Emerge Energy Services LP (NYSE:EMES) announced third quarter 2015 financial and operating results.
Emerge Energy reported net loss of $(11.9) million, or $(0.49) per diluted unit for the three months ended September 30, 2015. For that same period, Emerge Energy reported Adjusted EBITDA of $(0.3) million and Distributable Cash Flow of $(4.5) million. Net income, net income per diluted unit and Adjusted EBITDA for the three months ended September 30, 2014, were $26.1 million, $1.08 and $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 for the three months ended September 30, 2015 on sales volume of 799,000 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.” (Original Source)
Shares of Emerge Energy Services closed yesterday at $6.60. EMES has a 1-year high of $87.77 and a 1-year low of $3.78. The stock’s 50-day moving average is $8.19 and its 200-day moving average is $24.12.
On the ratings front, Emerge Energy has been the subject of a number of recent research reports. In a report issued on October 27, Robert W. Baird analyst Ethan Bellamy maintained a Sell rating on EMES. Separately, on October 23, Wunderlich Securities’ Abhishek Sinha reiterated a Hold rating on the stock and has a price target of $4.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ethan Bellamy and Abhishek Sinha have a total average return of 2.2% and -20.8% respectively. Bellamy has a success rate of 61.1% and is ranked #1598 out of 3824 analysts, while Sinha has a success rate of 22.0% and is ranked #3794.
Overall, 2 research analysts have rated the stock with a Sell rating, 2 research analysts have assigned a Hold rating and one research analyst has given a a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $19.50 which is 195.5% above where the stock closed yesterday.
Emerge Energy Services LP is engaged in the ownership, operation, and acquisition and development of a energy service assets. Its business is segmented into two – Sand segment and Fuel segment.