Acquisitions | Acquisitions Acquisition of Hi-Crush Proppants LLC and Hi-Crush GP LLC On October 21, 2018, the Partnership entered into a contribution agreement with our sponsor pursuant to which the Partnership acquired all of the then outstanding membership interests in the sponsor and the non-economic general partner interest in the Partnership, in exchange for 11,000,000 newly issued common units (the "Sponsor Contribution"). In connection with the acquisition, all of the outstanding incentive distribution rights representing limited partnership interests in the Partnership were canceled and extinguished and the sponsor waived any and all rights to receive contingent consideration payments from the Partnership or our subsidiaries pursuant to certain previously entered into contribution agreements to which it was a party. In connection with this acquisition, the Partnership incurred $3,810 of acquisition related costs during the year ended December 31, 2018, included in general and administrative expenses. As a result of this transaction, the Partnership's historical financial information has been recast to combine the Consolidated Statements of Operations and the Consolidated Balance Sheets of the Partnership with those of our sponsor and general partner as if the combination had been in effect since inception of common control on October 28, 2010. All material transactions between the Partnership, sponsor and general partner have been eliminated. Except for the combination of the Consolidated Statements of Operations and the respective allocation of recast net income (loss), distributions paid by the sponsor to its members prior to October 21, 2018 have not been allocated on a recast basis to the Partnership’s unitholders. Such transactions are presented within the non-controlling interest column in the Consolidated Statement of Partners' Capital as the Partnership and its unitholders would not have participated in these transactions. The following table summarizes the carrying value of our sponsor and general partner's net assets as of October 21, 2018, and the allocation of the purchase price: Net assets of our sponsor and general partner as of October 21, 2018: Cash $ 1,314 Accounts receivable 29 Due from Hi-Crush Partners LP 1,446 Prepaid expenses and other current assets 3,132 Property, plant and equipment 2,087 Accounts payable (2,236 ) Accrued and other current liabilities (2,562 ) Current portion of long-term debt (2,259 ) Other liabilities (86 ) Total carrying value of sponsor and general partner net assets $ 865 Allocation of purchase price Carrying value of sponsor's non-controlling interest prior to Sponsor Contribution $ (453,028 ) Excess purchase price over the acquired interest 453,028 Common control cost of sponsor and general partner acquisition $ — Acquisition of FB Industries Inc. On August 1, 2018, the Partnership acquired FB Industries, a company engaged in the engineering, design and marketing of silo-based frac sand management systems for $45,000 in cash and 1,279,328 of newly issued common units valued at $19,190 . The purchase price as of December 31, 2018 is $74,165 and is comprised of cash consideration of $54,975 which includes preliminary valuation of cash acquired and a working capital adjustment of $9,975 and the value of common units issued. The terms also include the potential for additional future consideration payments based on the achievement of established performance benchmarks through 2021. The acquisition was accounted for under the acquisition method of accounting whereby management assessed the net assets acquired and recognized amounts for the identified assets acquired and liabilities assumed. Refer to Note 12 - Commitments and Contingencies for additional disclosure regarding contingent consideration. The purchase price of $74,165 was allocated to the net assets acquired as follows: Net assets of FB Industries as of August 1, 2018: Cash $ 20,015 Accounts receivable 3,788 Inventories 13,416 Goodwill and intangible assets 69,643 Prepaid expenses and other current assets 2,202 Property, plant and equipment 1,868 Accounts payable (1,628 ) Deferred revenues (13,004 ) Accrued and other current liabilities (13,988 ) Contingent consideration (8,147 ) Fair value of net assets acquired $ 74,165 The operations of FB Industries have been included in the statements prospectively from August 1, 2018. In connection with this acquisition, the Partnership incurred $639 of acquisition related costs during the year ended December 31, 2018, included in general and administrative expenses. Pro forma results of operations for FB Industries have not been presented because the FB Industries acquisition was not material to the consolidated results of operations. Asset Acquisition of Permian Basin Sand Reserves On March 3, 2017, the Partnership completed an acquisition of Permian Basin Sand for total consideration of $200,000 in cash and 3,438,789 newly issued common units to the sellers, valued at $62,242 based on the closing price as of March 3, 2017. Permian Basin Sand owns a 1,226 -acre frac sand reserve strategically positioned in the Permian Basin, located within 75 miles of significant Delaware and Midland Basin activity. The acquisition of Permian Basin Sand was accounted for as an asset acquisition as the acquired assets did not constitute a business. The total purchase consideration of $263,072 is reflected as property, plant and equipment on the Consolidated Balance Sheet. The following table summarizes the total purchase consideration: Cash paid to sellers $ 200,000 Issuance of common units to sellers 62,242 Transactions costs associated with the acquisition 830 Cost of Permian Basin Sand acquisition $ 263,072 Acquisition of Hi-Crush Whitehall LLC and Other Assets On February 23, 2017, the Partnership entered into a contribution agreement with our sponsor to acquire all of the outstanding membership interests in Whitehall and Other Assets, for $140,000 in cash and up to $65,000 of contingent consideration over a two -year period. The Partnership completed this acquisition on March 15, 2017. In connection with this acquisition, the Partnership incurred $588 of acquisition related costs during the year ended December 31, 2017, included in general and administrative expenses. The contingent consideration was based on the Partnership's adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") exceeding certain thresholds for each of the fiscal years ending December 31, 2017 and 2018. As of March 15, 2017, the estimated fair value of the contingent consideration liability based on available information at the time of the acquisition was $14,000 . During the first quarter of 2018, the Partnership paid $20,000 of contingent consideration with respect to the 2017 measurement period. In October 2018, the Partnership completed the acquisition of its sponsor and general partner and the remaining contingent consideration arrangements were terminated. As a result of this transaction, the Partnership's historical financial information has been recast to combine the Consolidated Statements of Operations and the Consolidated Balance Sheets of the Partnership with those of Whitehall and Other Assets as if the combination had been in effect since inception of common control on August 16, 2012. All material transactions between the Partnership, Whitehall and Other Assets have been eliminated. The following table summarizes the carrying value of the Whitehall and Other Assets net assets as of March 15, 2017, and the allocation of the purchase price: Net assets of Hi-Crush Whitehall LLC and Other Assets as of March 15, 2017: Cash $ 198 Inventories 4,941 Prepaid expenses and other current assets 3 Property, plant and equipment 124,811 Accounts payable (938 ) Accrued and other current liabilities (386 ) Due to Hi-Crush Partners LP (2,615 ) Asset retirement obligation (1,716 ) Total carrying value of Whitehall and Other Assets net assets $ 124,298 Allocation of purchase price Carrying value of sponsor's non-controlling interest prior to Whitehall Contribution $ 119,108 Excess purchase price over the acquired interest (a) 34,892 Cost of Whitehall and Other Assets acquisition $ 154,000 (a) The deemed distribution attributable to the purchase price was allocated to the common unitholders and excludes the $14,000 estimated fair value of contingent consideration. Acquisition of Hi-Crush Blair LLC On August 9, 2016, the Partnership entered into a contribution agreement with our sponsor to acquire all of the outstanding membership interests in Blair, the entity that owned our sponsor’s Blair facility, for $75,000 in cash, 7,053,292 of newly issued common units in the Partnership, and payment of up to $10,000 of contingent consideration. The Partnership completed the acquisition of the Blair facility on August 31, 2016. In connection with this acquisition, the Partnership incurred $850 of acquisition related costs during the year ended December 31, 2016, included in general and administrative expenses. The contingent consideration was based on the Partnership's Adjusted EBITDA exceeding certain thresholds for each of the fiscal years ending December 31, 2017 and 2018. As of August 31, 2016, the estimated fair value of the contingent consideration liability based on available information at the time of the acquisition was $5,000 . During the first quarter of 2018, the Partnership paid $5,000 of contingent consideration with respect to the 2017 measurement period. In October 2018, the Partnership completed the acquisition of its sponsor and general partner and the remaining contingent consideration arrangements were terminated. As a result of this transaction, the Partnership's historical financial information has been recast to combine the Consolidated Statements of Operations and the Consolidated Balance Sheets of the Partnership with those of Blair as if the combination had been in effect since inception of common control on July 31, 2014. All material transactions between the Partnership and Blair have been eliminated. The following table summarizes the carrying value of Blair's assets as of August 31, 2016, and the allocation of the cash consideration payable: Net assets of Hi-Crush Blair LLC as of August 31, 2016: Cash $ 75 Inventories 6,310 Prepaid expenses and other current assets 360 Due from Hi-Crush Partners LP 406 Property, plant and equipment 125,565 Other assets 700 Accounts payable (5,653 ) Accrued and other current liabilities (2,269 ) Due to sponsor (311 ) Due to Hi-Crush Partners LP (1,240 ) Asset retirement obligation (380 ) Total carrying value of Blair's net assets $ 123,563 Allocation of purchase price Carrying value of sponsor's non-controlling interest prior to Blair Contribution $ 125,571 Excess carrying value over the purchase price of the acquired interest (a) (45,571 ) Cost of Blair acquisition $ 80,000 (a) The deemed contribution attributable to the purchase price was allocated to the common unitholders and excludes the $5,000 estimated fair value of contingent consideration. Recast Financial Results The following tables present, on a supplemental basis, our recast revenues, net income (loss), net income (loss) attributable to Hi-Crush Partners LP and net income (loss) per limited partner unit giving effect to the Sponsor Contribution, Blair Contribution and Whitehall Contribution, as reconciled to the revenues, net income (loss), net income (loss) attributable to Hi-Crush Partners LP and net income (loss) per limited partner unit of the Partnership. Year Ended December 31, 2018 Partnership Historical Sponsor and General Partner through October 21, 2018 Eliminations Partnership Recast (Supplemental) Revenues $ 842,840 $ — $ — $ 842,840 Net income (loss) $ 140,790 $ (3,195 ) $ — $ 137,595 Net income (loss) attributable to Hi-Crush Partners LP $ 140,790 $ (3,195 ) $ — $ 137,595 Net income per limited partner unit - basic $ 1.46 $ 1.42 Year Ended December 31, 2017 Partnership Historical Sponsor and General Partner Whitehall and Other Assets through Eliminations Partnership Recast (Supplemental) Revenues $ 602,623 $ — $ — $ — $ 602,623 Net income (loss) $ 83,979 $ (6,372 ) $ (1,366 ) $ (79 ) $ 76,162 Net income (loss) attributable to Hi-Crush Partners LP $ 84,005 $ (6,372 ) $ (1,392 ) $ (79 ) $ 76,162 Net income per limited partner unit - basic $ 0.97 $ 0.88 Year Ended December 31, 2016 Partnership Historical Sponsor and General Partner Blair through August 31, 2016 Whitehall and Other Assets Eliminations Partnership Recast (Supplemental) Revenues $ 204,430 $ — $ 13,761 $ 8,275 $ (22,036 ) $ 204,430 Net income (loss) $ (81,412 ) $ (8,506 ) $ 716 $ (3,778 ) $ (45 ) $ (93,025 ) Net income (loss) attributable to Hi-Crush Partners LP $ (81,313 ) $ (8,506 ) $ 716 $ (3,877 ) $ (45 ) $ (93,025 ) Net loss per limited partner unit - basic $ (1.64 ) $ (1.88 ) |