Emerge Energy Services LP (NYSE:EMES) announced first quarter 2016 financial and operating results.


  • Adjusted EBITDA of $(10.2) million for the three months ended March 31, 2016.
  • Full quarter sales of 439,000 tons of sand.
  • Management actively pursuing the sale of the fuel business.


Emerge Energy reported net loss of $(34.2) million, or $(1.42) per diluted unit, for the three months ended March 31, 2016.  For that same period, Emerge Energy reported Adjusted EBITDA of $(10.2) million and Distributable Cash Flow of $(14.8) million.  Net income, net income per unit and Adjusted EBITDA for the three months ended March 31, 2015, were $9.5 million, $0.39 per diluted unit and $28.4 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.

As of March 31, 2016, 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 March 31, 2016 were $(34.4) million and $(1.43) per diluted unit, compared to net income and net income per diluted unit for continuing operations for the three months ended March 31, 2015 of $8.8 million and $0.36 per diluted unit.

Previously, Emerge Energy announced that it will not make a cash distribution on its common units for the three months ended March 31, 2016.  Emerge Energy did not generate available cash to distribute for the three months ended March 31, 2016 due to the challenging oil and natural gas frac sand market and the volatility in wholesale fuel prices during this period.

 “The oil and gas environment, and particularly the services sector, remains under intense pressure from this historic downturn,” said Ted W. Beneski, Chairman of the Board of Directors of the general partner of Emerge Energy.  “We had a very disappointing first quarter, but there is reason to believe that our sales and the overall industry sales have reached the low-water mark in this historic down cycle.”

“We are working towards the sale of our fuel business so that we can use the proceeds to pay down our debt and amend our credit agreement to provide the liquidity we need to sustain us until the market recovers.  We are on track to have the fuel transaction drive a broader bank facility amendment process, which we have already initiated with our lending partners.  Although it will be difficult to part with this stable earnings stream, we understand the need for all stakeholders – creditors included – to be satisfied during these turbulent conditions.

“Our fuel business delivered another good quarter, with Adjusted EBITDA of $3.3 million in the first quarter of 2016, an improvement from the $3.1 million in the fourth quarter of 2015.  Results continued to benefit from changes in our transmix supply contracts as well as how we process the diesel we produce from transmix.  Furthermore, we successfully began operating the hydrotreater at Direct Fuels last week and are on track to have the Allied Energy hydrotreater operational in early August.”

“On the sand technology front, we are more excited than ever about the potential of our revolutionary SandMaxx(TM) self-suspending proppant to bring enormous value to our customers and our stakeholders.  We continue to believe that the SandMaxx product can be a “game changer” in this industry.  Several customers and operators agree that this is the next frontier of the hydraulic fracturing industry,” added Rick Shearer, CEO of Emerge Energy.  “I am proud of our company’s response to these tough times, and I think some of our best work has been done in the past six months.  Our entire team has done an extraordinary job managing the many challenges in this difficult time.  We are optimistic that our future is bright and that we will come out of this downturn stronger than ever.” (Original Source)

Shares of Emerge Energy closed yesterday at $3.53, down $0.29 or -7.59%. EMES has a 1-year high of $41.30 and a 1-year low of $1.97. The stock’s 50-day moving average is $4.83 and its 200-day moving average is $4.69.

On the ratings front, Cowen analyst Marc Bianchi downgraded EMES to Hold, with a price target of $3.70, in a report issued on February 29. The current price target represents a slight upside potential from current levels. According to TipRanks.com, Bianchi has a yearly average return of -8.1%, a 35.1% success rate, and is ranked #3455 out of 3828 analysts.