Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 07, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Cypress Energy Partners, L.P. | |
Entity Central Index Key | 1,587,246 | |
Document Type | 10-Q | |
Trading Symbol | CELP | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 11,946,040 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 11,230 | $ 24,508 |
Trade accounts receivable, net | 51,027 | 41,693 |
Prepaid expenses and other | 1,511 | 2,294 |
Assets held for sale | 2,172 | |
Total current assets | 63,768 | 70,667 |
Property and equipment: | ||
Property and equipment, at cost | 23,694 | 22,700 |
Less:Accumulated depreciation | 10,666 | 9,312 |
Total property and equipment, net | 13,028 | 13,388 |
Intangible assets, net | 23,433 | 25,477 |
Goodwill | 50,370 | 53,435 |
Debt issuance costs, net | 1,391 | |
Other assets | 285 | 236 |
Total assets | 152,275 | 163,203 |
Current liabilities: | ||
Accounts payable | 2,230 | 3,757 |
Accounts payable - affiliates | 3,656 | 3,173 |
Accrued payroll and other | 14,132 | 9,109 |
Liabilities held for sale | 97 | |
Income taxes payable | 708 | 646 |
Current portion of long-term debt | 136,293 | |
Total current liabilities | 20,726 | 153,075 |
Long-term debt | 76,129 | |
Other non-current liabilities | 369 | 143 |
Total liabilities | 97,224 | 153,218 |
Partners' capital: | ||
Common units (11,946,040 and 11,889,958 units outstanding at September 30, 2018 and December 31, 2017, respectively) | 35,266 | 34,614 |
Preferred units (5,769,231 units outstanding at September 30, 2018) | 44,671 | |
General partner | (25,876) | (25,876) |
Accumulated other comprehensive loss | (2,616) | (2,677) |
Total partners' capital | 51,445 | 6,061 |
Noncontrolling interests | 3,606 | 3,924 |
Total owners' equity | 55,051 | 9,985 |
Total liabilities and owners' equity | $ 152,275 | $ 163,203 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Common units outstanding (in shares) | 11,946,040 | 11,889,958 |
Preferred units outstanding (in shares) | 5,769,231 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue | $ 84,778 | $ 77,682 | $ 226,072 | $ 216,971 |
Costs of services | 71,870 | 68,292 | 194,092 | 192,643 |
Gross margin | 12,908 | 9,390 | 31,980 | 24,328 |
Operating costs and expense: | ||||
General and administrative | 6,064 | 5,574 | 17,341 | 16,013 |
Depreciation, amortization and accretion | 1,124 | 1,184 | 3,368 | 3,561 |
Impairments | 3,598 | |||
(Gains) losses on asset disposals, net | (822) | 208 | (4,137) | 95 |
Operating income | 6,542 | 2,424 | 15,408 | 1,061 |
Other (expense) income: | ||||
Interest expense, net | (1,283) | (1,907) | (4,907) | (5,411) |
Debt issuance cost write-off | (114) | |||
Foreign currency gains (losses) | 97 | 557 | (354) | 824 |
Other, net | 95 | 17 | 302 | 122 |
Net income (loss) before income tax expense | 5,451 | 1,091 | 10,335 | (3,404) |
Income tax expense | 497 | 529 | 865 | 458 |
Net income (loss) | 4,954 | 562 | 9,470 | (3,862) |
Net income (loss) attributable to noncontrolling interests | 289 | 8 | 673 | (1,290) |
Net income (loss) attributable to partners / controlling interests | 4,665 | 554 | 8,797 | (2,572) |
Net loss attributable to general partner | (1,000) | (2,750) | ||
Net income attributable to limited partners | 4,665 | 1,554 | 8,797 | 178 |
Net income attributable to preferred unitholder | 1,045 | 1,412 | ||
Net income attributable to common unitholders | $ 3,620 | $ 1,554 | $ 7,385 | $ 178 |
Net income per common limited partner unit: | ||||
Basic (in dollars per unit) | $ 0.30 | $ 0.13 | $ 0.62 | $ 0.02 |
Diluted (in dollars per unit) | $ 0.26 | $ 0.13 | $ 0.59 | $ 0.02 |
Weighted average common units outstanding: | ||||
Basic (in unit) | 11,940,032 | 11,884,196 | 11,924,183 | 10,902,838 |
Diluted (in unit) | 18,140,691 | 11,994,881 | 14,970,334 | 11,111,454 |
Subordinated Units [Member] | ||||
Weighted average common units outstanding: | ||||
Weighted average subordinated units outstanding - basic and diluted | 974,670 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 4,954 | $ 562 | $ 9,470 | $ (3,862) |
Other comprehensive income (loss) - foreign currency translation | (71) | (207) | 61 | (187) |
Comprehensive income (loss) | 4,883 | 355 | 9,531 | (4,049) |
Comprehensive income attributable to preferred unitholders | 1,045 | 1,412 | ||
Comprehensive income (loss) attributable to noncontrolling interests | 289 | 8 | 673 | (1,290) |
Comprehensive loss attributable to general partner | (1,000) | (2,750) | ||
Comprehensive income (loss) attributable to common unitholders | $ 3,549 | $ 1,347 | $ 7,446 | $ (9) |
Unaudited Condensed Consolida_5
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Operating activities: | ||
Net income (loss) | $ 9,470 | $ (3,862) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation, amortization and accretion | 4,186 | 4,378 |
Impairments | 3,598 | |
(Gain) loss on asset disposals, net | (4,137) | 95 |
Interest expense from debt issuance cost amortization | 429 | 443 |
Debt issuance cost write-off | 114 | |
Equity-based compensation expense | 908 | 1,136 |
Equity in earnings of investee | (169) | (98) |
Distributions from investee | 113 | 75 |
Deferred tax benefit, net | (361) | |
Non-cash allocated expenses | 1,750 | |
Foreign currency (gains) losses, net | 354 | (824) |
Changes in assets and liabilities: | ||
Trade accounts receivable | (9,395) | (11,583) |
Prepaid expenses and other | 891 | (765) |
Accounts payable and accrued payroll and other | 4,129 | 6,552 |
Income taxes payable | 62 | (271) |
Net cash provided by operating activities | 6,955 | 263 |
Investing activities: | ||
Proceeds from fixed asset disposals | 12,762 | 1,578 |
Purchases of property and equipment, excluding capital leases | (5,466) | (1,182) |
Net cash provided by investing activities | 7,296 | 396 |
Financing activities: | ||
Issuance of preferred units, net of issuance costs | 43,259 | |
Repayments of long-term debt | (60,771) | |
Debt issuance cost payments | (1,327) | |
Taxes paid related to net share settlement of equity-based compensation | (131) | (120) |
Contributions attributable to general partner | 1,000 | |
Capital lease repayments | (8) | |
Distributions to limited partners | (7,510) | (9,813) |
Distributions to noncontrolling interests | (991) | (12) |
Net cash used in financing activities | (27,479) | (8,945) |
Effect of exchange rates on cash | 11 | 831 |
Net decrease in cash and cash equivalents and restricted cash equivalents | (13,217) | (7,455) |
Cash and cash equivalents (including restricted cash equivalents of $490 at December 31, 2017 and December 31, 2016), beginning of period | 24,998 | 27,183 |
Cash and cash equivalents (including restricted cash equivalents of $551 at September 30, 2018 and $490 at September 30, 2017), end of period | 11,781 | 19,728 |
Non-cash items: | ||
Accounts payable excluded from capital expenditures | 75 | $ 320 |
Acquisitions of property and equipment included in liabilities | $ 335 |
Unaudited Condensed Consolida_6
Unaudited Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Cash Flows [Abstract] | ||||
Restricted cash equivalents | $ 551 | $ 490 | $ 490 | $ 490 |
Unaudited Condensed Consolida_7
Unaudited Condensed Consolidated Statement of Owners Equity (Unaudited) - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands | Common Units [Member] | Preferred Units [Member] | General Partner [Member] | Noncontrolling Interest [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Owners' equity at Dec. 31, 2017 | $ 34,614 | $ (25,876) | $ 3,924 | $ (2,677) | $ 9,985 | |
Net income | 7,385 | $ 1,412 | 673 | 9,470 | ||
Issuance of preferred units, net | 43,259 | 43,259 | ||||
Foreign currency translation adjustment | 61 | 61 | ||||
Distribution to partners | (7,510) | (7,510) | ||||
Distributions to non-controlling interest | (991) | (991) | ||||
Equity-based compensation | 908 | 908 | ||||
Taxes paid related to net share settlement of equity-based compensation | (131) | (131) | ||||
Owners' equity at Sep. 30, 2018 | $ 35,266 | $ 44,671 | $ (25,876) | $ 3,606 | $ (2,616) | $ 55,051 |
Organization and Operations
Organization and Operations | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | 1. Organization and Operations Cypress Energy Partners, L.P. (the “Partnership”) is a Delaware limited partnership formed in 2013 to provide independent pipeline inspection and integrity services to producers, public utility companies, and pipeline companies and to provide saltwater disposal and other water and environmental services to U.S. onshore oil and natural gas producers and trucking companies. Trading of our common units began January 15, 2014 on the New York Stock Exchange under the symbol “CELP”. Our business is organized into the Pipeline Inspection Services (“Pipeline Inspection”), Pipeline & Process Services (“Pipeline & Process Services”), and Water and Environmental Services (“Water Services”) segments. The Pipeline Inspection segment generates revenue primarily by providing essential inspection and integrity services on a variety of infrastructure assets including midstream pipelines, gathering systems, and distribution systems. Services include non-destructive examination, mechanical integrity, inline support, PIG tracking, survey, data gathering, and supervision of third-party contractors. Our results in this segment are driven primarily by the number of inspectors that perform services for our customers and the fees that we charge for those services, which depend on the type, skills, technology, equipment, and number of inspectors used on a particular project, the nature of the project, and the duration of the project. The number of inspectors engaged on projects is driven by the type of project, prevailing market rates, the age and condition of customers’ assets including pipelines, gas plants, compression stations, storage facilities, and gathering and distribution systems including the legal and regulatory requirements relating to the inspection and maintenance of those assets. Our customers are also billed for per diem charges, mileage, and other reimbursement items. Revenue and costs in this segment may be subject to seasonal variations and interim activity may not be indicative of yearly activity, considering many of our customers develop yearly operating budgets and enter into contracts with us during the winter season for work to be performed during the remainder of the year. Additionally, inspection work throughout the United States during the winter months (especially in the northern states) may be hampered or delayed due to inclement weather, thus affecting our revenue and costs. The Pipeline & Process Services segment (formerly our Integrity Services segment) generates revenue primarily by providing essential midstream services including hydrostatic testing services and chemical cleaning to energy companies and pipeline construction companies of newly-constructed and existing pipelines and related infrastructure. We generally charge our customers in this segment on a fixed-bid basis, depending on the size and length of the pipeline being tested, the complexity of services provided, and the utilization of our work force and equipment. Our results in this segment are driven primarily by the number of field personnel that perform services for our customers and the fees that we charge for those services, which depend on the type and number of field personnel used on a particular project, the type of equipment used and the fees charged for the utilization of that equipment, and the nature and duration of the project. The Water Services segment owns and operates nine (9) Environmental Protection Agency Class II saltwater disposal facilities in the Williston Basin region of North Dakota. Eight (8) of the facilities are wholly-owned and we have ten (10) pipelines from multiple E&P customers connected to these saltwater disposal facilities, including two (2) that were developed and are owned by the Partnership. Approximately 95% of our disposal water is produced water that is generated during the production life of an oil and gas well and approximately 41% of our water is delivered via pipeline to our saltwater disposal facilities. We currently serve in excess of 75 customers. Our saltwater disposal facilities provide essential midstream services to oil and natural gas upstream producers and their transportation companies. All of the saltwater disposal facilities utilize specialized equipment and remote monitoring to minimize the facilities’ downtime and increase the facilities’ efficiency for peak utilization. These facilities also utilize oil skimming and recovery processes that remove residual oil from water delivered to our saltwater disposal facilities via pipeline or truck. We sell the oil recovered from these skimming processes, which contributes to our revenues. In addition to these saltwater disposal facilities, we provide management and staffing services to a saltwater disposal facility in which we own a 25% ownership interest (see Note 7). |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The Unaudited Condensed Consolidated Financial Statements as of and for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 include our accounts and those of our controlled subsidiaries. Investments over which we exercise significant influence, but do not control, are accounted for using the equity method of accounting. Intercompany transactions and account balances have been eliminated in consolidation. The Unaudited Condensed Consolidated Balance Sheet at December 31, 2017 is derived from our audited financial statements. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Unaudited Condensed Consolidated Financial Statements include all adjustments considered necessary for a fair presentation of the consolidated financial position and consolidated results of operations for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed herein. Accordingly, the Unaudited Condensed Consolidated Financial Statements do not include all of the information and notes required by GAAP for complete consolidated financial statements. However, we believe that the disclosures made are adequate to make the information not misleading. These interim Unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2017 included in our Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. Use of Estimates in the Preparation of Financial Statements The preparation of our Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. Significant Accounting Policies Our significant accounting policies are consistent with those disclosed in Note 2 to our audited financial statements as of and for the year ended December 31, 2017 included in our Form 10-K, except for the adoption of Accounting Standards Update (“ASU”) 2014-09 - Revenue from Contracts with Customers Statement of Cash Flows - Restricted Cash and for disclosure regarding variable consideration . Accounts Receivable and Allowance for Bad Debts We grant unsecured credit to customers under normal industry standards and terms, and have established policies and procedures that allow for an evaluation of each of our customer’s creditworthiness. We typically receive payment from our customers 45 to 90 days after the services have been performed. general and administrative expense Income Taxes As a limited partnership, we generally are not subject to federal, state, or local income taxes. The tax on our net income is generally borne by the individual partners. Net income (loss) for financial statement purposes may differ significantly from taxable income (loss) of the partners as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under our partnership agreement. The aggregated difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined because information regarding each partner’s tax attributes is not available to us. The income of Tulsa Inspection Resources – Canada, ULC, our Canadian subsidiary, is taxable in Canada. Tulsa Inspection Resources – PUC, LLC, a subsidiary of our Pipeline Inspection segment that performs pipeline inspection services for utility customers, and Brown Integrity – PUC, LLC, a subsidiary in which we own a 51% membership interest, have elected to be taxed as corporations for U.S. federal income tax purposes, and therefore, these subsidiaries are subject to U.S. federal and state income tax. The amounts recognized as income tax expense (benefit), income taxes payable, and deferred tax assets / liabilities in our Unaudited Condensed Consolidated Financial Statements include the Canadian income taxes and U.S. federal and state income taxes referred to above, as well as partnership-level taxes levied by various states, which primarily include franchise taxes assessed by the state of Texas. As a publicly-traded partnership, we are subject to a statutory requirement that 90% of our total gross income represent “qualifying income” (as defined by the Internal Revenue Code, related Treasury Regulations, and Internal Revenue Service pronouncements), determined on a calendar-year basis. If our qualifying income does not meet this statutory requirement, we could be taxed as a corporation for federal and state income tax purposes. Our income has met the statutory qualifying income requirement each year since our initial public offering (“IPO”). Noncontrolling Interest We own a 51% interest in Brown Integrity, LLC (“Brown”) and a 49% interest in CF Inspection Management, LLC (“CF Inspection”). The accounts of these subsidiaries are included in our Unaudited Condensed Consolidated Financial Statements. The portion of the net income (loss) of these entities that is attributable to outside owners is reported as net income (loss) attributable to noncontrolling interests noncontrolling interests Property and Equipment Property and equipment consists of land, land and leasehold improvements, buildings, facilities, wells and related equipment, computer and office equipment, and vehicles. We record property and equipment at cost. Costs of improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repairs are expensed as incurred. We depreciate property and equipment on a straight-line basis over the estimated useful lives of the assets. Upon retirement or disposition of an asset, we remove the cost and related accumulated depreciation from the balance sheet and report the resulting gain or loss, if any, in the Unaudited Condensed Consolidated Statements of Operations. We assess property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, changes in regulatory and political environments, and historical and future cash flow and profitability measurements. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, we recognize an impairment charge for the excess of the carrying value of the asset over its estimated fair value. Determinations as to whether and how much an asset is impaired involve management estimates on highly uncertain matters such as future commodity prices, the effects of inflation on operating expenses, and the outlook for national or regional market supply and demand for the services we provide. Identifiable Intangible Assets Our intangible assets consist primarily of customer relationships, trade names, and our database of inspectors. We recorded these intangible assets as part of our accounting for the acquisitions of businesses, and we amortize these assets on a straight-line basis over their estimated useful lives, which typically range from 5 – 20 years. We review our intangible assets for impairment whenever events or circumstances indicate that the asset group to which they relate may be impaired. To perform an impairment assessment, we first determine whether the cash flows expected to be generated from the asset group exceed the carrying value of the asset group. If such estimated cash flows do not exceed the carrying value of the asset group, we reduce the carrying values of the assets to their fair values and record a corresponding impairment loss. Goodwill Goodwill is not amortized, but is subject to an annual review for impairment on November 1 (or at other dates if events or changes in circumstances indicate that the carrying value of goodwill may be impaired) at a reporting unit level. The reporting units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business that relates to the applicable goodwill is managed or operated. We have determined that our Pipeline Inspection, Pipeline & Process Services, and Water Services segments are the appropriate reporting units for testing goodwill impairment. To perform a goodwill impairment assessment, we perform an analysis to assess whether it is more likely than not that the fair value of the reporting unit exceeds its carrying value. If we determine that it is more likely than not that the carrying value of the reporting unit exceeds its fair value, we reduce the carrying value of goodwill and record a corresponding impairment expense. Accrued Payroll and Other Accrued payroll and other September 30, 2018 December 31, 2017 (in thousands) Accrued payroll $ 11,148 $ 6,893 Customer deposits 1,893 1,510 Other 1,091 706 $ 14,132 $ 9,109 Foreign Currency Translation Our Unaudited Condensed Consolidated Financial Statements are reported in U.S. dollars. We translate our Canadian-dollar-denominated assets and liabilities into U.S. dollars at the exchange rate in effect at the balance sheet date. We translate our Canadian-dollar-denominated revenues and expenses into U.S. dollars at the average exchange rate in effect during the period in which the applicable revenues and expenses were recorded. Our Unaudited Condensed Consolidated Balance Sheet at September 30, 2018 includes $2.6 million of accumulated other comprehensive loss accumulated other comprehensive loss partners’ capital Our Canadian subsidiary has certain intercompany payables to our U.S.-based subsidiaries. These intercompany payables and receivables among our consolidated subsidiaries are eliminated in our Unaudited Condensed Consolidated Balance Sheets. Beginning April 1, 2017, we report currency translation adjustments on these intercompany payables and receivables within foreign currency gains (losses) other comprehensive income (loss) New Accounting Standards On January 1, 2018, we adopted the following new accounting standards issued by the Financial Accounting Standards Board (“FASB”); The FASB issued Accounting Standards Update (“ASU”) 2014-09 – Revenue from Contracts with Customers The FASB issued ASU 2016-18 - Statement of Cash Flows - Restricted Cash Other accounting guidance proposed by the FASB that may impact our Unaudited Condensed Consolidated Financial Statements, which we have not yet adopted includes: The FASB issued ASU 2016-02 – Leases We plan to make accounting policy elections to not capitalize leases with a lease term of twelve months or less and to not separate lease and non-lease components for all asset classes. We also plan to elect the package of practical expedients within ASU 2016-02 that allows an entity to not reassess prior to the effective date (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases, but do not plan to elect the practical expedient of hindsight when determining the lease term of existing contracts at the effective date. In July 2018, the FASB issued ASU 2018-11 – Targeted Improvements related to the addition of the right-of-use asset and associated lease liability |
Impairments
Impairments | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Impairments | 3. Impairments During the three months ended March 31, 2017, the largest customer of TIR-Canada, the Canadian subsidiary of our Pipeline Inspection segment, completed a bid process and selected different service providers for its inspection projects. These rates were lower than we were prepared to extend to this client. In consideration of the expiration and non-renewal of this contract, we recorded impairments to the carrying values of certain intangible assets of $1.3 million during the three months ended March 31, 2017. Of this amount, $1.1 million related to customer relationships and $0.2 million related to trade names. During the three months ended March 31, 2017, we recorded an impairment to the remaining $1.6 million carrying value of the goodwill of our Pipeline & Process Services segment. Revenues of this segment were lower than we had expected for the first quarter of 2017. In addition, for this segment, the level of bidding activity for work is typically high in March and April once customers have finalized their budgets for the upcoming year. While we won bids on a number of projects, and our backlog began to improve, the improvement in the backlog was slower than we had originally anticipated, and we revised downward our expectations of the near-term operating results of the segment. We estimated the fair value of the Pipeline & Process Services segment utilizing the income approach (discounted cash flows valuation method), which is a Level 3 input as defined in ASC 820 – Fair Value Measurement During the three months ended March 31, 2017, we recorded an impairment of $0.7 million to the property and equipment at one of our saltwater disposal facilities. We have experienced low volumes at this facility due to competition in the area and to low levels of exploration and production activity near the facility. The impairment reduced the carrying value of the facility to $0.1 million, all of which is attributable to land. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt Credit Agreement On May 29, 2018, we entered into an amended and restated credit agreement (as amended and restated, the “Credit Agreement”) that provides up to $90.0 million in borrowing capacity, subject to certain limitations, and contains an accordion feature that allows us to increase the borrowing capacity to $110.0 million if the lenders agree to increase their commitments in the future or if other lenders join the facility. The three-year Credit Agreement matures May 29, 2021. The obligations under the Credit Agreement are secured by a first priority lien on substantially all of our assets. The credit agreement as it existed prior to the May 29, 2018 amendment will hereinafter be referred to as the “Previous Credit Agreement” or, together with the Credit Agreement, as the “Credit Agreements”. Outstanding borrowings at September 30, 2018 were $76.1 million and are reflected as long-term debt debt issuance costs, net current portion of long-term debt We incurred certain debt issuance costs associated with the Previous Credit Agreement, which we were amortizing on a straight-line basis over the life of the Previous Credit Agreement. Upon amending the Credit Agreement in May 2018, we wrote off $0.1 million of these debt issuance costs and reported this expense within debt issuance cost write-off All borrowings under the Credit Agreement bear interest, at our option, on a leveraged based grid pricing at (i) a base rate plus a margin of 1.5% to 3.0% per annum (“Base Rate Borrowing”) or (ii) an adjusted LIBOR rate plus a margin of 2.5% to 4.0% per annum (“LIBOR Borrowings”). The applicable margin is determined based on the leverage ratio of the Partnership, as defined in the Credit Agreement. Generally, the interest rate on our borrowings ranged between 4.74% and 5.95% for the nine months ended September 30, 2018 and 3.90% and 4.99% for the nine months ended September 30, 2017. Interest on Base Rate Borrowings is payable monthly. Interest on LIBOR Borrowings is paid upon maturity of the underlying LIBOR contract, but no less often than quarterly. Commitment fees are charged at a rate of 0.50% on any unused credit and are payable quarterly. Interest paid during the three months ended September 30, 2018 and 2017 was $1.1 million and $1.7 million respectively, including commitment fees. Interest paid during the nine months ended September 30, 2018 and 2017 was $4.6 million and $5.0 million, respectively, including commitment fees. The Credit Agreement contains various customary covenants and restrictive provisions. The Credit Agreement also requires maintenance of certain financial covenants, including a leverage ratio (as defined in the Credit Agreement) of not more than 4.0 to 1.0 and an interest coverage ratio (as defined in the Credit Agreement) of not less than 3.0 to 1.0. At September 30, 2018, our leverage ratio was 3.32 to 1.0 and our interest coverage ratio was 5.24 to 1.0, pursuant to the Credit Agreement. Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the Credit Agreement, the lenders may declare any outstanding principal, together with any accrued and unpaid interest, to be immediately due and payable and may exercise the other remedies set forth or referred to in the Credit Agreement. We were in compliance with all debt covenants as of September 30, 2018. In addition, the Credit Agreement restricts our ability to make distributions on, or redeem or repurchase, our equity interests, with certain exceptions detailed in the Credit Agreement. However, we may make distributions of available cash so long as, both at the time of the distribution and after giving effect to the distribution, no default exists under the Credit Agreement, we are in compliance with the financial covenants in the Credit Agreement, and we have at least $5.0 million of unused capacity on the Credit Agreement at the time of the distribution. Capital Leases During the third quarter of 2018, our Pipeline and Process Services and Water Services segments leased vehicles for $0.3 million under lease agreements at interest rates of 6.16% that are classified as capital leases. The leased vehicles are amortized on a straight-line basis over the lease terms of four years. Minimum lease payments will be less than $0.1 million in 2018 and $0.1 million for the years ended December 31, 2019 through 2021. The $0.3 million capital lease obligation is reflected in the Unaudited Condensed Consolidated Balance Sheet at September 30, 2018 in accrued payroll and other other non-current liabilities |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 5. Income Taxes The income tax expense |
Equity
Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Equity | 6. Equity Series A Preferred Units On May 29, 2018 (the “Closing Date”), we entered into a Series A Preferred Unit Purchase Agreement (the “Preferred Unit Purchase Agreement”) with Stephenson Equity, Co. No. 3 which subsequently assigned the units to Charles C. Stephenson, Jr. (the “Purchaser”), an affiliate of our General Partner, where we issued and sold in a private placement 5,769,231 Series A Preferred Units representing limited partner interests in the Partnership (the “Preferred Units”) to the Purchaser for a cash purchase price of $7.54 per Preferred Unit, resulting in proceeds to the Partnership of $43.5 million. We used proceeds from the transaction to reduce outstanding borrowings on our revolving credit facility. Concurrent with the closing of this transaction, we entered into an amended and restated Credit Agreement dated as of May 29, 2018, to amend and restate the terms of our credit facility, as more fully described in Note 4. The Preferred Unit Purchase Agreement also provides us with the right to exercise an option at any time during the six months after the Closing Date, to issue and sell to the Purchaser up to $6.5 million of additional Preferred Units. The Preferred Unit Purchase Agreement sets forth the method of determining the purchase price of these additional units, which price would, in turn, determine the number of units to be issued and sold. The Preferred Unit Purchase Agreement contains customary representations, warranties, and covenants of the Partnership and the Purchaser. The Partnership and the Purchaser agreed to indemnify each other and their respective officers, directors, managers, employees, agents, counsel, accountants, investment bankers, and other representatives against certain losses resulting from breaches of their respective representations, warranties, and covenants, subject to certain negotiated limitations and survival periods set forth in the Preferred Unit Purchase Agreement. Pursuant to the Preferred Unit Purchase Agreement, and in connection with the closing of this transaction, our General Partner executed the First Amendment to First Amended and Restated Agreement of Limited Partnership of the Partnership, which authorizes and establishes the rights and preferences of the Preferred Units. The Preferred Units shall have voting rights that are identical to the voting rights of the common units into which such Preferred Units would be converted at the then-applicable conversion rate. The Purchaser is entitled to receive quarterly distributions that represent an annual return of 9.5% on the Preferred Units. Of this 9.5% annual return, we will be required to pay at least 2.5% in cash and will have the option to pay the remaining 7.0% in kind (in the form of issuing additional preferred units) for the first twelve quarters after the Closing Date. We intend to pay the first distribution on the Preferred Units of $1.4 million in November 2018 in cash. After the third anniversary of the Closing Date, the Purchaser will have the option to convert the Preferred Units into common units on a one-for-one basis. If certain conditions are met after the third anniversary of the Closing Date, we will have the option to cause the Preferred Units to convert to common units. After the third anniversary of the Closing Date, we will also have the option to redeem the Preferred Units. The Partnership may redeem the Preferred Units (a) before November 29, 2018 at a redemption price equal to 100% of the issue price (plus $0.2 million), (b) at any time after the third anniversary of the closing date and on or prior to the fourth anniversary of the closing date at a redemption price equal to 105% of the issue price, and (c) at any time after the fourth anniversary of the closing date at a redemption price equal to 101% of the issue price. Earnings Per Unit Our net income (loss) Income attributable to our preferred unitholder Net income (loss) attributable to noncontrolling interests Net loss attributable to the General Partner Net income (loss) attributable to common unitholders Basic net income (loss) per common limited partner unit net income (loss) attributable to common unitholders Diluted net income (loss) per common limited partner unit net income attributable to preferred unitholder basic net income per common limited partner unit Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands, except per unit data) Net income attributable to common unitholders $ 3,620 $ 1,554 $ 7,385 $ 178 Weighted average common units outstanding 11,940 11,884 11,924 10,903 Basic net income per common limited partner unit $ 0.30 $ 0.13 $ 0.62 $ 0.02 The following summarizes the calculation of the diluted net income per common limited partner unit Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands, except per unit data) Net income attributable to common unitholders $ 3,620 $ 1,554 $ 7,385 $ 178 Net income attributable to preferred unitholder 1,045 — 1,412 — Net income attributable to limited partners $ 4,665 $ 1,554 $ 8,797 $ 178 Weighted average common units outstanding 11,940 11,884 11,924 10,903 Effect of dilutive securities: Weighted average preferred units outstanding 5,769 — 2,628 — Long-term incentive plan unvested units 431 111 418 208 Diluted weighted average common units outstanding 18,140 11,995 14,970 11,111 Diluted net income per common limited partner unit $ 0.26 $ 0.13 $ 0.59 $ 0.02 Cash Distributions The following table summarizes the cash distributions declared and paid to our limited partners since our IPO. Total Cash Per Unit Cash Total Cash Distributions Payment Date Distributions Distributions to Affiliates (a) (in thousands) Total 2014 Distributions 1.104646 13,064 8,296 Total 2015 Distributions 1.625652 19,232 12,284 Total 2016 Distributions 1.625652 19,258 12,414 February 13, 2017 0.406413 4,823 3,107 May 13, 2017 0.210000 2,495 1,606 August 12, 2017 0.210000 2,495 1,607 November 14, 2017 0.210000 2,497 1,608 Total 2017 Distributions 1.036413 12,310 7,928 February 14, 2018 0.210000 2,498 1,599 May 15, 2018 0.210000 2,506 1,604 August 14, 2018 0.210000 2,506 1,604 November 14, 2018 (b) 0.210000 2,509 1,606 Total 2018 Distributions 0.840000 10,019 6,413 Total Distributions (since IPO) $ 6.232363 $ 73,883 $ 47,335 (a) Approximately 63.9% of the Partnership’s outstanding common units at September 30, 2018 were held by affiliates. (b) Third quarter 2018 distribution was declared and will be paid in the fourth quarter of 2018. In addition, the owner of the Series A Preferred Units is entitled to receive quarterly distributions that represent an annual return of 9.5% on the Preferred Units. Of this 9.5% annual return, we will be required to pay at least 2.5% in cash and will have the option to pay the remaining 7.0% in kind (in the form of issuing additional preferred units) for the first twelve quarters after the Closing Date. We expect to pay the first distribution on the Preferred Units in November 2018 in the amount of $1.4 million in cash. Equity Compensation Our General Partner has adopted a long-term incentive plan (“LTIP”) that authorizes the issuance of up to 1,182,600 common units. Certain directors and employees of the Partnership have been awarded Phantom Restricted Units under the terms of the LTIP. The fair value of the awards is determined based on the quoted market value of the publicly-traded common units at each grant date, adjusted for a discount to reflect the fact that distributions are not paid on the restricted units during the vesting period. Compensation expense is recorded on a straight-line basis over the vesting period of each grant. We recorded expense of $0.9 million and $1.1 million during the nine months ended September 30, 2018 and 2017, respectively, related to the unit awards. We have historically granted annual LTIP awards to key employees in the second quarter of each year. The following table summarizes the LTIP unit activity for the nine months ended September 30, 2018 and 2017: Nine Months Ended September 30, 2018 2017 Weighted Weighted Average Average Grant Grant Number Date Fair Number Date Fair of Units Value / Unit of Units Value / Unit Unvested units at January 1 664,509 $ 8.46 573,902 $ 9.86 Unvested units granted 396,484 $ 3.24 249,120 $ 7.11 Units vested (75,222 ) $ 13.56 (43,930 ) $ 16.56 Unvested units forfeited (85,092 ) $ 7.07 (39,722 ) $ 8.51 Unvested units at September 30 900,679 $ 5.87 739,370 $ 8.61 The majority of the awards vest in three tranches, with one-third of the units vesting three years from the grant date, one-third vesting four years from the grant date, and one-third vesting five years from the grant date. However, certain of the awards have different, and typically shorter, vesting periods. One grant of 29,602 units vests three years from the grant date, contingent upon the recipient meeting certain performance targets. Total unearned compensation associated with the LTIP was $3.2 million at September 30, 2018, and the awards had an average remaining life of 2.31 years. |
Related-Party Transactions
Related-Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | 7. Related-Party Transactions Omnibus Agreement and Other Support from Holdings We are party to an omnibus agreement with Holdings and other related parties. The omnibus agreement governs the following matters, among other things: ● our payment of a quarterly administrative fee in the amount of $1.0 million to Holdings for providing certain partnership overhead services, including certain executive management services by certain officers and employees of our General Partner. This fee also includes the incremental general and administrative expenses we incur as a result of being a publicly-traded partnership. For the nine months ended September 30, 2018 and for the three months ended September 30, 2017, this fee was paid to Holdings in accordance with its terms and conditions. For the six months ended June 30, 2017, Holdings provided sponsor support to the Partnership by waiving payment of the quarterly administrative fee. The fee will be adjusted each year by an inflation adjustment as outlined in the omnibus agreement. If any additional modifications to this agreement are proposed, they would require approval by the Conflicts Committee of our Board of Directors. ● our right of first offer on Holdings’ and its subsidiaries’ assets used in, and entities primarily engaged in, providing saltwater disposal and other water and environmental services, and pipeline inspection and integrity services; and ● indemnification of us by Holdings for certain environmental and other liabilities, including events and conditions associated with the operation of assets that occurred prior to the closing of the IPO and our obligation to indemnify Holdings for events and conditions associated with the operation of our assets that occur after the closing of the IPO and for environmental liabilities related to our assets to the extent Holdings is not required to indemnify us. So long as affiliates of Holdings control our General Partner, the omnibus agreement will remain in effect, unless we and Holdings agree to terminate it sooner. If affiliates of Holdings cease to control our General Partner, either party may terminate the omnibus agreement, provided that the indemnification obligations will remain in full force and effect in accordance with their terms. We and Holdings may agree to amend the omnibus agreement; however, amendments will also require the approval of the Conflicts Committee of our Board of Directors. As part of our new Credit Agreement, Holdings agreed to waive the omnibus fee to support us in the event our leverage ratio were to exceed 3.75 times our trailing twelve-month Adjusted EBITDA at any quarter-end during the term of the credit facility. To the extent that Holdings incurs expenses on behalf of the Partnership in excess of administrative expense amounts paid under the omnibus agreement (including executive management services, payroll services, general and administrative costs incurred as a result of being a publicly traded partnership, and other allocated costs), the excess is allocated to the Partnership as non-cash allocated costs. The non-cash allocated amounts are reported as general and administrative expenses contribution attributable to general partner net loss attributable to general partner In addition to funding certain general and administrative expenses on our behalf, Holdings provided us with additional financial support by contributing $1.0 million for the three months ended September 30, 2017 in cash, as a reimbursement of certain expenditures incurred by us. This payment is reflected as a contribution attributable to general partner net loss attributable to the general partner Alati Arnegard, LLC We provide management services to Alati Arnegard, LLC (“Arnegard”), an entity that owns a saltwater disposal facility in North Dakota in which we hold a 25% membership interest. Management fee revenue earned from Arnegard totaled $0.2 million for the three months ended September 30, 2018 and 2017, and $0.5 million for the nine months ended September 30, 2018 and 2017. Accounts receivable from Arnegard were $0.1 million at September 30, 2018 and December 31, 2017, and are included in trade accounts receivable, net CF Inspection Management, LLC We have also entered into a joint venture with CF Inspection, a nationally-qualified woman-owned inspection firm affiliated with one of Holdings’ owners. We own 49% of CF Inspection and Cynthia A. Field, the daughter of Charles C. Stephenson, Jr., owns the remaining 51% of CF Inspection. For the nine months ended September 30, 2018, CF Inspection represented approximately 3.4% of our consolidated revenue. CF Inspection allows us to offer various services to clients that require the services of an approved Women's Business Enterprise ("WBE"), as CF Inspection is certified as a Women's Business Enterprise by the Supplier Clearinghouse in California and as a National Women's Business Enterprise by the Women's Business Enterprise National Council.. Sale of Preferred Equity As described in Note 6, we issued and sold $43.5 million of preferred equity to an affiliate in May 2018. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies Security Deposits We have various performance obligations related to our saltwater disposal facilities in North Dakota in our Water Services segment that are secured with short-term security deposits (reflected as restricted cash equivalents on our Unaudited Condensed Consolidated Statements of Cash Flows) of $0.6 million and $0.5 million at September 30, 2018, and December 31, 2017, respectively, included in prepaid expenses and other Compliance Audit Contingencies Certain customer master service agreements (“MSA’s”) offer our customers the opportunity to perform periodic compliance audits, which include the examination of the accuracy of our invoices. Should our invoices be determined to be inconsistent with the MSA, the MSA’s may provide the customer the right to receive a credit or refund for any overcharges identified. As of September 30, 2018, we have established a reserve of $0.1 million for potential liabilities related to these compliance audit contingencies. As of December 31, 2017, there were no reserves established for compliance audit contingencies. Legal Proceedings On October 5, 2017, a former inspector for TIR LLC and Cypress Energy Management – TIR, LLC (“CEM TIR”) filed a putative collective action lawsuit alleging that TIR LLC, CEM TIR and Cypress Energy Partners – Texas, LLC failed to pay a class of workers overtime in compliance with the Fair Labor Standards Act (“FLSA”) titled James Fithian, et al v. TIR LLC, et al in the United States District Court for the Western District of Texas, Midland Division. The plaintiff subsequently withdrew his action and filed a similar action in Oklahoma State Court, District of Tulsa County. The plaintiff alleges he was a non-exempt employee of TIR LLC and that he and other potential class members were not paid overtime in compliance with the FLSA. The plaintiff seeks to proceed as a collective action and to receive unpaid overtime and other monetary damages, including attorney’s fees. No estimate of potential loss can be determined at this time and the Partnership, TIR LLC, CEM TIR and Cypress Energy Partners – Texas, LLC deny the claims. The defendants plan to continue to vigorously defend these claims and have stayed a counterclaim against the named plaintiff. On March 28, 2018, the court granted a joint stipulation of dismissal without prejudice in regard to TIR LLC and Cypress Energy Partners – Texas, LLC, as neither of those parties were employers of the plaintiff or the putative class members during the time period that is the subject of the lawsuit. On July 26, 2018, plaintiff filed a motion for conditional class certification. CEM-TIR subsequently filed pleadings opposing the motion. The court set plaintiff’s motion for conditional certification for hearing on November 29, 2018. From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of business. Like other organizations, our operations are subject to extensive and rapidly changing federal and state environmental, health and safety and other laws and regulations governing air emissions, wastewater discharges, and solid and hazardous waste management activities. We are not a party to any other material pending or overtly threatened legal or governmental proceedings, other than proceedings and claims that arise in the ordinary course and are incidental to our business. |
Sale of Salt Water Disposal Fac
Sale of Salt Water Disposal Facility | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Sale of Salt Water Disposal Facility | 9. Sale of Saltwater Disposal Facilities In May 2018, we sold our subsidiary Cypress Energy Partners – Orla SWD, LLC (“Orla”), which owns a saltwater disposal facility in Orla, Texas, to an unrelated party for $8.2 million of cash proceeds. The proceeds of this transaction were utilized to reduce our outstanding debt. We recorded a gain on this transaction of $1.8 million ($0.2 million of this gain was recorded on contingent proceeds that were received and recorded in the third quarter of 2018), which represents the excess of the cash proceeds over the net book value of assets sold. The net book value of the assets sold included $3.0 million of allocated goodwill, calculated based on the estimated fair value of the Orla facility relative to the estimated fair value of the Water Services reporting unit as a whole. This calculation is considered Level 3 and the fair values included in this calculation were determined utilizing estimated discounted cash flows of the Orla facility and the Water Services reporting unit as a whole as of the date of sale. In January 2018, we sold our subsidiary Cypress Energy Partners – Pecos SWD, LLC (“Pecos”), which owns a saltwater disposal facility in Pecos, Texas, to an unrelated party for $4.0 million of cash proceeds and a royalty interest in the future revenues of the facility. We concluded this represented the sale of a business and we record the royalties in the periods in which they are received. We recorded a gain on this transaction of $1.8 million, which represents the excess of the cash proceeds over the net book value of assets sold. The proceeds were used to reduce our debt. The net book value of the assets sold included $2.0 million of allocated goodwill, calculated based on the estimated fair value of the Pecos facility relative to the estimated fair value of the Water Services reporting unit as a whole. This calculation is considered Level 3 and the fair values included in this calculation were determined utilizing estimated discounted cash flows of the Pecos facility and the Water Services reporting unit as a whole as of the date of sale. Assets held for sale liabilities held for sale During the three months ended September 30, 2018, we received proceeds of $0.4 million from the settlement of litigation related to lightning strikes that occurred in 2017 at our facilities in Orla, Texas and Grassy Butte, North Dakota. This litigation related to the non-performance of certain lightning protection equipment we had purchased to protect the facilities against lightning strikes. The proceeds from these settlements are reported within gain on assets disposals, net |
Reportable Segments
Reportable Segments | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segments | 10. Reportable Segments Our operations consist of three reportable segments: (i) Pipeline Inspection, (ii) Pipeline & Process Services, and (iii) Water Services. Pipeline Inspection – Pipeline & Process Services Water Services – Other The following tables show operating income (loss) by reportable segment and a reconciliation of segment operating income (loss) to net income (loss) before income tax expense. Pipeline Pipeline & Water Inspection Process Services Services Other Total Three months ended September 30, 2018 Revenue $ 77,606 $ 3,881 $ 3,325 $ (34 ) $ 84,778 Costs of services 68,350 2,592 962 (34 ) 71,870 Gross margin 9,256 1,289 2,363 — 12,908 General and administrative 4,422 592 774 276 6,064 Depreciation, amortization and accretion 571 143 410 — 1,124 (Gain) loss on asset disposal, net (21 ) (32 ) (769 ) — (822 ) Operating income (loss) $ 4,284 $ 586 $ 1,948 $ (276 ) 6,542 Interest expense, net (1,283 ) Foreign currency gains 97 Other, net 95 Net income before income tax expense $ 5,451 Three months ended September 30, 2017 Revenue $ 72,737 $ 2,834 $ 2,111 $ — $ 77,682 Costs of services 65,323 2,132 837 — 68,292 Gross margin 7,414 702 1,274 — 9,390 General and administrative 3,893 525 858 298 5,574 Depreciation, amortization and accretion 577 157 450 — 1,184 Losses on asset disposals, net — — 208 — 208 Operating income (loss) $ 2,944 $ 20 $ (242 ) $ (298 ) 2,424 Interest expense, net (1,907 ) Foreign currency gains 557 Other, net 17 Net income before income tax expense $ 1,091 Pipeline Pipeline & Water Inspection Process Services Services Other Total Nine months ended September 30, 2018 Revenue $ 205,938 $ 11,307 $ 8,861 $ (34 ) $ 226,072 Costs of services 183,305 7,840 2,981 (34 ) 194,092 Gross margin 22,633 3,467 5,880 — 31,980 General and administrative 12,313 (a) 1,715 2,402 (b) 911 17,341 Depreciation, amortization and accretion 1,717 449 1,202 — 3,368 Gains on asset disposals, net (21 ) (77 ) (4,039 ) — (4,137 ) Operating income (loss) $ 8,624 $ 1,380 $ 6,315 $ (911 ) 15,408 Interest expense, net (4,907 ) Debt issuance cost write-off (114 ) Foreign currency losses (354 ) Other, net 302 Net income before income tax expense $ 10,335 Nine months ended September 30, 2017 Revenue $ 205,039 $ 5,927 $ 6,005 $ — $ 216,971 Costs of services 185,308 5,005 2,330 — 192,643 Gross margin 19,731 922 3,675 — 24,328 General and administrative 10,212 (c) 1,488 1,651 (d) 2,662 (e) 16,013 Depreciation, amortization and accretion 1,755 471 1,335 — 3,561 Impairments 1,329 1,581 688 — 3,598 Losses on asset disposal, net 18 — 77 — 95 Operating income (loss) $ 6,417 $ (2,618 ) $ (76 ) $ (2,662 ) 1,061 Interest expense, net (5,411 ) Foreign currency gains 824 Other, net 122 Net loss before income tax expense $ (3,404 ) Total Assets September 30, 2018 $ 116,510 $ 9,365 $ 24,939 $ 1,461 $ 152,275 December 31, 2017 (recast to exclude intercompany receivables) $ 120,368 $ 10,481 $ 31,472 $ 882 $ 163,203 (a) Amount includes $2.1 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (b) Amount includes $0.9 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (c) Amount includes $0.7 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (d) Amount includes $0.3 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (e) Amount includes $1.8 million of allocated general and administrative expenses incurred by Holdings but not charged to us. For the six months ended June 30, 2017, Holdings waived the administrative fee specified in the omnibus agreement. |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Unaudited Condensed Consolidated Financial Statements as of and for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 include our accounts and those of our controlled subsidiaries. Investments over which we exercise significant influence, but do not control, are accounted for using the equity method of accounting. All significant intercompany transactions and account balances have been eliminated in consolidation. The Unaudited Condensed Consolidated Balance Sheet at December 31, 2017 is derived from our audited financial statements. The accompanying Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim consolidated financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Unaudited Condensed Consolidated Financial Statements include all adjustments considered necessary for a fair presentation of the consolidated financial position and consolidated results of operations for the interim periods presented. Such adjustments consist only of normal recurring items, unless otherwise disclosed herein. Accordingly, the Unaudited Condensed Consolidated Financial Statements do not include all of the information and notes required by GAAP for complete consolidated financial statements. However, we believe that the disclosures made are adequate to make the information not misleading. These interim Unaudited Condensed Consolidated Financial Statements should be read in conjunction with our audited financial statements as of and for the year ended December 31, 2017 included in our Form 10-K. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year. |
Use of Estimates in the Preparation of Financial Statements | Use of Estimates in the Preparation of Financial Statements The preparation of our Unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. |
Significant Accounting Policies | Significant Accounting Policies Our significant accounting policies are consistent with those disclosed in Note 2 to our audited financial statements as of and for the year ended December 31, 2017 included in our Form 10-K, except for the adoption of Accounting Standards Update (“ASU”) 2014-09 - Revenue from Contracts with Customers Statement of Cash Flows - Restricted Cash |
Accounts Receivable and Allowance for Bad Debts | Accounts Receivable and Allowance for Bad Debts We grant unsecured credit to customers under normal industry standards and terms, and have established policies and procedures that allow for an evaluation of each of our customer’s creditworthiness. We typically receive payment from our customers 45 to 90 days after the services have been performed. general and administrative expense |
Income Taxes | Income Taxes As a limited partnership, we generally are not subject to federal, state, or local income taxes. The tax on our net income is generally borne by the individual partners. Net income (loss) for financial statement purposes may differ significantly from taxable income (loss) of the partners as a result of differences between the tax basis and financial reporting basis of assets and liabilities and the taxable income allocation requirements under our partnership agreement. The aggregated difference in the basis of our net assets for financial and tax reporting purposes cannot be readily determined because information regarding each partner’s tax attributes is not available to us. The income of Tulsa Inspection Resources – Canada, ULC, our Canadian subsidiary, is taxable in Canada. Tulsa Inspection Resources – PUC, LLC, a subsidiary of our Pipeline Inspection segment that performs pipeline inspection services for utility customers, and Brown Integrity – PUC, LLC, a subsidiary in which we own a 51% membership interest, have elected to be taxed as corporations for U.S. federal income tax purposes, and therefore, these subsidiaries are subject to U.S. federal and state income tax. The amounts recognized as income tax expense (benefit), income taxes payable, and deferred tax assets / liabilities in our Unaudited Condensed Consolidated Financial Statements include the Canadian income taxes and U.S. federal and state income taxes referred to above, as well as partnership-level taxes levied by various states, which primarily include franchise taxes assessed by the state of Texas. As a publicly-traded partnership, we are subject to a statutory requirement that 90% of our total gross income represent “qualifying income” (as defined by the Internal Revenue Code, related Treasury Regulations, and Internal Revenue Service pronouncements), determined on a calendar-year basis. If our qualifying income does not meet this statutory requirement, we could be taxed as a corporation for federal and state income tax purposes. Our income has met the statutory qualifying income requirement each year since our initial public offering (“IPO”). |
Noncontrolling Interest | Noncontrolling Interest We own a 51% interest in Brown Integrity, LLC (“Brown”) and a 49% interest in CF Inspection Management, LLC (“CF Inspection”). The accounts of these subsidiaries are included in our Unaudited Condensed Consolidated Financial Statements. The portion of the net income (loss) of these entities that is attributable to outside owners is reported as net income (loss) attributable to noncontrolling interests noncontrolling interests |
Property and Equipment | Property and Equipment Property and equipment consists of land, land and leasehold improvements, buildings, facilities, wells and related equipment, computer and office equipment, and vehicles. We record property and equipment at cost. Costs of improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repairs are expensed as incurred. We depreciate property and equipment on a straight-line basis over the estimated useful lives of the assets. Upon retirement or disposition of an asset, we remove the cost and related accumulated depreciation from the balance sheet and report the resulting gain or loss, if any, in the Unaudited Condensed Consolidated Statements of Operations. We assess property and equipment for possible impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Such indicators include, among others, the nature of the asset, the projected future economic benefit of the asset, changes in regulatory and political environments, and historical and future cash flow and profitability measurements. If the carrying value of an asset exceeds the future undiscounted cash flows expected from the asset, we recognize an impairment charge for the excess of the carrying value of the asset over its estimated fair value. Determinations as to whether and how much an asset is impaired involve management estimates on highly uncertain matters such as future commodity prices, the effects of inflation on operating expenses, and the outlook for national or regional market supply and demand for the services we provide. |
Identifiable Intangible Assets | Identifiable Intangible Assets Our intangible assets consist primarily of customer relationships, trade names, and our database of inspectors. We recorded these intangible assets as part of our accounting for the acquisitions of businesses, and we amortize these assets on a straight-line basis over their estimated useful lives, which typically range from 5 – 20 years. We review our intangible assets for impairment whenever events or circumstances indicate that the asset group to which they relate may be impaired. To perform an impairment assessment, we first determine whether the cash flows expected to be generated from the asset group exceed the carrying value of the asset group. If such estimated cash flows do not exceed the carrying value of the asset group, we reduce the carrying values of the assets to their fair values and record a corresponding impairment loss. |
Goodwill | Goodwill Goodwill is not amortized, but is subject to an annual review for impairment on November 1 (or at other dates if events or changes in circumstances indicate that the carrying value of goodwill may be impaired) at a reporting unit level. The reporting units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business that relates to the applicable goodwill is managed or operated. We have determined that our Pipeline Inspection, Pipeline & Process Services, and Water Services segments are the appropriate reporting units for testing goodwill impairment. To perform a goodwill impairment assessment, we perform an analysis to assess whether it is more likely than not that the fair value of the reporting unit exceeds its carrying value. If we determine that it is more likely than not that the carrying value of the reporting unit exceeds its fair value, we reduce the carrying value of goodwill and record a corresponding impairment expense. |
Accrued Payroll and Other | Accrued Payroll and Other Accrued payroll and other September 30, 2018 December 31, 2017 (in thousands) Accrued payroll $ 11,148 $ 6,893 Customer deposits 1,893 1,510 Other 1,091 706 $ 14,132 $ 9,109 |
Foreign Currency Translation | Foreign Currency Translation Our Unaudited Condensed Consolidated Financial Statements are reported in U.S. dollars. We translate our Canadian-dollar-denominated assets and liabilities into U.S. dollars at the exchange rate in effect at the balance sheet date. We translate our Canadian-dollar-denominated revenues and expenses into U.S. dollars at the average exchange rate in effect during the period in which the applicable revenues and expenses were recorded. Our Unaudited Condensed Consolidated Balance Sheet at September 30, 2018 includes $2.6 million of accumulated other comprehensive loss accumulated other comprehensive loss partners’ capital Our Canadian subsidiary has certain intercompany payables to our U.S.-based subsidiaries. These intercompany payables and receivables among our consolidated subsidiaries are eliminated in our Unaudited Condensed Consolidated Balance Sheets. Beginning April 1, 2017, we report currency translation adjustments on these intercompany payables and receivables within foreign currency gains (losses) other comprehensive income (loss) |
New Accounting Standards | New Accounting Standards On January 1, 2018, we adopted the following new accounting standards issued by the Financial Accounting Standards Board (“FASB”); The FASB issued Accounting Standards Update (“ASU”) 2014-09 – Revenue from Contracts with Customers The FASB issued ASU 2016-18 - Statement of Cash Flows - Restricted Cash Other accounting guidance proposed by the FASB that may impact our Unaudited Condensed Consolidated Financial Statements, which we have not yet adopted includes: The FASB issued ASU 2016-02 – Leases We plan to make accounting policy elections to not capitalize leases with a lease term of twelve months or less and to not separate lease and non-lease components for all asset classes. We also plan to elect the package of practical expedients within ASU 2016-02 that allows an entity to not reassess prior to the effective date (i) whether any expired or existing contracts are or contain leases, (ii) the lease classification for any expired or existing leases, or (iii) initial direct costs for any existing leases, but do not plan to elect the practical expedient of hindsight when determining the lease term of existing contracts at the effective date. In July 2018, the FASB issued ASU 2018-11 – Targeted Improvements related to the addition of the right-of-use asset and associated lease liability |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Schedule of accrued payroll and other | Accrued payroll and other September 30, 2018 December 31, 2017 (in thousands) Accrued payroll $ 11,148 $ 6,893 Customer deposits 1,893 1,510 Other 1,091 706 $ 14,132 $ 9,109 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of the calculation of the basic net income (loss) per common limited partner unit | The following summarizes the calculation of the basic net income per common limited partner unit Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands, except per unit data) Net income attributable to common unitholders $ 3,620 $ 1,554 $ 7,385 $ 178 Weighted average common units outstanding 11,940 11,884 11,924 10,903 Basic net income per common limited partner unit $ 0.30 $ 0.13 $ 0.62 $ 0.02 |
Schedule of the calculation of the diluted net income (loss) per common limited partner unit | The following summarizes the calculation of the diluted net income per common limited partner unit Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands, except per unit data) Net income attributable to common unitholders $ 3,620 $ 1,554 $ 7,385 $ 178 Net income attributable to preferred unitholder 1,045 — 1,412 — Net income attributable to limited partners $ 4,665 $ 1,554 $ 8,797 $ 178 Weighted average common units outstanding 11,940 11,884 11,924 10,903 Effect of dilutive securities: Weighted average preferred units outstanding 5,769 — 2,628 — Long-term incentive plan unvested units 431 111 418 208 Diluted weighted average common units outstanding 18,140 11,995 14,970 11,111 Diluted net income per common limited partner unit $ 0.26 $ 0.13 $ 0.59 $ 0.02 |
Schedule of cash distributions declared and paid to our limited partners since our IPO | The following table summarizes the cash distributions declared and paid to our limited partners since our IPO. Total Cash Per Unit Cash Total Cash Distributions Payment Date Distributions Distributions to Affiliates (a) (in thousands) Total 2014 Distributions 1.104646 13,064 8,296 Total 2015 Distributions 1.625652 19,232 12,284 Total 2016 Distributions 1.625652 19,258 12,414 February 13, 2017 0.406413 4,823 3,107 May 13, 2017 0.210000 2,495 1,606 August 12, 2017 0.210000 2,495 1,607 November 14, 2017 0.210000 2,497 1,608 Total 2017 Distributions 1.036413 12,310 7,928 February 14, 2018 0.210000 2,498 1,599 May 15, 2018 0.210000 2,506 1,604 August 14, 2018 0.210000 2,506 1,604 November 14, 2018 (b) 0.210000 2,509 1,606 Total 2018 Distributions 0.840000 10,019 6,413 Total Distributions (since IPO) $ 6.232363 $ 73,883 $ 47,335 (a) Approximately 63.9% of the Partnership’s outstanding common units at September 30, 2018 were held by affiliates. (b) Third quarter 2018 distribution was declared and will be paid in the fourth quarter of 2018. |
Schedule of the LTIP Unit activity | The following table summarizes the LTIP unit activity for the nine months ended September 30, 2018 and 2017: Nine Months Ended September 30, 2018 2017 Weighted Weighted Average Average Grant Grant Number Date Fair Number Date Fair of Units Value / Unit of Units Value / Unit Unvested units at January 1 664,509 $ 8.46 573,902 $ 9.86 Unvested units granted 396,484 $ 3.24 249,120 $ 7.11 Units vested (75,222 ) $ 13.56 (43,930 ) $ 16.56 Unvested units forfeited (85,092 ) $ 7.07 (39,722 ) $ 8.51 Unvested units at September 30 900,679 $ 5.87 739,370 $ 8.61 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of operating income (loss) by reportable segment and a reconciliation of segment operating income (loss) to net income (loss) | The following tables show operating income (loss) by reportable segment and a reconciliation of segment operating income (loss) to net income (loss) before income tax expense. Pipeline Pipeline & Water Inspection Process Services Services Other Total Three months ended September 30, 2018 Revenue $ 77,606 $ 3,881 $ 3,325 $ (34 ) $ 84,778 Costs of services 68,350 2,592 962 (34 ) 71,870 Gross margin 9,256 1,289 2,363 — 12,908 General and administrative 4,422 592 774 276 6,064 Depreciation, amortization and accretion 571 143 410 — 1,124 (Gain) loss on asset disposal, net (21 ) (32 ) (769 ) — (822 ) Operating income (loss) $ 4,284 $ 586 $ 1,948 $ (276 ) 6,542 Interest expense, net (1,283 ) Foreign currency gains 97 Other, net 95 Net income before income tax expense $ 5,451 Three months ended September 30, 2017 Revenue $ 72,737 $ 2,834 $ 2,111 $ — $ 77,682 Costs of services 65,323 2,132 837 — 68,292 Gross margin 7,414 702 1,274 — 9,390 General and administrative 3,893 525 858 298 5,574 Depreciation, amortization and accretion 577 157 450 — 1,184 Losses on asset disposals, net — — 208 — 208 Operating income (loss) $ 2,944 $ 20 $ (242 ) $ (298 ) 2,424 Interest expense, net (1,907 ) Foreign currency gains 557 Other, net 17 Net income before income tax expense $ 1,091 Pipeline Pipeline & Water Inspection Process Services Services Other Total Nine months ended September 30, 2018 Revenue $ 205,938 $ 11,307 $ 8,861 $ (34 ) $ 226,072 Costs of services 183,305 7,840 2,981 (34 ) 194,092 Gross margin 22,633 3,467 5,880 — 31,980 General and administrative 12,313 (a) 1,715 2,402 (b) 911 17,341 Depreciation, amortization and accretion 1,717 449 1,202 — 3,368 Gains on asset disposals, net (21 ) (77 ) (4,039 ) — (4,137 ) Operating income (loss) $ 8,624 $ 1,380 $ 6,315 $ (911 ) 15,408 Interest expense, net (4,907 ) Debt issuance cost write-off (114 ) Foreign currency losses (354 ) Other, net 302 Net income before income tax expense $ 10,335 Nine months ended September 30, 2017 Revenue $ 205,039 $ 5,927 $ 6,005 $ — $ 216,971 Costs of services 185,308 5,005 2,330 — 192,643 Gross margin 19,731 922 3,675 — 24,328 General and administrative 10,212 (c) 1,488 1,651 (d) 2,662 (e) 16,013 Depreciation, amortization and accretion 1,755 471 1,335 — 3,561 Impairments 1,329 1,581 688 — 3,598 Losses on asset disposal, net 18 — 77 — 95 Operating income (loss) $ 6,417 $ (2,618 ) $ (76 ) $ (2,662 ) 1,061 Interest expense, net (5,411 ) Foreign currency gains 824 Other, net 122 Net loss before income tax expense $ (3,404 ) Total Assets September 30, 2018 $ 116,510 $ 9,365 $ 24,939 $ 1,461 $ 152,275 December 31, 2017 (recast to exclude intercompany receivables) $ 120,368 $ 10,481 $ 31,472 $ 882 $ 163,203 (a) Amount includes $2.1 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (b) Amount includes $0.9 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (c) Amount includes $0.7 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (d) Amount includes $0.3 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. (e) Amount includes $1.8 million of allocated general and administrative expenses incurred by Holdings but not charged to us. For the six months ended June 30, 2017, Holdings waived the administrative fee specified in the omnibus agreement. |
Organization and Operations (De
Organization and Operations (Details Narrative) - N | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | |
Equity interest salt water disposal facility | 25.00% | 25.00% | |
Water Services [Member] | |||
Number of saltwater disposal facilities | 8 | 10 | 9 |
Number of wholly-owned facilities | 8 | ||
Number of pipelines connected to E&P customers to saltwater disposal facilities | 10 | ||
Number of saltwater disposal facilities developed and owned by partnership | 2 | ||
Produced water from disposal water (percent) | 95.00% | ||
Pipeline water delivered to saltwater disposal facilities (percent) | 41.00% | ||
Water Services [Member] | Minimum [Member] | |||
Number of customers | 75 |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||
Accrued payroll | $ 11,148 | $ 6,893 |
Customer deposits | 1,893 | 1,510 |
Other | 1,091 | 706 |
Total | $ 14,132 | $ 9,109 |
Basis of Presentation and Sum_3
Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Threshold for nontaxation | 90.00% | |
Accumulated other comprehensive loss | $ (2,616) | $ (2,677) |
Accounts receivable previously reserved | $ 300 | |
Minimum [Member] | ||
Finite-lived intangible asset, useful life | 5 years | |
Maximum [Member] | ||
Finite-lived intangible asset, useful life | 20 years | |
Pipeline Inspection [Member] | Brown Integrity - PUC, LLC [Member] | ||
Subsidiary ownership interest | 51.00% | |
Brown Integrity, LLC [Member] | ||
Subsidiary ownership interest | 51.00% | |
CF Inspection Management, LLC [Member] | ||
Subsidiary ownership interest | 49.00% |
Impairments (Details Narrative)
Impairments (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | |
Impairment of intangible assets | $ 1,300 | |||
Property, plant and equipment, net | $ 13,028 | $ 13,388 | ||
Salt Water Disposal Facilities - PPE [Member] | ||||
Impairment of property, plant and equipment | 700 | |||
Property, plant and equipment, net | $ 100 | |||
Pipeline Inspection [Member] | Customer Relationships [Member] | ||||
Impairment of intangible assets | 1,100 | |||
Pipeline Inspection [Member] | Trade Names [Member] | ||||
Impairment of intangible assets | 200 | |||
Pipeline And Process Services [Member] | ||||
Impairment of goodwill | $ 1,600 | |||
Pipeline And Process Services [Member] | Fair Value, Inputs, Level 3 [Member] | ||||
Annual growth rate | 2.00% | |||
Discount rate | 18.00% |
Debt (Details Narrative)
Debt (Details Narrative) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Long-term debt | $ 76,129 | $ 76,129 | |||
Debt issuance costs, net | 1,391 | 1,391 | |||
Long-term debt | $ 136,900 | ||||
Debt issuance costs | 600 | ||||
Debt issuance cost write-off | $ 114 | ||||
Debt amortized period | 3 years | ||||
Accrued payroll and other | 14,132 | $ 14,132 | 9,109 | ||
Other non-current liabilities | 369 | 369 | $ 143 | ||
Amended and Restated Credit Agreement [Member] | |||||
Line of credit facility, maximum borrowing capacity | 90,000 | 90,000 | |||
Debt issuance costs | 1,300 | 1,300 | |||
Total borrowing capacity | $ 110,000 | $ 110,000 | |||
Line of credit facility, commitment fee percentage | 0.50% | ||||
Debt covenant total adjusted leverage ratio maximum | 4 | ||||
Debt covenant interest coverage ratio minimum | 3 | ||||
Total adjusted leverage ratio | 3.38 | 3.38 | |||
Interest coverage ratio | 5.24 | 5.24 | |||
Credit agreement minimum unused capacity at time of distributions | $ 5,000 | $ 5,000 | |||
Accrued payroll and other | 100 | 100 | |||
Other non-current liabilities | 200 | 200 | |||
Line of Credit [Member] | |||||
Interest expense including commitment fee | $ 1,100 | $ 1,700 | $ 4,600 | $ 5,000 | |
Maximum [Member] | Base Rate [Member] | |||||
Spread on variable rate borrowings | 3.00% | ||||
Maximum [Member] | LIBOR [Member] | |||||
Spread on variable rate borrowings | 4.00% | ||||
Maximum [Member] | Line of Credit [Member] | |||||
Debt instrument, interest rate, effective percentage during period | 5.95% | 4.99% | |||
Minimum [Member] | Base Rate [Member] | |||||
Spread on variable rate borrowings | 1.50% | ||||
Minimum [Member] | LIBOR [Member] | |||||
Spread on variable rate borrowings | 2.50% | ||||
Minimum [Member] | Line of Credit [Member] | |||||
Debt instrument, interest rate, effective percentage during period | 4.74% | 3.90% | |||
Capital Lease Obligations [Member] | |||||
Interest rate of capital lease | 6.16% | 6.16% | |||
Minimum lease payments December 31, 2019 through 2021 | $ 100 | $ 100 | |||
Capital Lease Obligations [Member] | Vehicles [Member] | |||||
Capital lease incurred | $ 300 | ||||
Amortization period | 4 years | ||||
Capital Lease Obligations [Member] | Maximum [Member] | |||||
Minimum lease payments 2018 | $ 100 | 100 | |||
Capital Lease Obligations [Member] | Other Non-current Liabilities [Member] | |||||
Accrued payroll and other | 200 | 200 | |||
Capital Lease Obligations [Member] | Accrued Payroll and Other [Member] | |||||
Capital lease obligation | $ 100 | $ 100 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Statutory tax rate | 21.00% | 35.00% | 21.00% | 35.00% |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Equity [Abstract] | ||||
Net income attributable to common unitholders | $ 3,620 | $ 1,554 | $ 7,385 | $ 178 |
Weighted average common units outstanding | 11,940,032 | 11,884,196 | 11,924,183 | 10,902,838 |
Basic net income per common limited partner unit | $ 0.30 | $ 0.13 | $ 0.62 | $ 0.02 |
Equity (Details 1)
Equity (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Equity [Abstract] | ||||
Net income attributable to common unitholders | $ 3,620 | $ 1,554 | $ 7,385 | $ 178 |
Net income attributable to preferred unitholder | 1,045 | 1,412 | ||
Net income attributable to limited partners | $ 4,665 | $ 1,554 | $ 8,797 | $ 178 |
Weighted average common units outstanding | 11,940,032 | 11,884,196 | 11,924,183 | 10,902,838 |
Effect of dilutive securities | ||||
Weighted average preferred units outstanding | 5,769,000 | 2,628,000 | ||
Long-term incentive plan unvested units | 431,000 | 111,000 | 418,000 | 208,000 |
Diluted weighted average common units outstanding | 18,140,691 | 11,994,881 | 14,970,334 | 11,111,454 |
Diluted net income per common limited partner unit | $ 0.26 | $ 0.13 | $ 0.59 | $ 0.02 |
Equity (Details 2)
Equity (Details 2) - USD ($) $ / shares in Units, $ in Thousands | Nov. 14, 2018 | Aug. 14, 2018 | May 15, 2018 | Feb. 14, 2018 | Nov. 14, 2017 | Aug. 12, 2017 | May 13, 2017 | Feb. 13, 2017 | Nov. 14, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Nov. 14, 2018 | ||||||||||||||
Per Unit Cash Distribution (in dollars per share) | $ 0.210000 | $ 0.210000 | $ 0.210000 | $ 0.210000 | $ 0.210000 | $ 0.210000 | $ 0.210000 | $ 0.406413 | $ 0.840000 | $ 1.036413 | $ 1.625652 | $ 1.625652 | $ 1.104646 | $ 6.232363 | ||||||||||||||
Total Cash Distribution | $ 2,509 | [1] | $ 2,506 | $ 2,506 | $ 2,498 | $ 2,497 | $ 2,495 | $ 2,495 | [2] | $ 4,823 | $ 10,019 | $ 12,310 | $ 19,258 | $ 19,232 | $ 13,064 | $ 73,883 | ||||||||||||
Affiliated Entity [Member] | ||||||||||||||||||||||||||||
Total Cash Distribution | $ 1,606 | [1] | $ 1,604 | [2] | $ 1,604 | [2] | $ 1,599 | [2],[3] | $ 1,608 | [2] | $ 1,607 | [2] | $ 1,606 | [1],[2] | $ 3,107 | [2] | $ 6,413 | [2] | $ 7,928 | [2] | $ 12,414 | [2] | $ 12,284 | [2] | $ 8,296 | [2] | $ 47,335 | [2] |
[1] | Third quarter 2018 distribution was declared and will be paid in the fourth quarter of 2018. | |||||||||||||||||||||||||||
[2] | Approximately 63.9% of the Partnership's outstanding units at June 30, 2018 were held by affiliates. | |||||||||||||||||||||||||||
[3] | First quarter 2018 distribution was declared and will be paid in the second quarter of 2018. |
Equity (Details 3)
Equity (Details 3) - $ / shares | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Unvested units at beginning | 664,509 | 573,902 |
Unvested units granted | 396,484 | 249,120 |
Units vested | (75,222) | (43,930) |
Unvested units forfeited | (85,092) | (39,722) |
Unvested units at ending | 900,679 | 739,370 |
Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Unvested units at beginning | $ 8.46 | $ 9.86 |
Unvested units granted | 3.24 | 7.11 |
Units vested | 13.56 | 16.56 |
Unvested units forfeited | 7.07 | 8.51 |
Unvested units at ending | $ 5.87 | $ 8.61 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | May 29, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Nov. 01, 2018 |
Share-based compensation expense | $ 908 | $ 1,136 | ||
Percentage of partnership units held by affiliates | 63.90% | |||
Brown Integrity, LLC [Member] | ||||
Percentage of income attributable to noncontrolling interests | 49.00% | |||
CF Inspection Management, LLC [Member] | ||||
Percentage of income attributable to noncontrolling interests | 51.00% | |||
Long Term Incentive Plan [Member] | ||||
Shares authorized under plan | 1,182,600 | |||
Share-based compensation expense | $ 900 | $ 1,100 | ||
Number of units which have specific performance vesting terms | 29,602 | |||
Compensation cost not yet recognized | $ 3,300 | |||
Period for recognition of compensation cost | 2 years 3 months 22 days | |||
Long Term Incentive Plan [Member] | Tranche One [Member] | ||||
Percentage of awards vesting | 33.33% | |||
Vesting period | 3 years | |||
Long Term Incentive Plan [Member] | Tranche Two [Member] | ||||
Percentage of awards vesting | 33.33% | |||
Vesting period | 4 years | |||
Long Term Incentive Plan [Member] | Tranche Three [Member] | ||||
Percentage of awards vesting | 33.33% | |||
Vesting period | 5 years | |||
Preferred Units [Member] | ||||
Annual rate of return of Preferred Units (percent) | 9.50% | |||
Dividend distribution to be paid in cash (percent) | 2.50% | |||
Dividend distribution to be paid in kind (percent) | 7.00% | |||
Preferred Units [Member] | Private Placement [Member] | ||||
Number of units issued and sold in a private placement | 5,769,231 | |||
Price per unit (in dollars per unit) | $ 7.54 | |||
Proceeds of units sold in a private placement | $ 43,500 | |||
Value of additional preferred units per right to exercise an option | $ 6,500 | |||
Preferred Units [Member] | Private Placement [Member] | Redemption Period Third [Member] | ||||
Redemption price as percent of issue price | 101.00% | |||
Preferred Units [Member] | Private Placement [Member] | Redemption Period Two [Member] | ||||
Redemption price as percent of issue price | 105.00% | |||
Preferred Units [Member] | Private Placement [Member] | Redemption Period One [Member] | ||||
Redemption price as percent of issue price | 100.00% | |||
Additional amount in redemption of preferred units | $ 200 | |||
Subsequent Event [Member] | Preferred Units [Member] | ||||
Distributions payable | $ 1,400 |
Related-Party Transactions (Det
Related-Party Transactions (Details Narrative) $ in Thousands | May 29, 2018USD ($) | May 31, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Alati Arnegard LLC [Member] | |||||||
Subsidiary ownership interest | 25.00% | ||||||
Management fee revenue from related parties | $ 200 | $ 200 | $ 500 | $ 500 | |||
Accounts receivable from related parties | 100 | 100 | $ 100 | ||||
General Partner [Member] | Omnibus Agreement [Member] | |||||||
Quarterly administrative fee | $ 1,000 | $ 1,000 | |||||
Non-cash allocated costs | $ 1,800 | ||||||
General Partner [Member] | Omnibus Agreement [Member] | Minimum [Member] | |||||||
Line of credit borrowing capacity - multiple of Adjusted EBITDA | 3.75 | 3.75 | |||||
Preferred Units [Member] | Private Placement [Member] | |||||||
Proceeds of units sold in a private placement | $ 43,500 | ||||||
Preferred Units [Member] | Affiliated Entity [Member] | Private Placement [Member] | |||||||
Proceeds of units sold in a private placement | $ 43,500 |
Related-Party Transactions (D_2
Related-Party Transactions (Details Narrative 1) - CF Inspection Management, LLC [Member] | 9 Months Ended |
Sep. 30, 2018 | |
Ownership interest | 49.00% |
Revenues [Member] | |
Concentration percentage | 3.40% |
Cynthia A. Fields [Member] | |
Ownership interest | 51.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Master Service Agreement Compliance Audits [Member] | ||
Compliance audit contigencies reserve | $ 100 | $ 0 |
Performance Obligation [Member] | ||
Short-term security deposits | $ 600 | $ 500 |
Sale of Salt Water Disposal F_2
Sale of Salt Water Disposal Facility (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2018 | Jan. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Allocated goodwill | $ 50,370 | $ 50,370 | $ 53,435 | ||||
Gain on asset disposals | 822 | $ (208) | 4,137 | $ (95) | |||
Cash proceeds from settlement of litigation related to lightning strikes | 400 | ||||||
Water Services [Member] | |||||||
Gain on asset disposals | 769 | $ 4,039 | |||||
Water Services [Member] | Pecos SWD, LLC [Member] | |||||||
Cash proceeds from sale of subsidiary | $ 4,000 | ||||||
Allocated goodwill | 2,000 | ||||||
Gain on asset disposals | $ 1,800 | ||||||
Water Services [Member] | Orla SWD, LLC [Member] | |||||||
Cash proceeds from sale of subsidiary | $ 8,200 | ||||||
Allocated goodwill | 3,000 | ||||||
Gain on asset disposals | $ 1,800 | $ 200 |
Reportable Segments (Details)
Reportable Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |||
Revenues | $ 84,778 | $ 77,682 | $ 226,072 | $ 216,971 | |||
Costs of services | 71,870 | 68,292 | 194,092 | 192,643 | |||
Gross margin | 12,908 | 9,390 | 31,980 | 24,328 | |||
General and administrative | 6,064 | 5,574 | 17,341 | 16,013 | |||
Depreciation, amortization and accretion | 1,124 | 1,184 | 3,368 | 3,561 | |||
Impairments | 3,598 | ||||||
Losses on asset disposal, net | 95 | ||||||
(Gain) loss on asset disposal, net | (822) | 208 | (4,137) | 95 | |||
Operating income (loss) | 6,542 | 2,424 | 15,408 | 1,061 | |||
Interest expense, net | (1,283) | (1,907) | (4,907) | (5,411) | |||
Debt issuance cost write-off | (114) | ||||||
Foreign currency gains | 97 | 557 | (354) | 824 | |||
Other, net | 95 | 17 | 302 | 122 | |||
Net loss before income tax expense | 5,451 | 1,091 | 10,335 | (3,404) | |||
Total assets | 152,275 | 152,275 | $ 163,203 | ||||
Pipeline Inspection [Member] | |||||||
Revenues | 77,606 | 72,737 | 205,538 | 205,039 | |||
Costs of services | 68,350 | 65,323 | 183,305 | 185,308 | |||
Gross margin | 8,856 | 7,414 | 22,233 | 19,731 | |||
General and administrative | 4,422 | 3,893 | 12,313 | [1] | 10,212 | [2] | |
Depreciation, amortization and accretion | 571 | 577 | 1,717 | 1,755 | |||
Impairments | 1,329 | ||||||
Losses on asset disposal, net | 18 | ||||||
(Gain) loss on asset disposal, net | (21) | (21) | |||||
Operating income (loss) | 3,884 | 2,944 | 8,224 | 6,417 | |||
Total assets | 116,510 | 116,510 | 120,368 | ||||
Pipeline And Process Services [Member] | |||||||
Revenues | 3,881 | 2,834 | 11,307 | 5,927 | |||
Costs of services | 2,592 | 2,132 | 7,840 | 5,005 | |||
Gross margin | 1,289 | 702 | 3,467 | 922 | |||
General and administrative | 592 | 525 | 1,715 | 1,488 | |||
Depreciation, amortization and accretion | 143 | 157 | 449 | 471 | |||
Impairments | 1,581 | ||||||
(Gain) loss on asset disposal, net | (32) | (77) | |||||
Operating income (loss) | 586 | 20 | 1,380 | (2,618) | |||
Total assets | 9,365 | 9,365 | 10,481 | ||||
Water Services [Member] | |||||||
Revenues | 3,325 | 2,111 | 8,861 | 6,005 | |||
Costs of services | 962 | 837 | 2,981 | 2,330 | |||
Gross margin | 2,363 | 1,274 | 5,880 | 3,675 | |||
General and administrative | 774 | 858 | 2,402 | [3] | 1,651 | [4] | |
Depreciation, amortization and accretion | 410 | 450 | 1,202 | 1,335 | |||
Impairments | 688 | ||||||
Losses on asset disposal, net | 208 | 77 | |||||
(Gain) loss on asset disposal, net | (769) | (4,039) | |||||
Operating income (loss) | 1,948 | (242) | 6,315 | (76) | |||
Total assets | 23,919 | 23,919 | 31,472 | ||||
Other Segments [Member] | |||||||
Revenues | (34) | (34) | |||||
Costs of services | (34) | (34) | |||||
General and administrative | 276 | 298 | 911 | 2,662 | [5] | ||
Operating income (loss) | (276) | $ (298) | (911) | $ (2,662) | |||
Total assets | $ 2,481 | $ 2,481 | $ 882 | ||||
[1] | Amount includes $2.1 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | ||||||
[2] | Amount includes $0.7 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | ||||||
[3] | Amount includes $0.6 million of allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | ||||||
[4] | Amount includes $0.3 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | ||||||
[5] | Amount includes $1.8 million of allocated general and administrative expenses incurred by Holdings but not charged to us. For the six months ended June 30, 2017, Holdings waived the administrative fee specified in the omnibus agreement. |
Reportable Segments (Details Na
Reportable Segments (Details Narrative) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018USD ($)N | Sep. 30, 2017USD ($)N | Sep. 30, 2018USD ($)N | Sep. 30, 2017USD ($) | |||
General and administrative expenses | $ 6,064 | $ 5,574 | $ 17,341 | $ 16,013 | ||
Number of reportable segments | N | 3 | |||||
Omnibus Agreement [Member] | ||||||
General and administrative expenses | 800 | 700 | ||||
Pipeline Inspection [Member] | ||||||
General and administrative expenses | 4,422 | 3,893 | $ 12,313 | [1] | 10,212 | [2] |
Refund liability | 200 | 200 | ||||
Pipeline Inspection [Member] | Omnibus Agreement [Member] | ||||||
Administrative fee charged | 2,100 | 700 | ||||
Pipeline And Process Services [Member] | ||||||
General and administrative expenses | 592 | 525 | 1,715 | 1,488 | ||
Recognition of deferred revenue | 500 | |||||
Water Services [Member] | ||||||
General and administrative expenses | $ 774 | $ 858 | $ 2,402 | [3] | 1,651 | [4] |
Number of commercial saltwater disposal (SWD) facilities | N | 8 | 10 | 9 | |||
Number of managed facilities, equity owned | N | 1 | |||||
Water Services [Member] | Omnibus Agreement [Member] | ||||||
Administrative fee charged | $ 900 | $ 300 | ||||
[1] | Amount includes $2.1 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | |||||
[2] | Amount includes $0.7 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | |||||
[3] | Amount includes $0.6 million of allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. | |||||
[4] | Amount includes $0.3 million of the allocated quarterly administrative fee charged by Holdings specified in the omnibus agreement. |