Summary: Emerge Energy Services has a solid fuel processing and distribution business and an even better fracking sand segment. Emerge Energy Services is flying high on the back of strong demand of proppants. Here's what Emerge Energy Services is doing to post triple-digit earnings and double-digit revenue growth.
Emerge Energy Services operates in two unrelated segments in the energy space: fracking sand production and fuel processing and distribution. The master limited partnership has been posting robust growth in both of these segments, in terms of volume, revenues and earnings, but it's the relatively smaller sand production business which has got everyone excited.
Why? In terms of operating margins, the sand segment is ten times more profitable than the fuel segment. In the first six months of this year, Emerge Energy reported sand production operating margins of 28.2%, considerably higher than the fuel segment margin of just 2.6%.
In the first six months of this year, Emerge Energy has reported 48.2% growth in revenues of the fuel segment to $430.5 million, which is impressive but is overshadowed by the 113.2% growth in revenues from sand production to $141.8 million.