Acquisitions | Acquisitions Acquisition of Proppant Logistics LLC On May 7, 2019, the Company acquired the remaining 34% ownership interest in Proppant Logistics, which owns Pronghorn, a leading provider of end-to-end proppant logistics services, for $2,951 in cash and 695,606 newly issued common units. The Company previously held a 66% ownership interest in Proppant Logistics, which was accounted for using the equity method. We remeasured our previously held equity interest in Proppant Logistics at fair value as of the date we obtained control in accordance with the accounting guidance for acquisitions achieved in stages in ASC 805, Business Combinations . As a result, we recognized a gain of $3,612 on the remeasurement of our equity method investment during the second quarter of 2019. The preliminary purchase price of $16,045 was allocated to the net assets acquired as follows: Net assets of Proppant Logistics as of May 7, 2019: Cash $ 1,841 Accounts receivable 7,951 Prepaid expenses and other current assets 782 Property, plant and equipment 205 Other assets 247 Goodwill and intangible assets 15,662 Accounts payable (7,047 ) Accrued and other current liabilities (359 ) Credit facility (3,237 ) Fair value of net assets acquired $ 16,045 The excess of the purchase consideration over the fair value of net assets acquired was recorded as goodwill. The recognition of goodwill is attributable to strategic benefits and expected synergies of our combined operations. Through the completion of acquiring 100% of the ownership interests in Proppant Logistics, the Company began to consolidate the operations of Proppant Logistics prospectively from May 7, 2019. In connection with this acquisition, the Company incurred $266 of acquisition related costs during the six months ended June 30, 2019, included in general and administrative expenses. Pro forma results of operations for Proppant Logistics have not been presented because the acquisition was not material to the consolidated results of operations. Acquisition of BulkTracer Holdings LLC On January 18, 2019, the Company completed the acquisition of BulkTracer, the owner of a logistics software system, PropDispatch, for $3,134 in cash. 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. The preliminary purchase price of $3,134 was allocated to the net assets acquired as follows: Net assets of BulkTracer as of January 18, 2019: Cash $ 15 Accounts receivable 152 Property, plant and equipment 3,030 Equity method investment in Proppant Express Investments, LLC 289 Accounts payable (86 ) Accrued and other current liabilities (166 ) Deferred revenues (100 ) Fair value of net assets acquired $ 3,134 The operations of BulkTracer have been included in the statements prospectively from January 18, 2019. In connection with this acquisition, the Company incurred $100 of acquisition related costs during the six months ended June 30, 2019, included in general and administrative expenses. Pro forma results of operations for BulkTracer have not been presented because the acquisition was not material to the consolidated results of operations. Acquisition of Hi-Crush Proppants LLC and Hi-Crush GP LLC On October 21, 2018, the Company entered into a contribution agreement with the sponsor pursuant to which the Company acquired all of the then outstanding membership interests in the sponsor and the non-economic general partner interest in the Company, in exchange for 11,000,000 newly issued common units. In connection with the acquisition, all of the outstanding incentive distribution rights representing limited partnership interests in the Company were canceled and extinguished and the sponsor waived any and all rights to receive contingent consideration payments from the Company or our subsidiaries pursuant to certain previously entered into contribution agreements to which it was a party. In connection with this acquisition, the Company 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 Company's historical financial information has been recast to combine the Consolidated Statements of Operations and the Consolidated Balance Sheets of the Company 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 transactions between the Company, the 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 Company’s unitholders. Such transactions were presented within the non-controlling interest column in the Consolidated Statement of Partners' Capital as the Company and its unitholders would not have participated in these transactions. The following table summarizes the carrying value of the sponsor's and general partner's net assets as of October 21, 2018, and the allocation of the purchase price: Net assets of the 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 $ — The following tables present, on a supplemental basis, our recast revenues, net income, net income attributable to Hi-Crush and net income per limited partner unit giving effect to the Sponsor Contribution, as reconciled to the revenues, net income, net income attributable to Hi-Crush and net income per limited partner unit of the Company. Three Months Ended June 30, 2018 Company Historical Sponsor and General Partner Eliminations Company Recast (Supplemental) Revenues $ 248,520 $ — $ — $ 248,520 Net income (loss) $ 68,008 $ (1,052 ) $ — $ 66,956 Net income (loss) attributable to Hi-Crush $ 68,008 $ (1,052 ) $ — $ 66,956 Net income per limited partner unit - basic $ 0.68 $ 0.67 Six Months Ended June 30, 2018 Company Historical Sponsor and General Partner Eliminations Company Recast (Supplemental) Revenues $ 466,633 $ — $ — $ 466,633 Net income (loss) $ 121,957 $ (1,570 ) $ — $ 120,387 Net income (loss) attributable to Hi-Crush $ 121,957 $ (1,570 ) $ — $ 120,387 Net income per limited partner unit - basic $ 1.32 $ 1.31 Acquisition of FB Industries Inc. On August 1, 2018, the Company 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 June 30, 2019 is $74,292 and is comprised of cash consideration of $55,102 , which includes valuation of cash acquired, a preliminary working capital adjustment of $10,102 and the value of common units issued. The working capital adjustment is subject to agreement and settlement by the sellers. 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 10 - Commitments and Contingencies for additional disclosure regarding contingent consideration. The preliminary purchase price of $74,292 was allocated to the net assets acquired as follows: Net assets of FB Industries as of August 1, 2018: Cash $ 20,015 Accounts receivable 2,540 Inventories 13,416 Goodwill and intangible assets 71,723 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 ) Deferred tax liabilities (429 ) Contingent consideration (8,423 ) Fair value of net assets acquired $ 74,292 The excess of the purchase consideration over the fair value of net assets acquired was recorded as goodwill. The recognition of goodwill is attributable to the future growth opportunities and synergies of our combined operations. The operations of FB Industries have been included in the statements prospectively from August 1, 2018. In connection with this acquisition, the Company 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 acquisition was not material to the consolidated results of operations. |