Hi-Crush Partners’ 3Q17 Earnings: Higher Volumes and New Projects
Hi-Crush Partners (HCLP) reported its 3Q17 results on October 31, 2017. The company’s EBITDA (earnings before interest, tax, depreciation, and amortization) rose 56% from 2Q17 to $41.8 million in 3Q17. Hi-Crush Partner’s distributable cash flow rose 64% to $37.5 million in 3Q17. The earnings growth during the quarter was driven by higher sand volumes sold and newer projects placed into service.
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After several quarters of negative distributable cash flow, Hi-Crush Partners reported a very small positive distributable cash flow in 1Q17. Its distributable cash flow rose significantly in 2Q17 and 3Q17. A recovery in the drilling activity contributed to Hi-Crush Partners’ earnings in the last few quarters.
The above graph shows Hi-Crush Partners’ distributable cash flow and capital expenditures in the last seven quarters. The company’s capital expenditures in 3Q17 were $40.2 million.
Hi-Crush Partners’ capital expenditures for 3Q17 included the expenditure on its Kermit facility, Pecos terminal facility, and equipment for its PropStream solution. Hi-Crush Partners expects to spend $7 million–$17 million on capital expenditures during 4Q17. For 2018, Hi-Crush Partners expects to spend $35 million–$45 million on capital projects.
On October 17, 2017, Hi-Crush Partners announced a distribution of $0.15 per unit for 3Q17. It hadn’t paid any distributions for the last eight quarters. Hi-Crush Partners also announced a unit buyback program of up to $100 million.
“With this initial distribution, we are setting the foundation for sustainable and meaningful growth over the near and long term,” said Robert E. Rasmus, Hi-Crush Partners CEO.
Based on the 3Q17 distributions, Hi-Crush Partners is trading at a yield of ~5.7%. The SPDR S&P 500 ETF (SPY) (SPX-INDEX) yields nearly 2%.
Emerge Energy Services (EMES) is scheduled to report its 3Q17 results on November 1, 2017.
In the next part, we’ll analyze the growth in Hi-Crush Partners’ sand volumes sold.