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Cypress Energy Partners, L.P. Announces Second Quarter 2018 Results

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Cypress Energy Partners, L.P. (NYSE:CELP)
today reported:

  • Revenues of $76.5 million for the second quarter, an increase of 2.5%
    from the second quarter of 2017, and an increase of 18.0% over the
    first quarter of 2018;
  • Gross margin of $10.9 million for the second quarter, an increase of
    27.1% from the second quarter of 2017, and an increase of 34.6% over
    the first quarter of 2018;
  • $10.5 million of cash as of June 30, 2018;
  • Coverage ratio of 1.25x, an increase of 48.8% from the second quarter
    of 2017; and
  • Cash distribution of $0.21 per unit, consistent with the last five
    quarters.

Peter C. Boylan III, Cypress Energy Partners, L.P.'s ("CELP") Chairman
and Chief Executive Officer stated, "We are encouraged by the sequential
improvement in our operating results in the second quarter of 2018. All
three of our business segments continued to show solid growth during the
quarter as anticipated. The strength of our recovery can be clearly seen
with significant improvements in EBITDA and DCF compared with prior
periods. Our Pipeline Inspection business, Tulsa Inspection Resources
("TIR"), achieved an important milestone in June, celebrating its 15th
anniversary. TIR has been profitable every year of its history, has
proven its resiliency during the financial crisis and the recent energy
downturn, and has posted an impressive history of growing its business
organically. During the quarter, we completed our previously announced
refinancing, and have significantly reduced our debt by 44% from the end
of 2017. We now enjoy a much stronger balance sheet with net leverage of
3.09x trailing twelve-month EBITDA.

"Our customers have recovered nicely from the downturn, benefitting from
the material improvement in commodity prices that have led to increases
in spending on maintenance and growth capital expenditures which, in
turn, has benefited our business. These fundamental improvements in the
energy industry underpin the confidence we have in our business outlook.
The last three years have been marked by the most significant energy
downturn in generations, and we have capitalized on a number of
competitive opportunities while simultaneously transforming our company
to be even more competitive in the broad-based recovery. We continue to
expand our lines of business organically and have reached new levels of
efficiency in all our activities as demonstrated in all three of our
business segments. We continue to look at some acquisition and organic
growth opportunities and remain ready to capture these opportunities.
Demand for our pipeline inspection and integrity services has remained
strong. Our Pipeline Inspection and Integrity Services segments
represented 96% of our revenues and 81% of our gross margin during the
three months ended June 30, 2018.

"The average pipeline inspector headcount from U.S. operations of 1,183
during the second quarter of 2018 was a 9.8% increase from the U.S.
inspector headcount during second quarter 2017. Revenues and gross
margins during 2018 have also benefitted from two new service lines that
we developed during 2017. Our Pipeline Inspection gross margin
percentage continues to improve (11.2% in the second quarter of 2018,
compared to 9.5% in the first quarter of 2018 and 9.7% in the second
quarter of 2017) as a result of our focus on higher-margin services.

"Revenues of our Integrity Services (hydrostatic testing) segment of
$7.4 million during the first six months of 2018 were considerably
higher than revenues of $3.1 million during the first six months of
2017. Our margin percentage of 29.3% in the first six months of 2018 was
also considerably higher than the margin percentage of 7.1% in the first
six months of 2017.

"Our Water Services segment continues to benefit from higher rig counts,
activity, and oil prices. Revenues from our North Dakota operations
continue to significantly increase ($3.0 million during second quarter
2018, compared to $2.4 million during first quarter 2018 and $1.5
million during second quarter 2017, an increase of 100% from
year-to-year) due to increased customer activity and the completion in
January 2018 of a new pipeline gathering system into one of our
facilities.

"We also sold our two saltwater disposal facilities in West Texas
earlier this year on attractive terms, and now operate our Water
Services segment solely in the Williston Basin region of North Dakota,
where we believe we have better economies of scale. We currently operate
nine saltwater disposal facilities with nine different connected
pipelines, with additional pipelines currently under development.
Approximately 43% of our saltwater disposal volumes in the second
quarter of 2018 were received via these pipelines. During the second
quarter of 2018, 90% of our saltwater was produced saltwater from
completed oil wells."

Additionally, Mr. Boylan stated, "We continue to pursue acquisition
opportunities and the previously-announced strategic alternatives
process. The long-term increasing demand for pipeline inspection and
integrity services and water solutions remains strong due to our
nation's aging pipeline infrastructure, growing production, and
increasing governmental regulations."

Second Quarter:

  • Revenue of $76.5 million for the three months ended June 30, 2018,
    compared with $74.6 million for the three months ended June 30, 2017,
    representing a 2.5% increase. For the quarter, revenue increased
    sequentially by 18% over the three months ended March 31, 2018 of
    $64.8 million.
  • Gross margin of $10.9 million for the three months ended June 30,
    2018, compared to $8.6 million for the three months ended June 30,
    2017, representing a 27.1% increase. For the quarter, gross margin
    increased 34.6% over the three months ended March 31, 2018, with a
    gross margin of $8.1 million. The gross margin percentage was 14.3%
    for the three months ended June 30, 2018, compared to 11.5% for the
    three months ended June 30, 2017 and 12.5% for the three months ended
    March 31, 2018.
  • Net income of $3.6 million for the three months ended June 30, 2018,
    compared to $0.5 million for the three months ended June 30, 2017. Net
    income included gains on asset sales of $1.6 million and $0.1 million
    for the three months ended June 30, 2018 and 2017, respectively. For
    the three months ended March 31, 2018, net income was $1.0 million.
  • Net income attributable to CELP limited partners of $3.4 million for
    the three months ended June 30, 2018, compared to $1.5 million for the
    three months ended June 30, 2017, representing a 133.5% increase.
    During the three months ended June 30, 2017, income attributable to
    limited partners included $0.8 million of sponsor support. For the
    three months ended March 31, 2018, net income attributable to CELP
    limited partners was $0.7 million.
  • Adjusted EBITDA of $5.9 million for the three months ended June 30,
    2018 (including noncontrolling interests and amounts attributable to
    our general partner), compared to $4.8 million for the three months
    ended June 30, 2017 (including noncontrolling interests and amounts
    attributable to our general partner), representing an increase of
    21.8%. During the three months ended June 30, 2017, Adjusted EBITDA
    included $0.8 million of sponsor support. The second quarter Adjusted
    EBITDA increased 81% compared to the three months ended March 31, 2018
    Adjusted EBITDA of $3.3 million.
  • Adjusted EBITDA attributable to limited partners of $5.6 million for
    the three months ended June 30, 2018, compared to $4.8 million for the
    three months ended June 30, 2017, representing an increase of 16.4%.
    During the three months ended June 30, 2017, Adjusted EBITDA
    attributable to limited partners included $0.8 million of sponsor
    support. The second quarter Adjusted EBITDA attributable to limited
    partners increased 96% compared to the three months ended March 31,
    2018 Adjusted EBITDA attributable to limited partners of $2.9 million.
  • Distributable Cash Flow available to limited partners of $3.1 million
    for the three months ended June 30, 2018, compared to $2.1 million for
    the three months ended June 30, 2017, representing an increase of
    48.6%. During the three months ended June 30, 2017, distributable cash
    flow included $0.8 million of sponsor support. The second quarter
    Distributable Cash Flow increased 236% compared to the three months
    ended March 31, 2018 Distributable Cash Flow of $0.9 million.
  • A coverage ratio of 1.25x in the second quarter of 2018, compared to a
    coverage ratio of 0.84x in the second quarter of 2017 and a coverage
    ratio of 0.37x in the first quarter of 2018.
  • A leverage ratio of 3.6x compared to a 4.0x covenant maximum and an
    interest coverage ratio of 5.0x compared to a 3.0x covenant minimum at
    June 30, 2018 pursuant to the terms of our credit facility.

Year-To-Date:

  • Revenue of $141.3 million for the six months ended June 30, 2018, an
    increase of 1.4% from the same period in the prior year. This increase
    was due to increased customer activity in each of our business
    segments, despite the sale during 2018 of two of our saltwater
    disposal facilities and a significant reduction in our Canadian
    operations.
  • Net income of $4.5 million for the six months ended June 30, 2018,
    compared to net loss of $4.4 million for the same period in the prior
    year. Net income included gains on asset sales of $3.3 million and
    $0.1 million for the six months ended June 30, 2018 and 2017,
    respectively. Net loss for the six months ended June 30, 2017 included
    impairment charges of $3.6 million.
  • Net income attributable to limited partners of $4.1 million for the
    six months ended June 30, 2018, compared to a net loss of $1.4 million
    for the same period in the prior year (including impairment charges of
    $2.8 million). During the six months ended June 30, 2017, net loss
    attributable to limited partners was reduced by $1.8 million of
    sponsor support.
  • Adjusted EBITDA of $9.1 million for the six months ended June 30, 2018
    (including non-controlling interests), compared to $7.6 million for
    the same period in the prior year, up 19.7%. During the six months
    ended June 30, 2017, Adjusted EBITDA included $1.8 million of sponsor
    support. Excluding sponsor support in the prior year period, Adjusted
    EBITDA increased 55%.
  • Adjusted EBITDA attributable to limited partners of $8.5 million for
    the six months ended June 30, 2018, compared to $7.9 million for the
    same period in the prior year, up 7.7%. During the six months ended
    June 30, 2017, Adjusted EBITDA attributable to limited partners
    included $1.8 million of sponsor support. Excluding sponsor support in
    the prior year period, Adjusted EBITDA attributable to limited
    partners increased 38%.
  • Distributable Cash Flow attributable to limited partners of $4.1
    million for the six months ended June 30, 2018, up 19.0% from the same
    period in the prior year and 145% excluding sponsor support in the
    prior year.

Highlights include:

  • A more attractive mix of business generating higher margins, EBITDA,
    and distributable cash flow on less working capital.
  • We averaged 1,188 inspectors per week for the second quarter of 2018,
    a slight increase compared to 1,186 in the second quarter of 2017 and
    1,030 in the first quarter of 2018. Our focus on maintenance and
    integrity work and non-destructive examination ("NDE") continues to
    benefit our gross margins in comparison with our basic inspection work.
  • We disposed 3.6 million barrels of saltwater, at an average revenue
    per barrel of $0.85 for the second quarter of 2018, compared with the
    disposal of 3.0 million barrels of saltwater at an average revenue per
    barrel of $0.68 for the second quarter of 2017 and 3.1 million barrels
    of saltwater at an average revenue per barrel of $0.82 for the first
    quarter of 2018.
  • Maintenance capital expenditures for the three months ended June 30,
    2018 were $0.1 million, compared to a nominal amount in the second
    quarter of 2017.
  • Our expansion capital expenditures during the first six months of 2018
    totaled $3.6 million and were primarily related to new pipelines which
    expanded our Water Services segment, the rebuilding of two saltwater
    disposal facilities that were struck by lightning in 2017 (one of
    which was subsequently sold), and equipment purchases in our Pipeline
    Inspection segment to support its growth.

Looking forward:

  • We continue to successfully grow our business organically pursuing new
    projects, new customers, and renewing existing contracts. We have
    solid growth prospects for the foreseeable future.
  • Our Integrity Services business (hydrostatic testing) second quarter
    results substantially improved over the prior year with an increase in
    average revenue per field personnel. We continue to see improvements
    in this segment as the economy turns and we invest in our senior
    management team.
  • During the second quarter, 90% of total water volumes came from
    produced water, and piped water represented 43% of total water
    volumes. As commodity prices have improved leading to increased
    drilling activity, we expect to have operating leverage with our cost
    structure and minimal maintenance capital expenditure requirements as
    volumes increase. During the second quarter of 2018, we rebuilt a
    North Dakota saltwater disposal facility which was struck by lightning
    in July 2017.
  • Our saltwater disposal facilities have substantial unused capacity to
    support growth with current utilization of approximately 40%.
  • We continue to evaluate several acquisition opportunities that would
    initially be acquired by our sponsor with the expectation that they
    would be offered to CELP in the future as a drop-down opportunity.
  • Our debt interest rate is floating and LIBOR interest rates have
    continued to rise over the last quarter by approximately 22 basis
    points and by almost 87 basis points compared to this time last year.
    The reduction in our outstanding debt upon amending our Credit
    Facility will favorably impact our interest expense.

CELP will file its quarterly report on Form 10-Q for the period ended
June 30, 2018 with the Securities and Exchange Commission on August 14,
2018. CELP will also post a copy of the Form 10-Q on its website at www.cypressenergy.com.

CELP will host the Second Quarter Earnings Conference Call on Tuesday,
August 14, 2018, at 10:00 am EDT (9:00 am CDT) to discuss its second
quarter 2018 financial results. Analysts, investors, and other
interested parties may access the conference call by dialing Toll-Free
(US & Canada): (888) 339-2688, Passcode 78286946, or International
Dial-In (Toll): (617) 847-3007, Passcode 78286946. An archived audio
replay of the call will be available on the Investor section of our
website at www.cypressenergy.com
beginning at 10:00 am EDT (9:00 am CDT) on August 16, 2018.

Non-GAAP Measures:

CELP defines Adjusted EBITDA as net income (loss), plus interest
expense, depreciation, amortization and accretion expenses, income tax
expenses, impairments, non-cash allocated expenses, and equity based
compensation, plus or minus other extraordinary or non-recurring items.
CELP defines Adjusted EBITDA attributable to limited partners as net
income (loss) attributable to limited partners, plus interest expense
attributable to limited partners, depreciation, amortization and
accretion attributable to limited partners, impairments attributable to
limited partners, income tax expense attributable to limited partners,
and equity based compensation attributable to limited partners, plus or
minus other extraordinary or non-recurring items attributable to limited
partners. CELP defines Distributable Cash Flow as Adjusted EBITDA
attributable to limited partners excluding cash interest paid, cash
income taxes paid, maintenance capital expenditures, and cash
distributions on preferred equity. These are supplemental, non-GAAP
financial measures used by management and by external users of our
financial statements, such as investors and commercial banks, to assess
our operating performance as compared to those of other companies in the
midstream sector, without regard to financing methods, historical cost
basis or capital structure; the ability of our assets to generate
sufficient cash flow to make distributions to our unitholders; our
ability to incur and service debt and fund capital expenditures; the
viability of acquisitions and other capital expenditure projects; and
the returns on investment of various investment opportunities. The GAAP
measures most directly comparable to Adjusted EBITDA, Adjusted EBITDA
attributable to limited partners, and Distributable Cash Flow are net
income (loss) and cash flow from operating activities, respectively.
These non-GAAP measures should not be considered as alternatives to the
most directly comparable GAAP financial measure. Each of these non-GAAP
financial measures exclude some, but not all, items that affect the most
directly comparable GAAP financial measure. Adjusted EBITDA, Adjusted
EBITDA attributable to limited partners and Distributable Cash Flow
should not be considered an alternative to net income, income before
income taxes, net income attributable to limited partners, cash flows
from operating activities, or any other measure of financial performance
calculated in accordance with GAAP as those items are used to measure
operating performance, liquidity, or the ability to service debt
obligations. CELP believes that the presentation of Adjusted EBITDA,
Adjusted EBITDA attributable to limited partners and Distributable Cash
Flow will provide useful information to investors in assessing our
financial condition and results of operations. CELP uses Adjusted
EBITDA, Adjusted EBITDA attributable to limited partners and
Distributable Cash Flow as a supplemental financial measure to both
manage our business and assess the cash flows generated by our assets
(prior to the establishment of any retained cash reserves by the general
partner) to fund the cash distributions we expect to pay to unitholders,
to evaluate our success in providing a cash return on investment, and
whether or not the Partnership is generating cash flow at a level that
can sustain or support an increase in its quarterly distribution rates
and to determine the yield of our units, which is a quantitative
standard used throughout the investment community with respect to
publicly-traded partnerships, as the value of a unit is generally
determined by a unit's yield (which in turn is based on the amount of
cash distributions the entity pays to a unitholder). Because Adjusted
EBITDA, Adjusted EBITDA attributable to limited partners and
Distributable Cash Flow may be defined differently by other companies in
our industry, our definitions of Adjusted EBITDA, Adjusted EBITDA
attributable to limited partners and Distributable Cash Flow may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility. Reconciliations of (i) Net Income (Loss) to
Adjusted EBITDA and Distributable Cash Flow, (ii) Net Income (Loss)
attributable to limited partners to Adjusted EBITDA attributable to
limited partners and Distributable Cash Flow and (iii) Net Cash Provided
by Operating Activities to Adjusted EBITDA and Distributable Cash Flow
are provided below.

This press release includes "forward-looking statements." All
statements, other than statements of historical facts included or
incorporated herein, may constitute forward-looking statements. Actual
results could vary significantly from those expressed or implied in such
statements, and are subject to a number of risks and uncertainties.
While CELP believes its expectations, as reflected in the
forward-looking statements, are reasonable, CELP can give no assurance
that such expectations will prove to be correct. The forward-looking
statements involve risks and uncertainties that affect operations,
financial performance, and other factors as discussed in filings with
the Securities and Exchange Commission. Other factors that could impact
any forward-looking statements are those risks described in CELP's
Annual Report filed on Form 10-K and other public filings. You are urged
to carefully review and consider the cautionary statements and other
disclosures made in those filings, specifically those under the heading
"Risk Factors." CELP undertakes no obligation to publicly update or
revise any forward-looking statements except as required by law.

About Cypress Energy Partners, L.P.

Cypress Energy Partners, L.P. is a master limited partnership that
provides essential midstream services, including pipeline inspection,
integrity, and hydrostatic testing services to various energy companies
and their vendors throughout the U.S. and Canada. Cypress also provides
saltwater disposal and environmental services to upstream energy
companies and their vendors in North Dakota in the Bakken region of the
Williston Basin. In all of these business segments, Cypress works
closely with its customers to help them comply with increasingly complex
and strict environmental and safety rules and regulations, and reduce
their operating costs. Cypress is headquartered in Tulsa, Oklahoma.

 
CYPRESS ENERGY PARTNERS, L.P.
Unaudited Condensed Consolidated Balance Sheets
As of June 30, 2018 and December 31, 2017
(in thousands, except unit data)
    June 30,       December 31,
  2018     2017  
 
ASSETS
Current assets:
Cash and cash equivalents $ 10,499 $ 24,508
Trade accounts receivable, net 47,692 41,693
Prepaid expenses and other 1,040 2,294
Assets held for sale   -     2,172  
Total current assets 59,231 70,667
Property and equipment:
Property and equipment, at cost 23,057 22,700
Less: Accumulated depreciation   9,991     9,312  
Total property and equipment, net 13,066 13,388
Intangible assets, net 24,114 25,477
Goodwill 50,344 53,435
Debt issuance costs, net 1,498 -
Other assets   266     236  
Total assets $ 148,519   $ 163,203  
 
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable $ 3,404 $ 3,757
Accounts payable - affiliates 3,966 3,173
Accrued payroll and other 11,163 9,109
Liabilities held for sale - 97
Income taxes payable 346 646
Current portion of long-term debt   -     136,293  
Total current liabilities 18,879 153,075
Long-term debt 76,129 -
Asset retirement obligations   142     143  
Total liabilities 95,150 153,218
 
Owners' equity:
Partners' capital:
Common units (11,933,522 and 11,889,958 units outstanding at
June 30, 2018 and December 31, 2017, respectively) 33,852 34,614
Preferred units (5,769,231 units outstanding at June 30, 2018) 43,636 -
General partner (25,876 ) (25,876 )
Accumulated other comprehensive loss   (2,545 )   (2,677 )
Total partners' capital 49,067 6,061
Noncontrolling interests   4,302     3,924  
Total owners' equity   53,369     9,985  
Total liabilities and owners' equity $ 148,519   $ 163,203  
 
CYPRESS ENERGY PARTNERS, L.P.
Unaudited Condensed Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2018 and 2017
(in thousands, except unit and per unit data)
       
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
 
Revenue $ 76,468 $ 74,567 $ 141,294 $ 139,289
Costs of services 65,525 65,958 122,222 124,351
Gross margin 10,943 8,609 19,072 14,938
 
Operating costs and expense:
General and administrative 5,822 5,329 11,277 10,439
Depreciation, amortization and accretion 1,110 1,206 2,244 2,377
Impairments - - - 3,598
Gain on asset disposals, net (1,606) (113) (3,315) (113)
Operating income (loss) 5,617 2,187 8,866 (1,363)
 
Other (expense) income:
Interest expense, net (1,668) (1,795) (3,624) (3,504)
Debt issuance cost write-off (114) - (114) -
Foreign currency gains (losses) (117) 267 (451) 267
Other, net 125 60 207 105
Net income (loss) before income tax expense 3,843 719 4,884 (4,495)
Income tax expense (benefit) 287 222 368 (71)
Net income (loss) 3,556 497 4,516 (4,424)
 
Net income (loss) attributable to noncontrolling interests 149 (133) 384 (1,298)
Net income (loss) attributable to partners / controlling interests 3,407 630 4,132 (3,126)
Net loss attributable to general partner - (829) - (1,750)
Net income (loss) attributable to limited partners 3,407 1,459 4,132 (1,376)
Net income attributable to preferred unitholders 367 - 367 -
Net income (loss) attributable to common unitholders $ 3,040 $ 1,459 $ 3,765 $ (1,376)
 
Net income (loss) per common limited partner unit:
Basic $ 0.25 $ 0.12 $ 0.32 $ (0.13)
Diluted $ 0.24 $ 0.12 $ 0.31 $ (0.13)
 
Weighted average common units outstanding:
Basic 11,933,390 11,880,452 11,916,127 10,404,026
Diluted 14,298,409 12,002,538 13,323,692 10,404,026
 
Weighted average subordinated units outstanding - basic and diluted - - - 1,470,083
 

Reconciliation of Net Income (Loss) to Adjusted EBITDA to
Distributable
Cash Flow

       
Three Months ended June 30, Six Months ended June 30,
  2018   2017   2018   2017  
(in thousands)
 
Net income (loss) $ 3,556 $ 497 $ 4,516 $ (4,424 )
Add:
Interest expense 1,668 1,795 3,624 3,504
Debt issuance cost write-off 114 - 114 -
Depreciation, amortization and accretion 1,375 1,481 2,793 2,913
Impairments - - - 3,598
Income tax expense (benefit) 287 222 368 (71 )
Non-cash allocated expenses - 829 - 1,750
Equity based compensation 335 409 547 766
Foreign currency losses 117 - 451 -
Less:
Foreign currency gains - 267 - 267
Gain on asset disposals, net   1,561   131   3,270   131  
Adjusted EBITDA $ 5,891 $ 4,835 $ 9,143 $ 7,638  
 
Adjusted EBITDA attributable to noncontrolling interests   278   12   664   (236 )
Adjusted EBITDA attributable to limited partners / controlling
interests
$ 5,613 $ 4,823 $ 8,479 $ 7,874  
 
Less:
Cash interest paid, cash taxes paid, maintenance capital expenditures   2,492   2,723   4,428   4,470  
Distributable cash flow $ 3,121 $ 2,100 $ 4,051 $ 3,404  
 
Reconciliation of Net Income (Loss) Attributable to Limited
Partners to Adjusted EBITDA Attributable to
Limited Partners and Distributable Cash Flow
 
Three Months ended June 30, Six Months ended June 30,
  2018   2017   2018   2017  
(in thousands)
 
Net income (loss) attributable to limited partners $ 3,407 $ 1,459 $ 4,132 $ (1,376 )
Add:
Interest expense attributable to limited partners 1,668 1,795 3,624 3,504
Debt issuance cost write-off attributable to limited partners 114 - 114 -
Depreciation, amortization and accretion attributable to limited
partners
1,252 1,340 2,527 2,630
Impairments attributable to limited partners - - - 2,823
Income tax expense attributable to limited partners 281 218 354 (75 )
Equity based compensation attributable to limited partners 335 409 547 766
Foreign currency losses attributable to limited partners 117 - 451 -
Less:
Foreign currency gains attributable to limited partners - 267 - 267
Gain on asset disposals attributable to limited partners, net   1,561   131   3,270   131  
Adjusted EBITDA attributable to limited partners 5,613 4,823 8,479 7,874
 
Less:
Cash interest paid, cash taxed paid and maintenance capital
expenditures
attributable to limited partners   2,492   2,723   4,428   4,470  
Distributable cash flow $ 3,121 $ 2,100 $ 4,051 $ 3,404  
 
Reconciliation of Net Cash Provided by Operating Activities to
Adjusted EBITDA to Distributable Cash Flow
Attributable to Limited Partners
      Six Months ended June 30,
      2018       2017  
(in thousands)
 
Cash flows provided by operating activities $ 2,059 $ 1,712
Changes in trade accounts receivable, net 6,059 4,727
Changes in prepaid expenses and other (1,358 ) 586
Changes in accounts payable and accrued liabilities (1,744 ) (3,920 )
Change in income taxes payable 300 802
Interest expense (excluding non-cash interest) 3,377 3,210
Income tax expense (excluding deferred tax benefit) 368 287
Other   82     234  
Adjusted EBITDA $ 9,143   $ 7,638  
 
Adjusted EBITDA attributable to noncontrolling interests   664     (236 )
Adjusted EBITDA attributable to limited partners / controlling
interests
$ 8,479   $ 7,874  
 
Less:
Cash interest paid, cash taxes paid, maintenance capital expenditures   4,428     4,470  
Distributable cash flow $ 4,051   $ 3,404  
Operating Data      
Three Months Six Months
Ended June 30, Ended June 30,
  2018     2017     2018     2017  
 
Total barrels of saltwater disposed (in thousands) 3,577 2,966 6,652 5,739
Average revenue per barrel $ 0.85 $ 0.68 $ 0.83 $ 0.68
Water and environmental services gross margins 68.3 % 70.0 % 63.5 % 61.7 %
Average number of inspectors 1,188 1,186 1,109 1,135
Average number of U.S. inspectors 1,183 1,077 1,102 968
Average revenue per inspector per week $ 4,556 $ 4,550 $ 4,475 $ 4,508
Pipeline inspection services gross margins 11.2 % 9.7 % 10.4 % 9.3 %
Average number of field personnel 22 18 22 17
Average revenue per field personnel per week $ 10,755 $ 10,244 $ 13,054 $ 7,036
Pipeline integrity services gross margins 32.0 % 17.9 % 29.3 % 7.1 %
Maintenance capital expenditures (in thousands) $ 139 $ 14 $ 263 $ 88
Expansion capital expenditures (in thousands) $ 1,725 $ 67 $ 3,632 $ 291
Distributions (in thousands) $ 2,506 $ 2,495 $ 5,012 $ 4,990
Coverage ratio 1.25x 0.84x 0.81x 0.68x

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