Emerge Energy Services LP — Investor Presentation (August 2013)
30 slides from Emerge Energy Services LP's investor presentation, Aug 22, 2013
Slide 1: Emerge Energy Services LP Investor Presentation
www.emergelp.com PAGE 1 Emerge Energy Services LP Investor Presentation August 2013
Slide 2: Forward Looking Statements
www.emergelp.com PAGE 2 Forward Looking Statements This presentation contains forward-looking statements. These statements can be identified by the use of forward-looking terminology including “may,” “believe,” “will,” “expect,” “anticipate,” or “estimate.” These forward-looking statements involve r
Slide 3: Partnership Overview
www.emergelp.com PAGE 3 Partnership Overview Sand Fuel • Primarily consists of processing & selling transportation mixture (“transmix”) • Also includes wholesale, terminal, and biodiesel operations • Operations in Dallas / Fort Worth and Birmingham, Alabama • Located adjacent to major common carrier
Slide 4: Our MLP Structure
www.emergelp.com PAGE 4 Our MLP Structure • We have a simplified MLP structure – All units are Common Units – Non-economic General Partner – No Incentive Distribution Rights (IDRs) – No Minimum Quarterly Distributions (MQD) • Our Sponsor, Insight Equity, which owns 49% of the Common Units, has fully
Slide 5: Our Sponsor and Organization
www.emergelp.com PAGE 5 Our Sponsor and Organization • Formed in 2002 – Over $800 million of capital under management • Strong track record of delivering investor returns • Invests in middle market companies in asset intensive sectors • Targets strategically viable companies with transformational up
Slide 6: Investment Considerations
www.emergelp.com PAGE 6 Investment Considerations Low Cost Operating Structure Experienced Management Team Significant Organic Growth Capacity High Quality, Strategically Located Assets Stable Cash Flow
Slide 7: Our Business Objective And Strategies
www.emergelp.com PAGE 7 Our Business Objective And Strategies • Sand segment has long-term contracts with creditworthy counterparties • Fuel segment contracts designed to generate stable margins • Continue to seek additional relationships and contracts with similar terms for both segments • Newly bu
Slide 8: Sand Overview
www.emergelp.com PAGE 8 SAND OVERVIEW
Slide 9: Proppants & Hydraulic Fracturing
www.emergelp.com PAGE 9 Proppants & Hydraulic Fracturing • Frac sand, or “proppant,” is used to prop open fissures in hydraulic fracturing • Demand expected to approximately double by 2021 Hydraulic Fracturing 2011 Proppant Consumption Historical & Projected Proppant Demand Source: The Freedonia Gro
Slide 10: Overview of Sand Segment Assets
www.emergelp.com PAGE 10 Overview of Sand Segment Assets The New Auburn and Barron facilities provide access to high performance frac sand favored in the drilling of crude oil, while the Kosse facility provides significant business opportunities in dry gas plays Location Proven Reserves Lease Expira
Slide 11: Proppant Market Differentiation
www.emergelp.com PAGE 11 16-30 Mesh 20-40 Mesh 30-50 Mesh 40-70 Mesh 100+ Mesh Proppant Market Differentiation • EMES mines and processes industry-leading frac sand • There are significant variations in sand characteristics and quality OIL / LIQUIDS (Coarser Sand) DRY GAS (Finer Sand) 0 PSI 2,000 PS
Slide 12: Sand Contracts
www.emergelp.com PAGE 12 Sand Contracts • Contracted fixed minimum volume • Specified price, delivery point, payment terms, and quality specifications • Specific monetary remedy for failure to purchase minimum quantity • Similar to Take or Pay except: – No specific remedy – damages determined in cou
Slide 13: North American Sand Markets
www.emergelp.com PAGE 13 North American Sand Markets EMES’ sand facilities are strategically located to provide customers with direct rail access to every major basin in North America Source: Association of American Railroads & U.S. Geological Survey. Basin Highest Quality Sand Mine Locations SSS Tr
Slide 14: Sand Segment Growth Opportunities
www.emergelp.com PAGE 14 Sand Segment Growth Opportunities Contracts and Customers • In negotiations for additional tons through multi-year, fixed price/volume contracts • Expanding and extending contracts with existing customers Logistics • Able to capture higher margins by delivering to the wellhe
Slide 15: Fuel Segment Overview
www.emergelp.com PAGE 15 FUEL SEGMENT OVERVIEW
Slide 16: Fuel Segment Operations
www.emergelp.com PAGE 16 Fuel Segment Operations Fuel Segment provides a stable base with meaningful growth opportunities (millions of gallons) Transmix Processing Capacity Fuel from Transmix Sold in 2012 Terminal Tankage Capacity Wholesale Fuel Sold in 2012 Biodiesel Refining Capacity Pipeline Conn
Slide 17: Refined Product Pipelines in the US
www.emergelp.com PAGE 17 Refined Product Pipelines in the US Transmix facilities are primarily located along major refined products pipelines Refined Products Pipeline Transmix Facilities EMES’ FP&D Facilities Direct Fuels AEC
Slide 18: Overview of Fuel Segment Business
www.emergelp.com PAGE 18 Overview of Fuel Segment Business Fuel segment revenue comes from a diverse mix of stable margin and fixed-fee activities Truck Pipeline Distillation Terminalling Automobiles Trains Truck Biodiesel Blending Gasoline Additives Biodiesel Facility Gasoline Additives Truck Rack
Slide 19: Fuel Segment Growth Opportunities
www.emergelp.com PAGE 19 Fuel Segment Growth Opportunities Transmix and Throughput • Leverage strong relationships and existing pipeline connectivity • Expand into adjacent geographies • Birmingham facility has significant unused capacity • Biodiesel facility recently restarted • Renewable Identific
Slide 20: Financial Overview
www.emergelp.com PAGE 20 FINANCIAL OVERVIEW
Slide 21: Recent Financial Results
www.emergelp.com PAGE 21 Recent Financial Results Unaudited Financial Results for Emerge Three Months Ended June 30, 2013 Three Months Ended June 30, 2012 Six Months Ended June 30, 2013 Six Months Ended June 30, 2012 Revenue $ 204,929 $ 152,410 $ 356,984 $ 276,430 Cost of Product 171,676 135,429 294
Slide 22: Selected Historical Performance Metrics
www.emergelp.com PAGE 22 Selected Historical Performance Metrics Pro Forma for DF Acquisition / Sand in Tons / Fuel in Thousands of Gallons 2Q 2013 1Q 2013 4Q 2012 3Q 2012 2Q 2012 1Q 2012 Sand Sales Volumes – Barron 288,560 188,064 11,903 Sand Sales Volumes – New Auburn 309,101 297,888 297,084 277,0
Slide 23: Pro Forma Capitalization
www.emergelp.com PAGE 23 Pro Forma Capitalization EMES has a $150 million revolver with an undrawn revolver capacity of $36 million EMES Capitalization as of 06/30/13 ($ in millions) Cash (Unrestricted) $15.0 Revolving Line of Credit 112.6 Long-Term Debt / Capital Lease 6.4 Partners Equity 166.7 Tot
Slide 24: • One of the most attractive frac sand reserves with high percentage of high-crush
www.emergelp.com PAGE 24 • One of the most attractive frac sand reserves with high percentage of high-crush coarse sand • Sand segment rail access on UP and CN railroads enables us to serve all major United States and Canadian shale basins • Fuel assets connected to key refined products pipelines •
Slide 25: Management and Board of Directors
www.emergelp.com PAGE 26 Management and Board of Directors Name Title Years of Industry Experience Senior Management Team Rick Shearer Chief Executive Officer; CEO of SSS (Sand Division) 39 Warren B. Bonham Vice President, Fuel; President, Direct Fuels 28 Robert Lane Chief Financial Officer 19 Board
Slide 26: Unit Price Performance
www.emergelp.com PAGE 27 Unit Price Performance * Consists of market cap weighted share prices of seven comparable variable rate MLPs (ALDW, CVRR, NTI, PDH, RNF, TNH, UAN) EMES AMZ VR MLP (20.0%) (10.0%) 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 5/8/13 5/15/13 5/22/13 5/29/13 6/5/13 6/12/
Slide 27: Liquidity
www.emergelp.com PAGE 28 Liquidity 2013 MLP IPOs Variable Rate MLPs 0.1% 0.3% 0.3% 0.4% 0.8% 1.0% 1.2% 1.8% 2.1% 0.3% 0.3% 1.1% 1.4% 1.5% 4.1% 6.4% 4.2% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% MLP 1 MLP 2 MLP 3 MLP 4 MLP 5 MLP 6 MLP 7 MLP 8 MLP 9 MLP 1 MLP 2 MLP 3 MLP 4 MLP 5 MLP 6 MLP 7 EMES Avg. D
Slide 28: Yield Comparison
www.emergelp.com PAGE 29 Yield Comparison 2013 MLP IPOs Variable Rate MLPs 2.7% 4.6% 5.2% 6.0% 6.3% 7.2% 7.2% 7.3% 11.1% 7.5% 10.0% 12.9% 13.4% 12.9% 19.2% 20.6% 9.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% MLP 1 MLP 2 MLP 3 MLP 4 MLP 5 MLP 6 MLP 7 MLP 8 MLP 9 MLP 1 MLP 2 MLP 3 MLP 5 MLP 4 MLP 6 MLP 7 EME
Slide 29: Non-GAAP Reconciliation
www.emergelp.com PAGE 30 Non-GAAP Reconciliation The following table presents a reconciliation of Adjusted EBITDA to the most directly comparable GAAP financial measures, on a historical basis and pro forma basis, as applicable, for each of the periods indicated. Reconciliation of Adjusted EBITDA to
Slide 30: Emerge Energy Services LP
www.emergelp.com PAGE 31 Emerge Energy Services LP Investor Presentation August 2013
Emerge Energy Services — Investor Presentation (August 2013) on 6ix