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Emerge Energy Services Announces Fourth Quarter 2016 Results | PressRelease
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Emerge Energy Services Announces Fourth Quarter 2016 Results

By on Feb 27, 2017 in Press Release | 0 comments

Fort Worth, Texas – February 27, 2017 – Emerge Energy Services LP (“Emerge Energy”) today announced fourth quarter 2016 financial and operating results.

Highlights

  • Net loss of $(20.8) million and Adjusted EBITDA of $(10.6) million for the three months ended December 31, 2016.
  • Full quarter sales of 825,699 tons of sand.
  • Completed a public offering and received net proceeds of $36.9 million.

Overview

Emerge Energy reported net loss of $(20.8) million, or $(0.77) per diluted unit, for the three months ended December 31, 2016.  For that same period, Emerge Energy reported Adjusted EBITDA of $(10.6) million and Distributable Cash Flow of $(15.2) million.  Net loss, net loss per diluted unit and Adjusted EBITDA for the three months ended December 31, 2015, were $(9.9) million, $(0.41) per diluted unit and $3.9 million, respectively.  Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that Emerge Energy uses to assess its performance on an ongoing basis.

The results of operations of the Fuel business have been classified as discontinued operations for all periods presented and we now operate our continuing business in a single sand segment.  Net loss and net loss per diluted unit for continuing operations for the three months ended December 31, 2016 were $(20.7) million and $(0.77) per diluted unit, respectively, compared to net loss and net loss per diluted unit for continuing operations for the three months ended December 31, 2015 of $(9.8) million and $(0.41) per diluted unit, respectively.

In November 2016, we completed a public offering of 3,400,000 of our common units at a price of $10.00 per unit and granted the underwriters an option to purchase up to an additional 510,000 common units, which the underwriter exercised in full.  The offering closed on November 23, 2016.  We received proceeds (net of underwriting discounts and offering expenses) from the offering of approximately $36.9 million.  The net proceeds from this offering were used to repay outstanding borrowings under our revolving credit agreement.

We will not make a cash distribution on our common units for the three months ended December 31, 2016 as we are restricted from making distributions to our common unitholders under our amended credit agreement and we did not generate available cash to distribute for the three months ended December 31, 2016.

“The recovery in the oil and gas markets gained momentum in the fourth quarter and has accelerated in the early parts of the first quarter,” said Ted W. Beneski, Chairman of the Board of Directors of the general partner of Emerge Energy.  “The fourth quarter was our first full quarter without the fuel business, so we are now a pure-play frac sand company. Our sand volumes increased by 68% sequentially to 825,699 tons, and our continuing operations Adjusted EBITDA improved by $0.3 million sequentially.  Small price increases started to take effect near the end of the quarter, but we are now realizing significant upward pricing movements to start 2017.  We further strengthened our balance sheet with a $36.9 million net equity raise, which lowered our bank loan balance to approximately $141 million at December 31, 2016, and we are now well positioned to take advantage of the current upswing in the North American shale markets as frac sand demand has rebounded significantly with higher drilling and completion activity.”

Conference Call

Emerge Energy will host its 2016 fourth quarter results conference call later today, Monday, February 27, 2017 at 2:00 p.m. CT.  Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (855) 850-4275 or (720) 634-2898 and entering pass code 66364861.  An audio webcast of the call will be available at www.emergelp.com within the Investor Relations portion of the website under the Webcasts Presentations section.  A replay will be available by audio webcast and teleconference for seven days following the conclusion of the call.  The replay teleconference will be available by dialing (855) 859-2056 or (404) 537-3406 and the reservation number 66364861.

Operating Results

The following table summarizes Emerge Energy’s consolidated operating results for the three and twelve months ended December 31, 2016 and 2015 and three months ended September 30, 2016.

 
Three months ended
 
Twelve Months Ended December 31,
 
 
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
REVENUES
$
42,619
 
 
$
31,285
 
 
$
44,502
 
 
$
128,399
 
 
$
269,518
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
Cost of goods sold
51,263
 
 
40,500
 
 
38,988
 
 
173,907
 
 
209,161
 
 
Depreciation, depletion and amortization
4,662
 
 
4,687
 
 
4,478
 
 
19,126
 
 
17,897
 
 
Selling, general and administrative expenses
5,020
 
 
4,697
 
 
6,410
 
 
20,951
 
 
27,551
 
 
Contract and project terminations

 
 
(25
)
 
1,308
 
 
4,011
 
 
10,652
 
 
Total operating expenses
60,945
 
 
49,859
 
 
51,184
 
 
217,995
 
 
265,261
 
 
Operating income (loss)
(18,326
)
 
(18,574
)
 
(6,682
)
 
(89,596
)
 
4,257
 
 
OTHER EXPENSE (INCOME)
 
 
 
 
 
 
 
 
 
 
Interest expense, net
3,448
 
 
8,014
 
 
3,126
 
 
21,339
 
 
11,216
 
 
Other expense (income)
(885
)
 
3,359
 
 
(1
)
 
2,471
 
 
(34
)
 
Total other expense
2,563
 
 
11,373
 
 
3,125
 
 
23,810
 
 
11,182
 
 
Income (loss) before provision for income taxes
(20,889
)
 
(29,947
)
 
(9,807
)
 
(113,406
)
 
(6,925
)
 
Provision (benefit) for income taxes
(220
)
 
8
 
 
(28
)
 
(191
)
 
258
 
 
Net income (loss) from continuing operations
(20,669
)
 
(29,955
)
 
(9,779
)
 
(113,215
)
 
(7,183
)
 
Discontinued Operations
 
 
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of taxes
(106
)
 
3,373
 
 
(109
)
 
8,746
 
 
(2,228
)
 
Gain on sale of discontinued operations

 
 
31,699
 
 

 
 
31,699
 
 

 
 
Total income (loss) from discontinued operations, net of tax
(106
)
 
35,072
 
 
(109
)
 
40,445
 
 
(2,228
)
 
NET INCOME (LOSS)
$
(20,775
)
 
$
5,117
 
 
$
(9,888
)
 
$
(72,770
)
 
$
(9,411
)
 
ADJUSTED EBITDA (a)
$
(10,648
)
 
$
(8,113
)
 
$
3,853
 
 
$
(37,354
)
 
$
50,704
 
 

(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP net income and cash flows.

Continuing operations

 
Three months ended
 
Twelve Months Ended December 31
 
 
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
REVENUES
$
42,619
 
 
$
31,285
 
 
$
44,502
 
 
$
128,399
 
 
$
269,518
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
 
Cost of goods sold
51,263
 
 
40,500
 
 
38,988
 
 
173,907
 
 
209,161
 
 
Depreciation, depletion and amortization
4,662
 
 
4,687
 
 
4,478
 
 
19,126
 
 
17,897
 
 
Selling, general and administrative expenses
5,020
 
 
4,697
 
 
6,410
 
 
20,951
 
 
27,551
 
 
Contract and project terminations

 
 
(25
)
 
1,308
 
 
4,011
 
 
10,652
 
 
Operating income (loss)
$
(18,326
)
 
$
(18,574
)
 
$
(6,682
)
 
$
(89,596
)
 
$
4,257
 
 
Net income (loss) from continuing operations
$
(20,669
)
 
$
(29,955
)
 
$
(9,779
)
 
$
(113,215
)
 
$
(7,183
)
 
Adjusted EBITDA (a)
$
(10,543
)
 
$
(10,872
)
 
$
665
 
 
$
(50,425
)
 
$
39,717
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume of sand sold (tons in thousands)
826
 
 
493
 
 
581
 
 
2,157
 
 
3,392
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume of sand produced (tons in thousands):
 
 
 
 
 
 
 
 
 
 
Arland, Wisconsin facility
165
 
 
21
 
 
165
 
 
186
 
 
1,064
 
 
Barron, Wisconsin facility
494
 
 
383
 
 
297
 
 
1,588
 
 
1,536
 
 
New Auburn, Wisconsin facility
162
 
 
10
 
 
43
 
 
352
 
 
604
 
 
Kosse, Texas facility
53
 
 
44
 
 
62
 
 
140
 
 
277
 
 
Total volume of sand produced
874
 
 
458
 
 
567
 
 
2,266
 
 
3,481
 
 

(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP net income and cash flows.

Net loss and Adjusted EBITDA from continuing operations improved in the fourth quarter compared to the third quarter of 2016.  This improvement was due to an increase in total volumes sold and lower sand production costs on a per ton basis, offset by $1.1 million of expense incurred to pull approximately 1,000 railcars out of storage and a $1.0 million write-down of SandMaxX(TM) inventory in the fourth quarter of 2016.  Our SandMaxX(TM) inventory included a batch of off-spec, early generation material that does not meet our standards of quality.

In addition, Net loss also improved in the fourth quarter of 2016 due to; a $3.3 million write-off of deferred financing costs in the third quarter of 2016 for total aggregate commitment reductions under the Credit Agreement; a $3.0 million charge to other expense for a non-cash mark-to-market adjustment on the warrant issued in August 2016; versus a $0.9 million mark up on the warrant in the fourth quarter of 2016.

Net loss and Adjusted EBITDA worsened for continuing operations for the fourth quarter of 2016, compared to same quarter in 2015 mainly due lower realized pricing for FOB plant sales and in-basin sales, and higher logistics costs.

Discontinued operations

 
Three months ended
 
Twelve Months Ended December 31
 
 
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Revenues
$

 
 
$
67,095
 
 
$
86,004
 
 
$
249,558
 
 
$
442,121
 
 
Cost of goods sold (excluding depreciation, depletion and amortization)

 
 
63,481
 
 
81,809
 
 
233,025
 
 
426,664
 
 
Depreciation and amortization

 
 

 
 
2,638
 
 
2,354
 
 
10,544
 
 
Selling, general and administrative expenses
106
 
 
(211
)
 
1,234
 
 
3,687
 
 
5,568
 
 
Interest expense, net

 
 
444
 
 
402
 
 
1,727
 
 
1,338
 
 
Other

 
 

 
 
(1
)
 

 
 
(11
)
 
Income (loss) from discontinued operations before provision for income taxes
(106
)
 
3,381
 
 
(78
)
 
8,765
 
 
(1,982
)
 
Provision for income taxes

 
 
8
 
 
31
 
 
19
 
 
246
 
 
Income (loss) from discontinued operations, net of taxes
(106
)
 
3,373
 
 
(109
)
 
8,746
 
 
(2,228
)
 
Gain on sale of discontinued operations

 
 
31,699
 
 

 
 
31,699
 
 

 
 
Total income (loss) from discontinued operations, net of taxes
$
(106
)
 
$
35,072
 
 
$
(109
)
 
$
40,445
 
 
$
(2,228
)
 
Adjusted EBITDA (a)
$
(105
)
 
$
2,759
 
 
$
3,188
 
 
$
13,071
 
 
$
10,987
 
 
 
 
 
 
 
 
 
 
 
 
 
Volume of refined fuels sold (gallons in thousands)

 
 
41,651
 
 
55,768
 
 
165,422
 
 
240,132
 
 
Volume of terminal throughput (gallons in thousands)

 
 
24,963
 
 
16,038
 
 
82,387
 
 
123,180
 
 
Volume of transmix refined (gallons in thousands)

 
 
18,942
 
 
22,021
 
 
68,326
 
 
93,128
 
 
Refined transmix as a percent of total refined fuels sold

 
 
45.5
%
 
39.5
%
 
41.3
%
 
38.8
%
 

(a) See section entitled “Adjusted EBITDA and Distributable Cash Flow” that includes a definition of Adjusted EBITDA and provides reconciliation to GAAP net income and cash flows.

Discontinued operations comprises what we previously classified as our fuel segment along with certain allocated corporate costs such as interest, taxes and equity-based compensation.  We closed the sale of the Fuel business on August 31, 2016, thus the quarter ended December 31, 2016 does not have any operations.  We recognized a gain on the sale of the Fuel business of $31.7 million.

Capital Expenditures

For the three months ended December 31, 2016, Emerge Energy’s capital expenditures totaled $1.3 million.  This includes approximately $1.2 million of maintenance capital expenditures.

About Emerge Energy Services LP

Emerge Energy Services LP (NYSE:EMES) is a growth-oriented limited partnership engaged in the businesses of mining, producing, and distributing silica sand, a key input for the hydraulic fracturing of oil and natural gas wells.  Emerge Energy operates its sand business through its subsidiary Superior Silica Sands LLC.  Emerge Energy also processed transmix, distributed refined motor fuels, operated bulk motor fuel storage terminals, and provided complementary fuel services through its fuel division which was sold on August 31, 2016.

Forward-Looking Statements

This release contains certain statements that are “forward-looking statements.” These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” or “estimate.” These forward-looking statements involve risks and uncertainties, and there can be no assurance that actual results will not differ materially from those expected by management of Emerge Energy Services LP.  When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Emerge Energy’s Annual Report on Form 10-K filed with the SEC. The risk factors and other factors noted in the Annual Report could cause actual results to differ materially from those contained in any forward-looking statement.  Except as required by law, Emerge Energy Services LP does not undertake any obligation to update or revise such forward-looking statements to reflect events or circumstances that occur after the date hereof.

PRESS CONTACT

Investor Relations
(817) 618-4020

EMERGE ENERGY SERVICES LP
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per unit data)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
 
2016
 
2015
 
2016
 
2015
 
REVENUES
$
42,619
 
 
$
44,502
 
 
$
128,399
 
 
$
269,518
 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
Cost of goods sold
51,263
 
 
38,988
 
 
173,907
 
 
209,161
 
 
Depreciation, depletion and amortization
4,662
 
 
4,478
 
 
19,126
 
 
17,897
 
 
Selling, general and administrative expenses
5,020
 
 
6,410
 
 
20,951
 
 
27,551
 
 
Contract and project terminations

 
 
1,308
 
 
4,011
 
 
10,652
 
 
Total operating expenses
60,945
 
 
51,184
 
 
217,995
 
 
265,261
 
 
Operating income (loss)
(18,326
)
 
(6,682
)
 
(89,596
)
 
4,257
 
 
 
 
 
 
 
 
 
 
 
OTHER EXPENSE (INCOME)
 
 
 
 
 
 
 
 
Interest expense, net
3,448
 
 
3,126
 
 
21,339
 
 
11,216
 
 
Other expense (income)
(885
)
 
(1
)
 
2,471
 
 
(34
)
 
Total other expense
2,563
 
 
3,125
 
 
23,810
 
 
11,182
 
 
Income (loss) before provision for income taxes
(20,889
)
 
(9,807
)
 
(113,406
)
 
(6,925
)
 
Provision (benefit) for income taxes
(220
)
 
(28
)
 
(191
)
 
258
 
 
Net income (loss) from continuing operations
(20,669
)
 
(9,779
)
 
(113,215
)
 
(7,183
)
 
Discontinued Operations
 
 
 
 
 
 
 
 
Income (loss) from discontinued operations, net of taxes
(106
)
 
(109
)
 
8,746
 
 
(2,228
)
 
Gain on sale of discontinued operations

 
 

 
 
31,699
 
 

 
 
Total income (loss) from discontinued operations, net of tax
(106
)
 
(109
)
 
40,445
 
 
(2,228
)
 
NET INCOME (LOSS)
$
(20,775
)
 
$
(9,888
)
 
$
(72,770
)
 
$
(9,411
)
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per common unit
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
Earnings (loss) per common unit from continuing operations
$
(0.77
)
 
$
(0.41
)
 
$
(4.55
)
 
$
(0.30
)
 
Earnings (loss) per common unit from discontinued operations

 
 

 
 
1.63
 
 
(0.09
)
 
Basic earnings (loss) per common unit
$
(0.77
)
 
$
(0.41
)
 
$
(2.92
)
 
$
(0.39
)
 
Diluted:
 
 
 
 
 
 
 
 
Earnings (loss) per common unit from continuing operations
$
(0.77
)
 
$
(0.41
)
 
$
(4.55
)
 
$
(0.30
)
 
Earnings (loss) per common unit from discontinued operations

 
 

 
 
1.63
 
 
(0.09
)
 
Diluted earnings (loss) per common unit
$
(0.77
)
 
$
(0.41
)
 
$
(2.92
)
 
$
(0.39
)
 
Weighted average number of common units outstanding including participating securities (basic)
27,055,160
 
 
24,119,972
 
 
24,870,258
 
 
23,973,850
 
 
Weighted average number of common units outstanding (diluted)
27,055,160
 
 
24,119,972
 
 
24,870,258
 
 
23,973,850
 
 

Adjusted EBITDA and Distributable Cash Flow

We calculate Adjusted EBITDA, a non-GAAP measure, in accordance with our current Credit Agreement as: net income (loss) plus consolidated interest expense (net of interest income), income tax expense, depreciation, depletion and amortization expense, non-cash charges and losses that are unusual or non-recurring less income tax benefits and gains that are unusual or non-recurring and other adjustments allowable under our existing credit agreement.  We report Adjusted EBITDA to our lenders under our revolving credit facility in determining our compliance with certain financial covenants.  Adjusted EBITDA should not be considered as an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP.  Moreover, our Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.  The following tables reconcile net income (loss) to Adjusted EBITDA for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015.

 
Three Months Ended December 31,
 
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing
 
Discontinued
 
Consolidated (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
 
Net income (loss)
$
(20,669
)
 
$
(9,779
)
 
$
(106
)
 
$
(109
)
 
$
(20,775
)
 
$
(9,888
)
 
 
Interest expense, net
3,448
 
 
3,126
 
 

 
 
402
 
 
3,448
 
 
3,528
 
 
 
Depreciation, depletion and amortization
4,662
 
 
4,478
 
 

 
 
2,638
 
 
4,662
 
 
7,116
 
 
 
Provision for income taxes
(220
)
 
(28
)
 

 
 
31
 
 
(220
)
 
3
 
 
 
EBITDA
(12,779
)
 
(2,203
)
 
(106
)
 
2,962
 
 
(12,885
)
 
759
 
 
 
Equity-based compensation expense
251
 
 
(167
)
 

 
 
104
 
 
251
 
 
(63
)
 
 
Contract and project terminations

 
 
1,308
 
 

 
 

 
 

 
 
1,308
 
 
 
Provision for doubtful accounts
4
 
 
922
 
 

 
 
38
 
 
4
 
 
960
 
 
 
Accretion expense
30
 
 
30
 
 

 
 

 
 
30
 
 
30
 
 
 
Retirement of assets
350
 
 
36
 
 

 
 

 
 
350
 
 
36
 
 
 
Reduction in workforce

 
 
362
 
 

 
 

 
 

 
 
362
 
 
 
Other state and local taxes
389
 
 
377
 
 
1
 
 
84
 
 
390
 
 
461
 
 
 
Non-cash deferred lease expense
2,079
 
 

 
 

 
 

 
 
2,079
 
 

 
 
 
Unrealized loss (gain) on fair value of warrants
(885
)
 

 
 

 
 

 
 
(885
)
 

 
 
 
Non-capitalized cost of private placement
17
 
 

 
 

 
 

 
 
17
 
 

 
 
 
Other adjustments allowable under our existing credit agreement
1
 
 

 
 

 
 

 
 
1
 
 

 
 
 
Adjusted EBITDA
$
(10,543
)
 
$
665
 
 
$
(105
)
 
$
3,188
 
 
$
(10,648
)
 
$
3,853
 
 
 

 
 
Three Months Ended September 30,
 
 
2016
 
2016
 
2016
 
 
 
 
 
 
 
 
 
 
 
Continuing
 
Discontinued
 
Consolidated (a)
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
 
Net income (loss)
 
$
(29,955
)
 
$
35,072
 
 
$
5,117
 
 
Interest expense, net
 
8,014
 
 
444
 
 
8,458
 
 
Depreciation, depletion and amortization
 
4,687
 
 

 
 
4,687
 
 
Provision for income taxes
 
8
 
 
8
 
 
16
 
 
EBITDA
 
(17,246
)
 
35,524
 
 
18,278
 
 
Equity-based compensation expense
 
235
 
 
97
 
 
332
 
 
Contract and project terminations
 
(25
)
 

 
 
(25
)
 
Provision for doubtful accounts
 
8
 
 
(543
)
 
(535
)
 
Accretion expense
 
30
 
 

 
 
30
 
 
Retirement of assets
 
209
 
 

 
 
209
 
 
Reduction in workforce
 

 
 
(679
)
 
(679
)
 
Other state and local taxes
 
483
 
 
59
 
 
542
 
 
Non-cash deferred lease expense
 
2,072
 
 

 
 
2,072
 
 
Unrealized loss (gain) on fair value of warrants
 
2,975
 
 

 
 
2,975
 
 
Non-capitalized cost of private placement
 
387
 
 

 
 
387
 
 
Gain on sale of discontinued operations, net of tax
 

 
 
(31,699
)
 
(31,699
)
 
Adjusted EBITDA
 
$
(10,872
)
 
$
2,759
 
 
$
(8,113
)
 

The following tables reconcile net income (loss) to Adjusted EBITDA for the twelve months ended December 31, 2016 and 2015.

 
Year Ended December 31,
 
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing
 
Discontinued
 
Consolidated (a)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Net income (loss)
$
(113,215
)
 
$
(7,183
)
 
$
40,445
 
 
$
(2,228
)
 
$
(72,770
)
 
$
(9,411
)
 
Interest expense, net
21,339
 
 
11,216
 
 
1,727
 
 
1,338
 
 
23,066
 
 
12,554
 
 
Depreciation, depletion and amortization
19,126
 
 
17,897
 
 
2,354
 
 
10,544
 
 
21,480
 
 
28,441
 
 
Provision for income taxes
(191
)
 
258
 
 
19
 
 
246
 
 
(172
)
 
504
 
 
EBITDA
(72,941
)
 
22,188
 
 
44,545
 
 
9,900
 
 
(28,396
)
 
32,088
 
 
Equity-based compensation expense
388
 
 
2,935
 
 
331
 
 
597
 
 
719
 
 
3,532
 
 
Write-down of sand inventory
5,394
 
 

 
 
 
 

 
 
5,394
 
 

 
 
Contract and project terminations
4,011
 
 
10,652
 
 

 
 

 
 
4,011
 
 
10,652
 
 
Provision for doubtful accounts
1,684
 
 
1,391
 
 
(469
)
 
150
 
 
1,215
 
 
1,541
 
 
Accretion expense
119
 
 
110
 
 

 
 

 
 
119
 
 
110
 
 
Retirement of assets
559
 
 
138
 
 
67
 
 
8
 
 
626
 
 
146
 
 
Reduction in force
76
 
 
362
 
 

 
 

 
 
76
 
 
362
 
 
Other state and local taxes
1,824
 
 
1,941
 
 
296
 
 
332
 
 
2,120
 
 
2,273
 
 
Non-cash deferred lease expense
5,758
 
 

 
 

 
 

 
 
5,758
 
 

 
 
Unrealized 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
)
 
$
39,717
 
 
$
13,071
 
 
$
10,987
 
 
$
(37,354
)
 
$
50,704
 
 

(a) Consolidated numbers for Interest expense, net, Provision for income taxes, Depreciation, depletion and amortization, Equity-based compensation expense, Provision for doubtful accounts and Loss (gain) on disposal of assets include discontinued operations.

The following table reconciles Consolidated Adjusted EBITDA to our operating cash flows for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 and years ended December 31, 2016 and 2015:

 
Three Months Ended,
 
Year Ended December 31,
 
 
December 31, 2016
 
September 30, 2016
 
December 31, 2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
$
(10,648
)
 
$
(8,113
)
 
$
3,853
 
 
$
(37,354
)
 
$
50,704
 
 
Non-cash interest expense, net
(3,001
)
 
(4,682
)
 
(4,094
)
 
(16,672
)
 
(11,729
)
 
Non-cash income tax expense
(170
)
 
(558
)
 
(464
)
 
(1,948
)
 
(2,777
)
 
Contract and project terminations – non-cash
(3
)
 
25
 
 
353
 
 
(3
)
 
(307
)
 
Reduction in workforce

 
 

 
 
(362
)
 
(76
)
 
(362
)
 
Write-down of sand inventory

 
 

 
 

 
 
(5,394
)
 

 
 
Other adjustments allowable under our existing credit agreement
(1
)
 

 
 

 
 
(209
)
 

 
 
Fuel division selling expenses

 
 
679
 
 

 
 

 
 

 
 
Cost to retire assets

 
 

 
 

 
 
9
 
 

 
 
Non-cash deferred lease expense
(2,079
)
 
(2,072
)
 

 
 
(5,758
)
 

 
 
Change in other operating assets and liabilities
(3,589
)
 
(82
)
 
5,476
 
 
20,079
 
 
11,796
 
 
Cash flows from operating activities:
$
(19,491
)
 
$
(14,803
)
 
$
4,762
 
 
$
(47,326
)
 
$
47,325
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
$
(1,263
)
 
$
152,816
 
 
$
(10,946
)
 
$
140,541
 
 
$
(33,674
)
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
$
(20,753
)
 
$
(141,166
)
 
$
21,166
 
 
$
(114,081
)
 
$
343
 
 

We define Distributable Cash Flow generally as net income plus (i) non-cash net interest expense, (ii) depreciation, depletion and amortization expense, (iii) non-cash charges, and (iv) selected losses that are unusual or non-recurring; less (v) selected principal repayments, (vi) selected gains that are unusual or non-recurring, and (vii) maintenance capital expenditures. In addition, our Board of Directors utilizes reserves for future capital expenditures, compliance with law or debt agreements, and to provide funds for distributions to unitholders in respect to any one or more of the next four quarters. Distributable Cash Flow does not reflect changes in working capital balances.  The following table (in thousands) reconciles net income to Distributable Cash Flow:

 
 
Three months ended December 31, 2016
 
 
 
 
 
Net income (loss)
 
$
(20,775
)
 
 
 
 
 
Add (less) reconciling items:
 
 
 
Add depreciation, depletion and amortization expense
 
4,662
 
 
Add non-cash deferred lease expense
 
2,079
 
 
Add amortization of deferred financing costs
 
678
 
 
Add loss on disposal of assets
 
350
 
 
Add equity-based compensation expense
 
251
 
 
Add accretion
 
30
 
 
Add provision for doubtful accounts
 
4
 
 
Less income taxes accrued, net of payments
 
(220
)
 
Less unrealized gain on fair value of interest rate swaps
 
(232
)
 
Less unrealized loss on fair value of warrants
 
(885
)
 
Less maintenance capital expenditures
 
(1,174
)
 
 
 
 
 
Distributable cash flow
 
$
(15,232
)
 

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Emerge Energy Services LP via Globenewswire

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