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Emerge Energy Services Announces Third Quarter Results

The following excerpt is from the company's SEC filing.

Southlake, Texas —

November 4, 2015

— Emerge Energy Services LP (“Emerge Energy”) today announced


financial and operating results.


Adjusted EBITDA of

$(0.3) million

for the three months ended

September 30, 2015

Distributable Cash Flow of

$(4.5) million

Full quarter sales of


tons of sand.


Emerge Energy reported net

$(11.9) million


per diluted unit for the three months ended

. For that same period, Emerge Energy reported Adjusted EBITDA of

and Distributable Cash Flow of

. Net


, net

per diluted unit and Adjusted EBITDA for the three months ended

September 30, 2014

, were

$26.1 million

$37.4 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.

Previously, Emerge Energy announced that it will not make a cash distribution on its common units for the three months ended September 30, 2015. Emerge Energy did not generate available cash to distribute for the three months ended September 30, 2015 due to the challenging oil and natural gas frac sand market and the volatility in wholesale fuel prices during this period.

“The third quarter reflected a continued challenging market, with significant downward pressure on pricing for frac sand and refined fuels as rig counts and oil prices continue to decline,” said Ted W. Beneski, Chairman of the Board of Directors of the general partner of Emerge Energy. “We also expect drilling and well completion activity levels, based on indications from our customers and other industry sources, will be extremely weak in the fourth quarter of this year. While we do ultimately expect a recovery in the frac sand market, we now expect that any market recovery in our frac sand business will occur during the second half of 2016 or, potentially, not until 2017.”

“Our fuel segment also had a challenging third quarter, primarily driven by declining oil prices. We have begun work on two hydrotreater facilities which will allow us to remove sulfur from our transmix diesel so that it can be sold at a premium into the on-road market for ultra low sulfur diesel beginning next spring. We expect margins in the fourth quarter of 2015 to improve significantly over the third quarter, as we expect the market for petroleum products to be more stable in the quarter and we have a solid solution in place for dealing with our transmix diesel.”

“The sand segment generated Adjusted EBITDA of

$4.2 million

on sales volume of

tons," added Rick Shearer, CEO of Emerge Energy. "Our volumes were down approximately 7% from the second quarter of 2015, and market pricing, as well as the prices we have negotiated with our customers, have continued to decline at the plant and in-basin. While we have been able to significantly lower our production costs, and believe we will continue to do so in subsequent quarters, our fixed rail expense, which includes both our operating leases and railcar storage costs, remain significant. We are taking a number of steps to reduce that cost, such as pushing out in-service dates for future railcars and aggressively seeking opportunities to sublease a portion of our idle railcars.”

“These are challenging times for our industry, but the Emerge Energy team sees this as a time of opportunity, and we have taken definite steps to build further our position as one of the elite frac sand companies in the industry. 2015 has been challenging and the balance of this year will continue to press us to improve our business every day. We will meet these challenges and be a better company for it.”

Conference Call

Emerge Energy will host its

quarter results conference later today, Wednesday,

at 1:00 p.m. CST. Callers may listen to the live...