Emerge Energy Services LP (NYSE:EMES) announced second quarter 2015 financial and operating results.
Emerge Energy reported net income of $2.9 million, or $0.12 per diluted unit for the three months ended June 30, 2015. For that same period, Emerge Energy reported Adjusted EBITDA of $17.0 million and Distributable Cash Flow of $13.5 million. Net income, net income per diluted unit and Adjusted EBITDA for the three months ended June 30, 2014, were $20.1 million, $0.83 and $30.1 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 declared a distribution of $0.67 per unit for the second quarter of 2015, which includes $0.11 of distributable cash flow that was reserved in the first quarter of 2015 and the third quarter of 2014. This total distribution represents a 33% decrease from the first quarter 2015 distribution of $1.00 per unit.
“Emerge Energy had another solid quarter, especially given the current market environment,” said Ted W. Beneski, Chairman of the Board of Directors of the general partner of Emerge Energy. “After a challenging second half of 2014, our fuel segment improved its profitability and continues to build on early successes in 2015. Our sand segment continued to increase market share in the first quarter of 2015 and was able to deliver solid volumes in the second quarter, but was again impacted from a weak pricing environment and the underutilization of our railcar fleet. As a result of the current market conditions, we continue to expect to spend $30-40 million dollars in capital expenditures in 2015, including maintenance capital expenditures.”
“Our sand segment once again performed very well, despite the decline in proppant demand and pricing,” added Rick Shearer, CEO of Emerge Energy. “The sand segment generated Adjusted EBITDA of $13.9 million for the three months ended June 30, 2015 on sales volume of 861,000 tons. Our volumes were down approximately 25% from the first quarter of 2015; and based on our estimates of market demand, we believe we have continued to grow our market share despite lower quarter-over-quarter volumes on a sequential and year over year basis. Market pricing, as well as the prices we have negotiated with our customers, have continued to decline, both 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, were significant. We are taking a number of steps to reduce that cost, including sub-leasing a portion of our railcar fleet.
“Our fuel segment generated Adjusted EBITDA of $5.4 million for the three months ended June 30, 2015, a significant sequential quarterly increase. Our base margin on our wholesale and transmix improved, while the increase in refined product pricing contributed positively to EBITDA.” (Original Source)
Shares of Emerge Energy Services closed yesterday at $20.76. EMES has a 1-year high of $145.72 and a 1-year low of $20.14. The stock’s 50-day moving average is $29.15 and its 200-day moving average is $40.95.
On the ratings front, Emerge Energy Services has been the subject of a number of recent research reports. In a report issued on July 30, Robert W. Baird analyst Ethan Bellamy upgraded EMES to Buy, with a price target of $31, which implies an upside of 49.3% from current levels. Separately, on July 24, Wunderlich Securities’ Abhishek Sinha reiterated a Hold rating on the stock and has a price target of $22.
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 5.1% and -22.9% respectively. Bellamy has a success rate of 62.3% and is ranked #1172 out of 3727 analysts, while Sinha has a success rate of 21.2% and is ranked #3703.
The street is mostly Neutral on EMES stock. Out of 5 analysts who cover the stock, 3 suggest a Hold rating and 2 recommend to Buy the stock.
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.