Cypress Energy Partners (CELP) Reports Q1 EPS of $0.05, Revenues Beat

Cypress Energy Partners (NYSE: CELP) reported Q1 EPS of $0.05, versus $0.06 reported last year. Revenue for the quarter came in at $90.4 million versus the consensus estimate of $66.6 million.

• Revenues - $90.4 million, up 39% over the prior year;
• Gross margin - $10.0 million, up 23% over the prior year;
• Net income - $1.4 million, up 44% over the prior year;
• Adjusted EBITDA attributable to limited partners - $4.5 million, up 58% over the prior year;
• Net debt leverage - 3.19x, down 39% from the prior year; and
• Cash distribution of $0.21 per unit, consistent with the last eight quarters.

Peter C. Boylan III, CELP’s Chairman and Chief Executive Officer, stated, “We posted a great first quarter with strong revenue growth driven by Tulsa Inspection Resources (“TIR”), our Pipeline Inspection segment. During the fourth quarter of 2018, we began work on the largest contract in the 15-year history of TIR. During the second quarter of 2019, we are expecting very strong results. Pipeline inspection and integrity services, our primary businesses, represented 98% of our revenue and 86% of our gross margin during the first three months of 2019.”

Mr. Boylan continued, “Revenues of our Pipeline Inspection segment grew from $58.0 million in the first quarter of 2018 to $86.2 million in the first quarter of 2019, an increase of 49%. This increase was due to growing demand for our services and increased business development efforts. Gross margins in this segment increased 53% from $5.5 million in the first quarter of 2018 to $8.4 million in the first quarter of 2019.

“Revenues of our Pipeline & Process Services segment decreased in the first quarter of 2019. The decrease was due primarily to adverse weather, which delayed several large projects scheduled to begin in the first quarter of 2019. We currently have the largest project backlog in this segment’s history which we have begun work on in the second quarter of 2019.

“Revenues of our Water Services segment decreased in the first quarter of 2019, due to the sale of our Texas facilities in 2018 and lower crude oil prices which led to a decline in exploration and production activity in the areas around our facilities.

“As previously disclosed, our sponsor Cypress Energy Holdings, LLC, completed two acquisitions in 2018. Our sponsor continues to make progress with both of these acquisitions and intends to offer them to the Partnership once it has accomplished certain developmental goals. These acquisitions would move us into several new pipeline services including water treatment, in-line inspection (“ILI”), equipment rental (which could be converted into a service business before offering this business to the Partnership), and offshore pipeline process services. We remain excited about entering the ILI industry with next-generation technology capable of helping pipeline owners and operators better manage the integrity of their assets in both the energy and municipal water industries.”

Mr. Boylan further stated, “We had an excellent 2018 year with strong growth and we are off to a great start in 2019. The long-term increasing demand for pipeline inspection, integrity services, and water solutions remains strong due to our nation’s aging pipeline infrastructure as well as growing production, and we believe we are well-positioned to capitalize on the opportunities that improving market conditions will create. The future addition of the acquisitions referred to above should also position us to eventually resume increasing our distributions. Our ownership interests continue to remain fully aligned with our unitholders, as our General Partner and insiders collectively own 64% of our common units and an affiliate of our General Partner owns 100% of our preferred units.”

For earnings history and earnings-related data on Cypress Energy Partners (CELP) click here.

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