TULSA, Okla.–(BUSINESS WIRE)–Cypress Energy Partners, L.P. (NYSE:CELP) today reported:
Peter C. Boylan III, CELP’s chairman, president and chief executive officer, stated, “We were pleased to announce our third quarter 2015 operating performance, and that we maintained our distribution rate of $0.406413 per unit consistent with our second quarter distribution per unit, despite the challenging environment impacting virtually everyone in the energy industry.”
Mr. Boylan continued, “Our team continues to focus on organic growth opportunities with our customer relationships in the inspection industry to cross-sell our new hydrostatic testing services from our recent acquisition. We also continue to see an increase in Water and Environmental Services opportunities, including strategic opportunities to partner with E&P producers that has led to new piped water opportunities and may also lead to accretive acquisition and growth opportunities as producers focus on their core business of finding and producing hydrocarbons.
“Our strong balance sheet and credit facility allow us to pursue opportunities, and during the quarter we have seen a material increase in acquisition opportunities in both existing segments and some new areas covered under our IRS private letter ruling. Our businesses require very nominal maintenance capital expenditures, leading to attractive free cash flow generation unlike many other MLPs.”
Third Quarter:
Year To Date:
Highlights include:
Looking forward:
CELP also announced that it will file its quarterly report on Form 10-Q for its fiscal period ended September 30, 2015 with the Securities and Exchange Commission later today. CELP will also post a copy of the Form 10-Q on its website at www.cypressenergy.com.
CELP will host an earnings call on Friday, November 13, 2015, at 10:00am EST (9:00am CST) to discuss its third quarter 2015 financial results. Analysts, investors, and other interested parties may access the conference call by dialing Toll-Free (US & Canada): (888) 428-7458 or International Dial-In (Toll): (862) 255-5400. An archived audio replay of the call will be available on the investor section of our website at www.cypressenergy.com beginning at 10:00am EST (9:00am CST) on November 17, 2015.
CELP defines Adjusted EBITDA as net income, plus interest expense, depreciation and amortization expenses, income tax expenses, impairments, offering costs, non-cash allocated expenses and equity based compensation. CELP defines Distributable Cash Flow as Adjusted EBITDA attributable to limited partners excluding cash interest paid, cash income taxes paid and maintenance capital expenditures. Adjusted EBITDA and Distributable Cash Flow should not be considered an alternative to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP as those items are used to measure operating performance, liquidity or the ability to service debt obligations. CELP believes that the presentation of Adjusted EBITDA will provide useful information to investors in assessing our financial condition and results of operations. CELP uses Distributable Cash Flow as a supplemental financial measure to assess the cash flows generated by our assets (prior to the establishment of any retained cash reserves by the general partner) to fund the cash distributions we expect to pay to unitholders, to evaluate our success in providing a cash return on investment and whether or not the Partnership is generating cash flow at a level that can sustain or support an increase in its quarterly distribution rates and to determine the yield of our units, which is a quantitative standard used throughout the investment community with respect to publicly-traded partnerships, as the value of a unit is generally determined by a unit’s yield (which in turn is based on the amount of cash distributions the entity pays to a unitholder). Because adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA and Distributable Cash Flow may not be comparable to a similarly titled measure of other companies, thereby diminishing their utility. A reconciliation of Adjusted EBITDA and Distributable Cash Flow to net income is shown below.
This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While CELP believes its expectations as reflected in the forward-looking statements are reasonable, CELP can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in CELP’s Annual Report filed on Form 10-K and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” CELP undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
About Cypress Energy Partners, L.P.
Cypress Energy Partners, L.P. is a growth-oriented master limited partnership that provides midstream services including pipeline inspection, integrity and hydrostatic testing services to energy, E&P and midstream companies and their vendors throughout the U.S. and Canada. Cypress also provides saltwater disposal and other water and environmental services to U.S. energy E&P companies and their vendors in North Dakota in the Williston Basin, and West Texas in the Permian Basin. In all three of these business segments, Cypress works closely with its customers to help them comply with increasingly complex and strict environmental and safety rules and regulations and reduce their operating costs. Cypress is headquartered in Tulsa, Oklahoma.
CYPRESS ENERGY PARTNERS, L.P. | ||||||||||
Condensed Consolidated Balance Sheets | ||||||||||
As of September 30, 2015 and December 31, 2014 | ||||||||||
(in thousands, except unit data) | ||||||||||
(unaudited) | ||||||||||
September 30, | December 31, | |||||||||
2015 | 2014 | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 25,677 | $ | 20,757 | ||||||
Trade accounts receivable, net | 56,470 | 54,075 | ||||||||
Accounts receivable – affiliates | 65 | – | ||||||||
Deferred tax assets | 36 | 68 | ||||||||
Prepaid expenses and other | 3,043 | 2,440 | ||||||||
Total current assets | 85,291 | 77,340 | ||||||||
Property and equipment: | ||||||||||
Property and equipment, at cost | 24,515 | 27,878 | ||||||||
Less: Accumulated depreciation |
4,671 | 3,538 | ||||||||
Total property and equipment, net | 19,844 | 24,340 | ||||||||
Intangible assets, net | 33,279 | 30,245 | ||||||||
Goodwill | 65,323 | 55,545 | ||||||||
Debt issuance costs, net | 1,910 | 2,318 | ||||||||
Other assets | 66 | 54 | ||||||||
Total assets | $ | 205,713 | $ | 189,842 | ||||||
LIABILITIES AND OWNERS’ EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable | $ | 3,172 | $ | 2,461 | ||||||
Accounts payable – affiliates | – | 586 | ||||||||
Accrued payroll and other | 16,797 | 7,750 | ||||||||
Income taxes payable | 379 | 546 | ||||||||
Total current liabilities | 20,348 | 11,343 | ||||||||
Long-term debt | 140,900 | 77,600 | ||||||||
Deferred tax liabilities | 386 | 438 | ||||||||
Asset retirement obligations | 78 | 33 | ||||||||
Total liabilities | 161,712 | 89,414 | ||||||||
Commitments and contingencies | ||||||||||
Owners’ equity: | ||||||||||
Partners’ capital | ||||||||||
Common units (5,920,467 and 5,913,000 units outstanding at September 30, 2015 and December 31, 2014, respectively) | 1,734 | 6,285 | ||||||||
Subordinated units (5,913,000 outstanding at September 30, 2015 and December 31, 2014) | 60,961 | 66,096 | ||||||||
General partner | (25,876 | ) | 1,999 | |||||||
Accumulated other comprehensive loss | (2,451 | ) | (525 | ) | ||||||
Total partners’ capital | 34,368 | 73,855 | ||||||||
Non-controlling interests | 9,633 | 26,573 | ||||||||
Total owners’ equity | 44,001 | 100,428 | ||||||||
Total liabilities and owners’ equity | $ | 205,713 | $ | 189,842 |
CYPRESS ENERGY PARTNERS, L.P. | |||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||
For the Three and Nine Months Ended September 30, 2015 and September 30, 2014 | |||||||||||||||||||
(in thousands, except unit and per unit data) | |||||||||||||||||||
(unaudited) | |||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Revenues | $ | 96,408 | $ | 111,016 | $ | 281,427 | $ | 302,261 | |||||||||||
Costs of services | 84,307 | 97,735 | 248,014 | 265,257 | |||||||||||||||
Gross margin | 12,101 | 13,281 | 33,413 | 37,004 | |||||||||||||||
Operating costs and expense: | |||||||||||||||||||
General and administrative | 6,024 | 5,437 | 17,353 | 15,358 | |||||||||||||||
Depreciation, amortization and accretion | 1,481 | 1,582 | 4,113 | 4,719 | |||||||||||||||
Impairments | 5,567 | – | 5,567 | – | |||||||||||||||
Operating income (loss) | (971 | ) | 6,262 | 6,380 | 16,927 | ||||||||||||||
Other income (expense): | |||||||||||||||||||
Interest expense, net | (1,623 | ) | (795 | ) | (4,070 | ) | (2,352 | ) | |||||||||||
Offering costs | – | – | – | (446 | ) | ||||||||||||||
Other, net | 1,043 | 43 | 1,106 | 68 | |||||||||||||||
Net income (loss) before income tax expense | (1,551 | ) | 5,510 | 3,416 | 14,197 | ||||||||||||||
Income tax expense | 89 | 413 | 371 | 654 | |||||||||||||||
Net income (loss) | (1,640 | ) | 5,097 | 3,045 | 13,543 | ||||||||||||||
Net income attributable to non-controlling interests | 169 | 1,542 | 259 | 3,564 | |||||||||||||||
Net income (loss) attributable to partners | (1,809 | ) | 3,555 | 2,786 | 9,979 | ||||||||||||||
Less net income (loss) attributable to general partner | – | – | (183 | ) | 646 | ||||||||||||||
Net income (loss) attributable to limited partners | $ | (1,809 | ) | $ | 3,555 | $ | 2,969 | $ | 9,333 | ||||||||||
Net income (loss) attributable to limited partners allocated to: | |||||||||||||||||||
Common unitholders | $ | (905 | ) | $ | 1,778 | $ | 1,485 | $ | 4,667 | ||||||||||
Subordinated unitholders | (904 | ) | 1,777 | 1,484 | 4,666 | ||||||||||||||
$ | (1,809 | ) | $ | 3,555 | $ | 2,969 | $ | 9,333 | |||||||||||
Net income (loss) per common limited partner unit – basic |
$ | (0.15 | ) | $ | 0.30 | $ | 0.25 | $ | 0.79 | ||||||||||
– diluted |
$ | (0.15 | ) | $ | 0.30 | $ | 0.25 | $ | 0.78 | ||||||||||
Net income (loss) per subordinated unit – basic and diluted |
$ | ( 0.15 | ) | $ | 0.30 | $ | 0.25 | $ | 0.79 | ||||||||||
Weighted average common units outstanding – basic |
5,920,467 | 5,913,000 | 5,917,981 | 5,913,000 | |||||||||||||||
– diluted |
5,920,467 | 5,978,804 | 5,917,981 | 5,986,328 | |||||||||||||||
Weighted average subordinated units outstanding – basic and diluted | 5,913,000 | 5,913,000 | 5,913,000 | 5,913,000 | |||||||||||||||
Reconciliation of Net Income to Adjusted EBITDA (in thousands)
Three Months Ended |
Nine Months Ended |
||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||
Net income | $ | (1,640 | ) | $ | 5,097 | $ | 3,045 | $ | 13,543 | ||||||||
Add: | |||||||||||||||||
Interest expense | 1,623 | 795 | 4,070 | 2,352 | |||||||||||||
Income tax expense | 89 | 413 | 371 | 654 | |||||||||||||
Depreciation, amortization and accretion | 1,663 | 1,621 | 4,492 | 4,847 | |||||||||||||
Impairments | 5,567 | – | 5,567 | – | |||||||||||||
Offering costs | – | – | – | 446 | |||||||||||||
Non-cash allocated expenses | – | – | 183 | – | |||||||||||||
Equity based compensation | 296 | – | 828 | – | |||||||||||||
Adjusted EBITDA | $ | 7,598 | $ | 7,926 | $ | 18,556 | $ | 21,842 | |||||||||
Reconciliation of Net Income Attributable to Limited Partners to Adjusted EBITDA and Distributable Cash Flow Attributable to Limited Partners (in thousands)
Three Months Ended |
Nine Months |
January 21, |
|||||||||||||||
2015 | 2014 |
September |
September |
||||||||||||||
Net income attributable to limited partners | $ | (1,809 | ) | $ | 3,555 | $ | 2,969 | $ | 9,333 | ||||||||
Add: | |||||||||||||||||
Interest expense attributable to limited partners | 1,561 | 224 | 3,765 | 614 | |||||||||||||
Income tax expense attributable to limited partners | 72 | 213 | 317 | 329 | |||||||||||||
Depreciation, amortization and accretion attributable to limited partners | 1,532 | 1,276 | 4,144 | 3,529 | |||||||||||||
Impairments attributable to limited partners | 5,567 | – | 5,567 | – | |||||||||||||
Equity based compensation attributable to limited partners | 296 | – | 828 | – | |||||||||||||
Adjusted EBITDA attributable to limited partners | $ | 7,219 | $ | 5,268 | $ | 17,590 | $ | 13,805 | |||||||||
Less: | |||||||||||||||||
Cash interest paid, cash taxes paid & maintenance capital expenditures | 1,584 | 76 | 4,042 | 271 | |||||||||||||
Distributable cash flow attributable to limited partners | $ | 5,635 | $ | 5,192 | $ | 13,548 | $ | 13,534 | |||||||||
Operating Data
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||||||
Total barrels of saltwater disposed (in thousands) | 4,745 | 5,465 | 14,532 | 14,205 | ||||||||||||||||
Average revenue per barrel | $ | 0.73 | $ | 1.09 | $ | 0.81 | $ | 1.21 | ||||||||||||
Water and environmental services gross margins | 58.1 | % | 58.3 | % | 58.2 | % | 62.1 | % | ||||||||||||
Average number of inspectors | 1,406 | 1,648 | 1,412 | 1,530 | ||||||||||||||||
Average revenue per inspector per week | $ | 4,749 | $ | 4,850 | $ | 4,741 | $ | 4,778 | ||||||||||||
Pipeline inspection services gross margins | 9.7 | % | 9.3 | % | 9.3 | % | 9.2 | % | ||||||||||||
Average number of field personnel | 35 | – | 35 | – | ||||||||||||||||
Average revenue per field personnel per week | $ | 11,246 | $ | – | $ | 11,308 | $ | – | ||||||||||||
Pipeline integrity services gross margins | 29.6 | % | – | 25.6 | % | – | ||||||||||||||
Maintenance capital expenditures (in thousands) | $ | 87 | $ | 82 | $ | 449 | $ | 165 | ||||||||||||
Expansion capital expenditures (in thousands) | $ | 194 | $ | – | $ | 1,085 | $ | 302 | ||||||||||||
Distributions (in thousands) | $ | 4,809 | $ | 4,806 | $ | 14,426 | $ | 13,064 | ||||||||||||
Coverage ratio | 1.17x | 1.08x | 0.94x | 1.04x |