HCLP: Volumes fall, earnings rises
Frac sand MLPs Hi-Crush Partners (HCLP) and Emerge Energy Services (EMES) reported their 1Q18 results on May 1. Hi-Crush Partners’ adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose from $59 million in 4Q17 to $64.5 million, and its distributable cash flow rose to $56.4 million from $52 million. Extreme winter and railroad issues impacted the company’s performance during the quarter.
Hi-Crush Partners’ frac sand volumes sold fell 12% sequentially to 2.6 million tons due to weather- and railroad-related challenges. Its average sales price rose to $73 per ton from $71 per ton in 4Q17, supported by demand-supply dynamics for frac sand. Hi-Crush Partners expects frac sand sales volumes to rise to 2.9 million–3.1 million tons in 2Q18.
EMES: Higher volumes drive performance
Emerge Energy Services reported a 7% sequential increase in frac sand volumes sold in 1Q18. The company’s adjusted EBITDA for the quarter were $17.4 million, down from $18.6 million in 4Q17. The decline in EBITDA was due to a $4 million adjustment related to a previously deferred rent repayment. Excluding this one-time charge, the company’s EBITDA rose $2.7 million sequentially.
Emerge Energy Services’ 1Q18 distributable cash flow was $8.7 million, compared with $13.4 million in 4Q17. “The 7% sequential volume improvement is a testament to our newly enhanced rail shipping outlets and the positive strides made by our two Texas in-basin plants,” said Ted W. Beneski, board of directors chairman of Emerge Energy’s general partner.
Commenting on the frac sand demand outlook, Beneski said, “The demand for frac sand remains strong, and the market continues to face supply shortages due to constrained railroad service and construction delays for several new in-basin plants.” To learn what analysts recommend for the two stocks, read 87% of Analysts Rate Hi-Crush Partners as a ‘Buy.’