“The operating results for the quarter were both disappointing and unacceptable.”
Cypress Environmental Partners, LP Chairman, President and CEO Peter C. Boylan III was blunt about his assessment of the company’s financial earnings report for the three months ended March 31, 2021.
The company managed to reduce its debt by $20.2 million in the quarter but it also had a net loss of $3.7 million attributable to common unitholders and adjusted EBITDA of only $800,000 during the time period. The net loss amounted to 30 cents per basic unit and 15 cents per diluted unit.
As a result, the company’s common unit and preferred unit distributions remain suspended as Cypress focuses on reducing even more debt.
During the quarter, Cypress took additional steps to reduce costs with more reductions in workforce and increased furloughs.
Boylan said the first and fourth quarters are typically slower quarters for Cypress so perhaps things will improve as the firm enters its second quarter.
“As commodity prices have continued to improve with WTI crude oil approaching $65 per barrel, we are seeing our customers resume spending on inspection services that were deferred and we have seen some nominal growth in the number of inspectors deployed.”
He said sales efforts are beginning to show some promising results “with some exciting wins with new municipal customers inspecting non-energy public assets.”
But it’s obvious things have been financially tough for the company as it restricted cash distributions.
“An affiliate of our general partner has graciously agreed to suspend his right to receive distributions on his preferred equity until we reduce our leverage,” added Boylan.
The slow resumption of drilling activities nationally obviously had a heavy impact on Cypress as reflected in its different segments.
A breakdown of the company’s divisions showed its Inspection Services had a low headcount in early 2021 “as customers continue to evaluate their spending plans.” The division had a 60% decline in revenues.
The firm’s Pipeline & Process Services is still “slow” and implemented “substantial salary reductions, furloughs and reductions-in-force” in the first quarter of 2021. Revenues declined 89% and were less than $0.1 million in January and February and increased to $0.3 million in March.
The company’s Water & Environmental Services saw a slight increase in business at its water treatment facilities in North Dakota but revenues still dropped 30% and the pending Dakota Access Pipeline decision in a federal lawsuit “remains a major overhang” in the state.
Capital expenditures for the company were held to $0.1 million and there was no expansion of cap-ex.
Click here for Cypress Environmental press release