audit fees (1)
|
|
$
|
840
|
|
|
$
|
1,434
|
|
Audit-related fees (2)
|
|
10
|
|
|
11
|
|
||
Total
|
|
$
|
850
|
|
|
$
|
1,445
|
|
(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 the 401(k) audit.
|
•
|
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 61.
|
(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, Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Rick Shearer
|
|
President, Chief Executive Officer and Director
|
|
March 1, 2018
|
Rick Shearer
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
/s/ Deborah Deibert
|
|
Chief Financial Officer
|
|
March 1, 2018
|
Deborah Deibert
|
|
(principal financial officer)
|
|
|
|
|
|
|
|
/s/ Nadya Kurani
|
|
Chief Accounting Officer
|
|
March 1, 2018
|
Nadya Kurani
|
|
(principal accounting officer)
|
|
|
|
|
|
|
|
/s/ Ted W. Beneski
|
|
Chairman of the Board and
|
|
March 1, 2018
|
Ted W. Beneski
|
|
Director
|
|
|
|
|
|
|
|
/s/ Warren B. Bonham
|
|
Director
|
|
March 1, 2018
|
Warren B. Bonham
|
|
|
|
|
|
|
|
|
|
/s/ Kevin Clark
|
|
Director
|
|
March 1, 2018
|
Kevin Clark
|
|
|
|
|
|
|
|
|
|
/s/ Mark Gottfredson
|
|
Director
|
|
March 1, 2018
|
Mark Gottfredson
|
|
|
|
|
|
|
|
|
|
/s/ Peter Jones
|
|
Director
|
|
March 1, 2018
|
Peter Jones
|
|
|
|
|
|
|
|
|
|
/s/ Francis J. Kelly, III
|
|
Director
|
|
March 1, 2018
|
Francis J. Kelly, III
|
|
|
|
|
|
|
|
|
|
/s/ Eliot E. Kerlin, Jr.
|
|
Director
|
|
March 1, 2018
|
Eliot E. Kerlin, Jr.
|
|
|
|
|
|
|
|
|
|
/s/ Victor L. Vescovo
|
|
Director
|
|
March 1, 2018
|
Victor L. Vescovo
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Exhibit
Number
|
|
Description
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
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|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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.
|
1 Year EMERGE ENERGY SERVICES LP Chart |
1 Month EMERGE ENERGY SERVICES LP Chart |
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