Cypress Environmental Partners, L.P. 8-K 

Exhibit 99.1

CYPRESS ENVIRONMENTAL PARTNERS REPORTS FOURTH QUARTER RESULTS

TULSA, March 23, 2021 - Today, Cypress Environmental Partners, L.P., (NYSE: CELP) (“Cypress”) reported its financial results for the three months ended December 31, 2020.

HIGHLIGHTS

FOURTH QUARTER 2020 SUMMARY FINANCIAL RESULTS

(1)       This press release includes the following financial measures not presented in accordance with U.S. generally accepted accounting principles, or GAAP: adjusted EBITDA, adjusted EBITDA attributable to limited partners, and distributable cash flow. Each such non-GAAP financial measure is defined below under “Non-GAAP Financial Information”, and each is reconciled to its most directly comparable GAAP financial measure in schedules at the end of this press release.

CEO'S PERSPECTIVE

“2020 was our worst year in our short history following our best year that included record results in 2019 prior to the COVID-19 global pandemic. The fourth quarter is typically our weakest quarter each year and our business results continued to suffer because of ongoing demand headwinds from COVID-19 that continue to impact our customers, and the bad debt reserve from a former customer that filed and emerged from bankruptcy. Our primary focus continues to be safely serving our customers and ensuring the health and safety of our employees as the vaccination process for COVID-19 advances," said Peter C. Boylan III, Chairman, President, and CEO. “I continue to be proud of how our employees have handled the challenges with the pandemic in the field, office, and work-from-home environments. Commodity prices have made a strong recovery with WTI crude oil pricing topping $60 per barrel, which is benefitting both our customers and Cypress as our customers have more flexibility in their budgets for maintenance and new construction. We were pleased to reach agreement with our bank group to modify and extend the maturity date of our credit agreement to May 2022. We will use cash flows generated from operations to continue to reduce our debt and thereby strengthen our balance sheet. We will not resume our common unit distribution during this renewal term, and 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.”

“Sales remain our priority, and we are bidding on numerous opportunities with both existing and prospective customers. We were recently awarded an attractive long-term contract for maintenance inspection with a new customer. The near-term recovery remains fragile, as market participants evaluate the risks associated with new variants of the coronavirus.  Historically, as commodity prices increase, customers begin to increase their spending, which increases our opportunities to provide our services. We believe there will be significant long-term demand for our services, and we continue our efforts to diversify our customer base.”

“Our leadership team continues our diversification initiative to begin offering our inspection services to other industries, including renewables (such as wind, solar, hydroelectric), electrical transmission, municipal water, sewer, and Department of Transportation infrastructure (such as bridges). We have begun bidding on inspection opportunities in these new markets. Many of our inspectors and technicians have the skills to offer these services to these new markets. Longer term we hope to have the majority of our inspection revenue coming from these new segments”.

SEGMENT UPDATE

Inspection Services

Pipeline & Process Services (“PPS”)

Water & Environmental Services (“Environmental Services”)

COMMON UNIT & PREFERRED UNIT DISTRIBUTIONS

In July 2020, Cypress announced that it had temporarily suspended common unit distributions. Cypress’s credit facility, as amended in March 2021, contains significant restrictions on the payment of distributions. As a result, Cypress does not expect to pay significant distributions in the near term; instead, Cypress expects to use available cash to pay down debt and for working capital needs. An affiliate of the General Partner of Cypress also agreed to suspend the distribution payment to which it is entitled on his preferred units.

FOURTH QUARTER 2020 OPERATING RESULTS BY BUSINESS SEGMENT

Inspection Services

The Inspection Services segment’s results for the three months ended December 31, 2020 and 2019 were:

Pipeline & Process Services (“PPS”)

The PPS segment’s results for the three months ended December 31, 2020 and 2019 were:

Water & Environmental Services (“Environmental Services”)

The Environmental Services segment’s results for the three months ended December 31, 2020 and 2019 were:

CAPITALIZATION, LIQUIDITY, AND FINANCING

Cypress had outstanding borrowings of $62.0 million on its credit facility and cash and cash equivalents of $17.9 million at December 31, 2020. In March 2021, Cypress reached agreement with the lenders to modify and extend the maturity of the credit agreement to May 31, 2022. The total capacity on the amended credit facility is $75.0 million. The amendment increases the allowable gross leverage ratio to 6.0x at December 31, 2020 and March 31, 2021, 5.3x at June 30, 2021, and 4.5x at September 30, 2021. The maximum leverage ratio returns to 4.0x at December 31, 2021.

CAPITAL EXPENDITURES

During the quarter, Cypress had $0.2 million in maintenance capital expenditures and $0.1 million in expansion capital expenditures, which are reflective of an attractive business model that requires minimal capital expenditures.

ANNUAL REPORT

Cypress has filed its annual report on Form 10-K for the year ended December 31, 2020 with the Securities and Exchange Commission. Cypress will also post a copy of the Form 10-K on its website at www.cypressenvironmental.biz. Unitholders may request a printed copy of these reports free of charge by contacting Investor Relations at Cypress Environmental Partners, L.P., 5727 S. Lewis Ave., Suite 300, Tulsa, OK 74105 or by e-mailing [email protected].

NON-GAAP FINANCIAL INFORMATION

This press release and the accompanying financial schedules include the following non-GAAP financial measures: adjusted EBITDA, adjusted EBITDA attributable to limited partners, and distributable cash flow. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures. Cypress's non-GAAP financial measures should not be considered in isolation or as an alternative to its financial measures presented in accordance with GAAP, including revenues, net income or loss attributable to limited partners, net cash provided by or used in operating activities, or any other measure of liquidity or financial performance presented in accordance with GAAP as a measure of operating performance, liquidity, or ability to service debt obligations and make cash distributions to unitholders. The non-GAAP financial measures presented by Cypress may not be comparable to similarly-titled measures of other entities because other entities may not calculate their measures in the same manner.

Cypress defines adjusted EBITDA as net income or loss exclusive of (i) interest expense, (ii) depreciation, amortization, and accretion expense, (iii) income tax expense or benefit, (iv) equity-based compensation expense, (v) and certain other unusual or nonrecurring items. Cypress defines adjusted EBITDA attributable to limited partners as adjusted EBITDA exclusive of amounts attributable to the general partner and to noncontrolling interests. Cypress defines distributable cash flow as adjusted EBITDA attributable to limited partners less cash interest paid, cash income taxes paid, maintenance capital expenditures, and cash distributions on preferred equity. Management believes these measures provide investors meaningful insight into results from ongoing operations.

These non-GAAP financial measures are used as supplemental liquidity and performance measures by Cypress's management and by external users of its financial statements, such as investors, banks, and others to assess:

ABOUT CYPRESS ENVIRONMENTAL PARTNERS, L.P.

Cypress Environmental Partners, L.P. is a master limited partnership that provides essential environmental services to the energy and utility industries, including pipeline & infrastructure inspection, NDE testing, various integrity services, and pipeline & process services throughout the United States. Cypress also provides environmental services to upstream and midstream energy companies and their vendors in North Dakota, including water treatment, hydrocarbon recovery, and disposal into EPA Class II injection wells to protect our groundwater. Cypress works closely with its customers to help them protect people, property, and the environment, and to assist their compliance with increasingly complex and strict rules and regulations. Cypress is headquartered in Tulsa, Oklahoma.

CAUTIONARY STATEMENTS

This press release may contain or incorporate by reference forward-looking statements as defined under the federal securities laws regarding Cypress Environmental Partners, L.P., including projections, estimates, forecasts, plans and objectives. Although management believes that expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct. In addition, these statements are subject to certain risks, uncertainties and other assumptions that are difficult to predict and may be beyond Cypress's control. If any of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, Cypress's actual results may vary materially from what management forecasted, anticipated, estimated, projected or expected.

The key risk factors that may have a direct bearing on Cypress's results of operations and financial condition are described in detail in the "Risk Factors" section of Cypress's most recently filed annual report and subsequently filed quarterly reports with the Securities and Exchange Commission. Investors are encouraged to closely consider the disclosures and risk factors contained in Cypress's annual and quarterly reports filed from time to time with the Securities and Exchange Commission. The forward-looking statements contained herein speak as of the date of this announcement. Cypress undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Information contained in this press release is unaudited and subject to change.

Investors or Analysts:

Contact: Cypress Environmental Partners, L.P. - Jeff Herbers – Vice President & Chief Financial Officer
[email protected] or 918-947-5730

CYPRESS ENVIRONMENTAL PARTNERS, L.P.

Consolidated Balance Sheets

As of December 31, 2020 and 2019

(in thousands)

CYPRESS ENVIRONMENTAL PARTNERS, L.P.

Consolidated Statements of Operations

For the Three Months and Years Ended December 31, 2020 and 2019

(in thousands, except per unit data)

Reconciliation of Net (Loss) Income to Adjusted EBITDA

and Distributable Cash Flow

Reconciliation of Net (Loss) Income Attributable to

Limited Partners to Adjusted EBITDA Attributable

to Limited Partners and Distributable Cash Flow

Reconciliation of Net Cash Provided by Operating Activities to

Adjusted EBITDA and Distributable Cash Flow

Operating Data