Hi-Crush Partners (HCLP) Lowers Quarterly Distribution to $0.225, 10.3% Yield; Delivers Prelim. 3Q Estimates

Hi-Crush Partners (NYSE: HCLP) declared a quarterly dividend of $0.225 per share, or $0.9 annualized. This is a 70% decrease from the prior dividend of $0.75.

The dividend will be payable on November 14, 2018, to stockholders of record on November 1, 2018, with an ex-dividend date of October 31, 2018.

The annual yield on the dividend is 10.3 percent.

“In light of our path to corporate conversion, as well as our assessment of current and future market conditions, our current Board of Directors, following the buyout of our general partner, has elected to better align our cash payout to a level more consistent with a growth-focused C-Corp,” said Mr. Rasmus. “The third quarter distribution of $0.225 per common unit reflects the Board’s ongoing commitment to capital return, as well as its desire to maintain a strong balance sheet.”

PRELIMINARY 3Q ESTIMATES

Preliminary Estimate of Selected Third Quarter 2018 Financial and Operational Results

Although the Partnership’s results of operations for the third quarter of 2018 are not yet final, based on the information and data currently available, the Partnership’s sales volumes totaled 2,775,361 tons for the three months ended September 30, 2018. The Partnership estimates, on a preliminary basis, that revenues for the third quarter of 2018 will be within a range of $210.0 to $215.0 million. Net income for the third quarter of 2018 is estimated to be within a range of $25.0 to $27.0 million, and earnings before interest, taxes, depreciation and amortization adjusted for earnings from equity method investments ("Adjusted EBITDA") for the third quarter 2018, is estimated to be within a range of $49.0 to $51.0 million.

This preliminary financial information reflects management’s estimates based solely upon information available to the Partnership as of the date hereof, and is the responsibility of management. The preliminary financial results presented above do not reflect a comprehensive statement of the Partnership’s financial results.

“The market for frac sand began to soften in early August due to a temporary decrease in completions activity, as reflected by the previously announced reduction in our volume outlook for the third quarter,” said Ms. Fulton. “This temporary weakness accelerated throughout September and continues through today. The decision reached on the distribution by the Board reflects these market conditions, and at the same time represents their confidence in the Partnership’s ability to generate strong cash flow in the first half of 2019 and beyond. This growth is supported by the construction and planned commencement of operations at our second Kermit facility in late December 2018, as well as the expansion of Wyeville starting up in the first quarter of 2019, both of which are backed by significant contracts with E&P customers. The coverage ratio on the third quarter distribution is approximately 1.8 times, reflecting our commitment to funding our capital return program without incurring debt, and better enabling our ongoing investment in the growth of the Partnership, particularly in our logistics capabilities.

“We will continue to evaluate each project on its own merits, and relative to other potential uses of cash, to provide the best returns for our unitholders today and in the future,” continued Ms. Fulton. “The Board retains significant flexibility with respect to future capital return decisions, and has not established a long-term distribution policy as we continue to perform the analysis and complete the steps required to effect a C-Corp conversion in the future.”

Any decision with respect to distribution amounts will be made by the Partnership’s Board of Directors on a quarterly basis, subject to company performance and market conditions. The evaluation of corporate structure transactions is subject to significant uncertainties, including general industry and market conditions. The Partnership has from time to time considered a number of potential corporate structure changes, such as corporate conversion. It is not possible, at this time, to determine whether or not any form of a corporate structure change may be consummated or to define the timing of such a transaction. Any such corporate structure change may require approval of the Partnership’s unitholders.

For a dividend history and other dividend-related data on Hi-Crush Partners (HCLP) click here.

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