News Column

Hi-Crush Partners LP Reports First Quarter 2014 Results

May 5, 2014

News Release Hi-Crush Partners LP Reports First Quarter 2014 Results Houston, Texas, May 5, 2014 - Hi-Crush Partners LP (NYSE: HCLP), "Hi-Crush" or the "Partnership", today reported first quarter results. Net income was $14.3 million, or $0.49 per limited partner unit, for the first quarter of 2014.  Net income was affected by severe weather in January which resulted in lower volumes sold and higher transport costs. The Partnership reported earnings before interest, taxes and depreciation and amortization ("EBITDA") of $19.2 million for the first quarter of 2014 in the middle of guidance range provided on April 8, 2014.  The Partnership's distributable cash flow for the first quarter of 2014 of $17.4 million corresponds to distribution coverage of 1.00 times the total $17.4 million in total distributions to be paid on May 15, 2014.  Excluding the distributions to be paid on the 4.25 million common units issued in April, the distribution coverage would have been 1.15 times. "We've had a great start to 2014," said Robert E. Rasmus, Co-Chief Executive Officer of Hi-Crush.  "We're advancing on the next phase of growth for Hi-Crush through our accretive acquisition of the Augusta facility, and through our timely expansion of both the Augusta facility and our sponsor's Whitehall facility.  Production capacity for the Partnership is 3.2 million tons after the acquisition and will be 4.2 million tons after the expansion is on line in the third quarter. There is a lot of demand for Hi-Crush sand and we are well- prepared." Revenues for the quarter ended March 31, 2014 totaled $55.8 million on sales of 632,763 tons of frac sand and transload services.  The average selling price of frac sand, reflecting the mix between pricing for delivery at the production facility and at the destination, was $76 per ton. "We are very focused on our customers and on the market's needs," said James M. Whipkey, Co-Chief Executive Officer of Hi-Crush.  "Since the start of the year, we have announced several contract amendments, including extensions of terms and significant annual volume commitments, as well as a long-term contract with a new customer.  We've significantly increased our committed volumes, further strengthened our relationships, and provided a pathway of accelerating value for our unitholders." Production cost for sand produced and delivered from the Wyeville facility was $15.53 per ton during the quarter.  Production costs per ton were impacted by lower production volumes, normal first quarter maintenance and higher natural gas prices. On April 17, 2014, Hi-Crush declared its first quarter cash distribution of $0.5250 per unit for all common and subordinated units, or $2.10 on an annualized basis. This amount corresponds to an 11% increase from the minimum quarterly cash distribution of $0.475 per unit, and will be paid on May 15, 2014 to all common and subordinated unitholders of record on May 1, 2014. Conference Call A conference call for investors will be held on Tuesday, May 6, 2014 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss Hi-Crush's first quarter results and forward outlook. Hosting the call will be Robert E. Rasmus, Co-Chief Executive Officer, James M. Whipkey, Co-Chief Executive Officer, and Laura C. Fulton, Chief Financial Officer.  The call can be accessed live over the telephone by dialing (877) 705-6003, or for international callers, (201) 493-6725. A replay will be available shortly after the call and can be accessed by dialing (877) 870-5176, or for international callers (858) 384-5517.  The passcode for the replay is 13581131. The replay will be available until May 20, 2014. Interested parties may also listen to a simultaneous webcast of the conference call by logging onto Hi-Crush's website at in the Investors-Event Calendar and Presentations section. A replay of the webcast will also be available for approximately 30 days following the call. The slide presentation to be referenced on the call will also be on Hi-Crush's website at in the Investors-Event Calendar and Presentations section. Non-GAAP Financial Measures This news release and the accompanying schedules include the non-GAAP financial measure of EBITDA, Distributable Cash Flow and Production Costs, which may be used periodically by management when discussing our financial results with investors and analysts. The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). EBITDA, Distributable Cash Flow and Production Costs are presented as management believes the data provides a measure of operating performance that is unaffected by historical cost basis and provides additional information and metrics relative to the performance of our business. About Hi-CrushHi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline sand, a specialized mineral that is used as a "proppant" (frac sand) to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wyeville, Wisconsin, consist of "Northern White" sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America. For more information, visit Forward-Looking Statements Some of the information in this news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "may," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush's reports filed with the Securities and Exchange Commission ("SEC"), including those described under 1A of Hi-Crush's Form 10-K for the year ended December 31, 2013 and any subsequently filed 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any pending litigation; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush's forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise. Investor contact: Investor Relations (713) 960-4811 Unaudited Condensed Consolidated Statement of Operations (Amounts in thousands, except tons, units and per unit amounts)           Three Months   Three Months           Ended   Ended           March 31, 2014   March 31, 2013 ---------------- --------------- Revenues $ 55,828 $ 19,628 Cost of goods sold (including depreciation, depletion, and amortization)   38,322   5,782 ---------------- ---------------   Gross profit   17,506   13,846 Operating costs and expenses:   General and administrative   5,591   2,719   Exploration expense   -   1   Accretion of asset retirement obligation   29   29 ---------------- ---------------     Income from operations   11,886   11,097 ---------------- --------------- Other income (expense): Income from preferred interest in Hi-Crush   Augusta LLC   3,750   -   Interest expense       (1,373)   (314) ---------------- ---------------     Net income $ 14,263 $ 10,783 ---------------- --------------- Net income per limited partner unit:   Common units $ 0.49 $ 0.40 ---------------- ---------------   Subordinated units $ 0.49 $ 0.40 ---------------- --------------- Weighted average limited partner units outstanding:   Common units   15,233,529   13,644,094 ---------------- ---------------   Subordinated units   13,640,351   13,640,351 ---------------- --------------- Unaudited EBITDA and Distributable Cash Flow (Amounts in thousands)           Three Months   Three Months           Ended   Ended           March 31, 2014   March 31, 2013 ---------------- --------------- Reconciliation of distributable cash flow to net income:   Net income $ 14,263 $ 10,789   Depreciation and depletion expense   996   273   Amortization expense   2,536   -   Interest expense   1,373   314 ---------------- --------------- EBITDA $ 19,168 $ 11,370   Less: Cash interest expense   (1,235)   (255) Less: Maintenance and replacement capital expenditures, including accrual for   reserve replacement ((1))       (540)   (422) Add: Accretion of asset retirement   obligation   29   29 Add: Quarterly distribution from preferred   interest in Augusta ((2))   -   3,750 ---------------- --------------- Distributable cash flow $ 17,422 $ 14,472 ---------------- --------------- ((1)        )Maintenance and replacement capital expenditures, including accrual for reserve replacement, were determined based on an estimated reserve replacement cost of $1.35 per ton produced and delivered during the period. Such expenditures include those associated with the replacement of equipment and sand reserves, to the extent that such expenditures are made to maintain our long-term operating capacity. The amount presented does not represent an actual reserve account or requirement to spend the capital. ((2)        )The amount pertains to the first quarter 2013 performance of Augusta, on which we were entitled to receive a preferred distribution of $3,750. We have included this amount in our distributable cash flow for the three months ended March 31, 2013 as we received this distribution on May 10, 2013. The amount is not reflected in our GAAP net income during the first three months of 2013 because our investment in Augusta is accounted for under the cost method. In accordance with that method, any distributions earned under our preferred interest are not recognized as income until the cash is actually received by the Partnership. The preferred interest was terminated in connection with the closing of the Augusta facility acquisition on April 28, 2014. Unaudited Condensed Consolidated Cash Flow Information (Amounts in thousands)           Three Months   Three Months           Ended   Ended           March 31, 2014   March 31, 2013 ------------------ ----------------- Operating activities $ 21,098 $ 8,466 Investing activities   (1,561)   (39,345) Financing activities   (28,226)   30,902 ------------------ ----------------- Net increase (decrease) in cash $ (8,689) $ 23 ------------------ ----------------- Unaudited Condensed Consolidated Balance Sheet (Amounts in thousands)           March 31, 2014   December 31, 2013 ---------------- ------------------ Assets Current assets:   Cash $ 7,358 $ 16,047   Restricted cash   690   690   Accounts receivable   38,501   31,581   Inventories   8,413   16,265 Prepaid expenses and other current   assets   2,014   1,432 ---------------- ------------------     Total current assets   56,976   66,015 Property, plant and equipment, net   114,312   113,342 Goodwill and intangibles assets, net   69,400   71,936 Preferred interest in Hi-Crush Augusta LLC   47,043   47,043 Other assets   3,544   3,808 ---------------- ------------------     Total assets $ 291,275 $ 302,144 ---------------- ------------------ Liabilities and Partners' Capital Current liabilities:   Accounts payable $ 8,091 $ 8,306   Accrued and other current liabilities   4,806   4,375   Due to Sponsor   5,012   2,571 ---------------- ------------------     Total current liabilities   17,909   15,252   Long-term debt   124,750   138,250   Asset retirement obligation   1,702   1,673 ---------------- ------------------     Total liabilities   144,361   155,175 Commitments and contingencies   -   - Partners' capital:   General partner interest       -   - Limited partner interests, 28,876,342 and 28,865,171 units outstanding,   respectively   137,371   137,426 Class B units, 3,750,000 units   outstanding   9,543   9,543 ---------------- ------------------     Total partners' capital   146,914   146,969 ---------------- ------------------ Total liabilities and partners'     capital $ 291,275 $ 302,144 ---------------- ------------------ Unaudited Production Cost per Ton           Three Months   Three Months           Ended   Ended           March 31, 2014   March 31, 2013 ------------------ ----------------- Sand produced and delivered (tons)   400,401   312,730 Production costs ($ in thousands) $ 6,219 $ 5,509 Production costs per ton $ 15.53 $ 17.62 This announcement is distributed by GlobeNewswire on behalf of GlobeNewswire clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. Source: Hi-Crush Partners LP via GlobeNewswire [HUG#1782879]

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