SCOTTSDALE, Ariz., Nov. 5, 2015 /PRNewswire/ -- Nuverra Environmental Solutions, Inc. (NYSE: NES) ("Nuverra" or the "Company") announced financial and operating results today for the third quarter and nine months ended September 30, 2015.
SUMMARY OF THIRD-QUARTER RESULTS
Mark D. Johnsrud, Chairman of the Board and Chief Executive Officer, commented, "The third quarter saw volume and pricing headwinds as customers reduced drilling and completion activities. To position the company to weather these trends, which we expect to continue into 2016, we continued to focus on our cost-management and efficiency initiatives with a goal of operating within our cash flow as we work to complete the next steps to transform our business.
"In the recent amendments to our credit facility, our banks agreed to carve out our midstream subsidiary from our corporate capital structure. This is an important step toward advancing our long-term midstream strategy because it opens the door to project-level financing. Our objective is to seek long-term customer contracts that can reduce our overall economic exposure to fluctuations in commodity prices and well-activity levels."
THIRD-QUARTER 2015 RESULTS
Third-quarter 2015 revenue from continuing operations was $76.5 million, a decrease of approximately $63.1 million or 45.2%, compared with third-quarter 2014 revenue from continuing operations of $139.6 million. The decrease was primarily related to declines in overall customer drilling and completion activities and service pricing erosion, both of which drove lower revenue from water logistics, salt water disposal, solids management and rental services, offset in part by higher revenue related to salt water recycling services in the Northeast Division.
Adjusted for special items, total costs and expenses were down 34.9% compared with the third quarter of 2014. These reductions included approximately $17 million in lower payroll and related expenses, approximately $8 million in fuel savings, and approximately $5 million in lower depreciation and amortization expense, with the remainder related primarily to reductions in all other direct operating costs. Total costs and expenses excluding special items were down 22.0% in the first nine months of 2015 compared with the same period in 2014.
During the third quarter, continued declines in global crude oil prices, coupled with a reduction in the market price of the Company's common stock, required the Company to record a pre-tax, non-cash goodwill impairment charge of $104.7 million.
Excluding special items, third-quarter net loss from continuing operations was $22.5 million, or a loss of $0.81 per diluted share, compared with net loss of $6.3 million, or a loss of $0.24 per diluted share, in the third quarter of 2014. Reported third-quarter net loss from continuing operations was $128.1 million, or a loss of $4.61 per share, compared with a net loss from continuing operations of $99.4 million, or a loss of $3.73 per share in the third quarter of 2014.
Third-quarter adjusted EBITDA from continuing operations was $6.3 million, a 77.7% decrease compared with adjusted EBITDA from continuing operations of $28.0 million in the third quarter of 2014. Third-quarter adjusted EBITDA margin was 8.2%, compared with 20.1% for the third quarter of 2014. The year-over-year margin variance was due primarily to lower overall revenues associated with reduced customer drilling and completion-related activities, offset in part by lower total costs and expenses.
YEAR-TO-DATE RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015 ("YTD")
YTD revenue from continuing operations was $288.1 million, a decrease of $106.5 million or 27.0%, compared with $394.5 million for the same period in 2014. The decrease was primarily related to significant overall declines in customer drilling and completion activities during the period. These declines resulted in lower revenues for water logistics, solids management and rentals in the Rocky Mountain Division and a reduction in water logistics and fresh water transfer services in the Southern Division, offset in part by increases in revenue related to water logistics and salt water recycling services in the Northeast Division.
Excluding special items, YTD net loss from continuing operations was $52.3 million, or a loss of $1.89 per diluted share, compared with a loss of $29.3 million, or a loss of $1.14 per diluted share, for the same period in 2014. Reported YTD net loss from continuing operations was $160.8 million, or a loss of $5.82 per diluted share, compared with a loss of $136.1 million, or a loss of $5.28 per diluted share, for the same period in 2014.
Adjusted EBITDA from continuing operations for the YTD period was $37.3 million and a margin of 12.9%, compared with adjusted EBITDA from continuing operations of $69.8 million and a margin of 17.7% for the same period in 2014. The year-over-year margin variance was due primarily to lower overall revenues associated with reduced customer drilling and completion-related activities, offset in part by lower total costs and expenses.
CASH & LIQUIDITY
Net cash provided by operating activities from continuing operations through September 30, 2015 was $55.7 million. Year-to-date net cash capital expenditures from continuing operations (or purchases of property, plant and equipment net of proceeds received from sales of property, plant and equipment) were $4.2 million. The Company generated $51.4 million in free cash flow for the nine-month period.
As of September 30, 2015, total debt outstanding, excluding $0.5 million of discounts and premiums, was $522.3 million, consisting of $400.0 million of 2018 Notes, $101.8 million outstanding under the revolving credit facility, and $20.5 million in capital leases and notes payable.
On November 2, 2015, the Company amended its credit facility following a periodic redetermination of its borrowing base, reducing lender commitments to $125.0 million from $195.0 million, reflecting lower appraisal values for machinery and equipment used in determining the borrowing base. As of November 2, 2015, after giving effect to the amendment and appraisal, $101.8 million was outstanding under the credit facility and estimated availability under the facility was less than $5 million, net of required reserves, with cash on hand of approximately $31.6 million.
Additionally, as the Company prepared for next steps in its water infrastructure investment strategy, the amendment releases Nuverra Rocky Mountain Pipeline, LLC ("RMP"), a wholly-owned subsidiary of the Company, from all obligations under the credit facility, including as guarantor and a grantor under the guaranty and security agreement to the credit facility. The agreement with the banks releases all liens on the assets of RMP and equity interests in RMP to the extent they are transferred to a third-party investor and establishes a separate permitted investment basket allowing for additional aggregate investments of up to $5.0 million in RMP. The Company concurrently designated RMP as an Unrestricted Subsidiary under the indenture governing its 9.875% Senior Notes due 2018 and removing RMP as a guarantor thereunder.
DIVISION RESULTS SUMMARY
| Three Months Ended September 30, 2015 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 41,325 |
$ 19,825 |
$ 15,378 |
$ - |
$ 76,528 |
|||||
| Operating loss |
(104,710) |
(1,421) |
(4,441) |
(5,497) |
(116,069) |
|||||
| Operating Margin % |
(253.4%) |
(7.2%) |
(28.9%) |
NA |
(151.7%) |
|||||
| Adjusted EBITDA |
8,442 |
2,606 |
740 |
(5,524) |
6,264 |
|||||
| Adjusted EBITDA Margin % |
20.4% |
13.1% |
4.8% |
NA |
8.2% |
|||||
| Three Months Ended September 30, 2014 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 87,596 |
$ 25,759 |
$ 26,288 |
$ - |
$ 139,643 |
|||||
| Operating income (loss) |
14,112 |
(33,917) |
(68,217) |
(2,775) |
(90,797) |
|||||
| Operating Margin % |
16.1% |
(131.7%) |
(259.5%) |
NA |
(65.0%) |
|||||
| Adjusted EBITDA |
27,439 |
4,063 |
2,292 |
(5,760) |
28,034 |
|||||
| Adjusted EBITDA Margin % |
31.3% |
15.8% |
8.7% |
NA |
20.1% |
|||||
| Nine Months Ended September 30, 2015 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 158,336 |
$ 74,549 |
$ 55,182 |
$ - |
$ 288,067 |
|||||
| Operating loss |
(93,147) |
(1,224) |
(9,923) |
(19,096) |
(123,390) |
|||||
| Operating Margin % |
(58.8%) |
(1.6%) |
(18.0%) |
NA |
(42.8%) |
|||||
| Adjusted EBITDA |
37,560 |
11,052 |
4,983 |
(16,342) |
37,253 |
|||||
| Adjusted EBITDA Margin % |
23.7% |
14.8% |
9.0% |
NA |
12.9% |
|||||
| Nine Months Ended September 30, 2014 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 246,981 |
$ 67,418 |
$ 80,120 |
$ - |
$ 394,519 |
|||||
| Operating income (loss) |
32,865 |
(41,227) |
(77,326) |
(22,100) |
(107,788) |
|||||
| Operating Margin % |
13.3% |
(61.2%) |
(96.5%) |
NA |
(27.3%) |
|||||
| Adjusted EBITDA |
72,167 |
7,577 |
6,200 |
(16,122) |
69,822 |
|||||
| Adjusted EBITDA Margin % |
29.2% |
11.2% |
7.7% |
NA |
17.7% |
Rocky Mountain Division (Bakken)
Rocky Mountain Division revenue for the third quarter was $41.3 million, a decrease of 52.8% compared with the third quarter of 2014. The year-over-year difference was related primarily to further declines in customer drilling and completion activities and continued pricing pressures, which drove lower revenue for water logistics, solids management and equipment rental services. YTD revenue for the division was $158.3 million, a decrease of 35.9% when compared with year-to-date revenue of $247.0 million for the same period in 2014.
Third-quarter adjusted EBITDA for the Rocky Mountain Division was $8.4 million, a margin of 20.4% compared with adjusted EBITDA of $27.4 million and a margin of 31.3% in the third quarter of 2014. YTD adjusted EBITDA for this division was $37.6 million, a margin of 23.7% compared with adjusted EBITDA of $72.2 million and a margin of 29.2% for the same period in 2014.
Northeast Division (Marcellus, Utica)
Northeast Division revenue for the third quarter was $19.8 million, a decrease of 23.0% compared with the third quarter of 2014. The year-over-year decrease was primarily due to a reduction in water logistics and salt water disposal revenue driven by an overall ramp-down in activities among several key customers in the region, offset in part by increases in water recycling services revenue. YTD, Northeast Division revenue was $74.5 million, an increase of 10.6%, when compared with year-to-date revenue of $67.4 million in the same period of 2014. The year-over-year increase for the nine-month period was primarily related to earlier period 2015 growth in market share from the addition of several new customers in the region.
Third-quarter adjusted EBITDA for the Northeast Division was $2.6 million and a margin of 13.1%, compared with adjusted EBITDA of $4.1 million and a margin of 15.8% in the third quarter of 2014. YTD adjusted EBITDA for this division improved to $11.1 million and a margin of 14.8%, compared with adjusted EBITDA of $7.6 million and a margin of 11.2% for the same period in 2014.
The quarterly decrease in adjusted EBITDA and margin relate primary to lower water logistics and salt water disposal activities, as well as pricing pressures, offset in part by reduced operating costs and expenses. YTD improvements in adjusted EBITDA and margin were primarily due to an overall gain in market share earlier during the year, which drove higher revenue, coupled with reduced operating costs and expenses. These YTD improvements were offset in part by lower water logistics and salt water disposal activities, as well as continued pricing pressures.
Southern Division (Haynesville, Eagle Ford, Mississippian, Permian)
Southern Division revenue for the third quarter was $15.4 million, a decrease of 41.5% compared with the third quarter of 2014. The year-over-year decrease was primarily related to overall declines in drilling and completion activities, which were pronounced in the Eagle Ford Shale region. This resulted in lower water logistics, salt water disposal, water transfer, and rental services revenue in the Eagle Ford region when compared with the third quarter of 2014, offset in part by increases in the Haynesville region in water logistics, salt water disposal and water infrastructure revenue. YTD, Southern Division revenue was $55.2 million, a decrease of 31.1%, when compared with year-to-date revenue of $80.1 million in the same period of 2014.
Third-quarter adjusted EBITDA for the Southern Division was $0.7 million, a margin of 4.8% compared with adjusted EBITDA of $2.3 million and a margin of 8.7% in the third quarter of 2014. YTD adjusted EBITDA for this division was $5.0 million, a margin of 9.0%, compared with adjusted EBITDA of $6.2 million and a margin of 7.7% for the same period in 2014. YTD margin improvement was due primarily to increases in water logistics, salt water disposal and water infrastructure revenue in the Haynesville region and lower overall costs and expenses in both the Haynesville and Eagle Ford regions.
Conference Call & Webcast
The Company will host a conference call and webcast to discuss third quarter 2015 results at 11:00 a.m. ET, 8:00 a.m. PT on Thursday, November 5, 2015. To participate, please dial +1-877-407-0784 (US) or +1-201-689-8560 (International) and reference conference ID 13623082. A live webcast and a slide presentation will accompany the call. To access the webcast, go to http://public.viavid.com/index.php?id=116812.
An audio replay of the call will be available approximately one hour following the conclusion of the call. The audio replay can be accessed telephonically through November 12, 2015 by dialing +1-877-870-5176 (US) or +1-858-384-5517 (International) and entering access code 13623082. A webcast replay will be available by accessing the "Investors" section of the Company's web site at www.nuverra.com.
About Nuverra
Nuverra Environmental Solutions is among the largest companies in the United States dedicated to providing comprehensive, full-cycle environmental solutions to customers in the energy market. Nuverra focuses on the delivery, collection, treatment, recycling, and disposal of restricted solids, water, wastewater, waste fluids and hydrocarbons. The Company provides its suite of environmentally compliant and sustainable solutions to customers who demand stricter environmental compliance and accountability from their service providers. Find additional information about Nuverra on the Company's website, http://www.nuverra.com, and in documents filed with the U.S. Securities and Exchange Commission (SEC) at http://www.sec.gov.
Forward-Looking Statements
The information contained herein includes certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include forecasts of growth, revenues, business activity, pricing, adjusted EBITDA, pipeline and solids treatment initiatives, and landfill and treatment facility activities, as well as statements regarding possible acquisitions, divestitures, financings, business growth and expansion opportunities, liquidity, availability of capital, ability to access capital markets, cost-management initiatives, expected outcome of litigation and other statements that are not historical facts. Actual results may differ materially from results expressed or implied by these forward-looking statements. All forward-looking statements involve risks and uncertainties, including, difficulties encountered in acquiring and integrating businesses; uncertainties in evaluating goodwill and long-lived assets for potential impairment; potential impact of litigation; risks of successfully consummating expected transactions within the timeframes or on the terms contemplated; uncertainty relating to successful negotiation, execution and consummation of all necessary definitive agreements in connection with our strategic initiatives; whether certain markets grow as anticipated; pricing pressures; risks associated with our indebtedness; current and projected future uncertainties in commodities markets, including low oil and/or natural gas prices; changes in customer drilling and completion activities and capital expenditure plans; shifts in production in shale areas where we operate and/or shale areas where we currently do not have operations; control of costs and expenses, including uncertainty regarding the ability to successfully implement cost-management initiatives; liquidity and access to capital; compliance with the terms of agreements governing our indebtedness; and the competitive and regulatory environment. Additional risks and uncertainties are disclosed from time to time in the Company's filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as well as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Source: Nuverra Environmental Solutions, Inc.
Liz Merritt, VP-Investor Relations & Communications
480-878-7452
[email protected]
- Tables to Follow –
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
| (In thousands, except per share amounts) |
||||||||
| (Unaudited) |
||||||||
| Three Months Ended |
Nine Months Ended |
|||||||
| September 30, |
September 30, |
|||||||
| 2015 |
2014 |
2015 |
2014 |
|||||
| Revenue: |
||||||||
| Non-rental revenue |
$ 71,000 |
$ 122,474 |
$ 263,540 |
$ 339,617 |
||||
| Rental revenue |
5,528 |
17,169 |
24,527 |
54,902 |
||||
| Total revenue |
76,528 |
139,643 |
288,067 |
394,519 |
||||
| Costs and expenses: |
||||||||
| Direct operating expenses |
62,482 |
98,791 |
222,055 |
289,125 |
||||
| General and administrative expenses |
8,705 |
9,348 |
31,102 |
48,600 |
||||
| Depreciation and amortization |
16,687 |
21,585 |
52,465 |
63,866 |
||||
| Impairment of goodwill |
104,721 |
100,716 |
104,721 |
100,716 |
||||
| Other, net |
2 |
- |
1,114 |
- |
||||
| Total costs and expenses |
192,597 |
230,440 |
411,457 |
502,307 |
||||
| Operating loss |
(116,069) |
(90,797) |
(123,390) |
(107,788) |
||||
| Interest expense, net |
(12,097) |
(12,956) |
(37,137) |
(37,975) |
||||
| Other income, net |
22 |
321 |
743 |
373 |
||||
| Loss on extinguishment of debt |
- |
- |
(1,011) |
(3,177) |
||||
| Loss from continuing operations before income taxes |
(128,144) |
(103,432) |
(160,795) |
(148,567) |
||||
| Income tax benefit |
31 |
4,014 |
40 |
12,513 |
||||
| Loss from continuing operations |
(128,113) |
(99,418) |
(160,755) |
(136,054) |
||||
| Income (loss) from discontinued operations, net of income taxes |
350 |
(45,568) |
(818) |
(43,656) |
||||
| Net loss attributable to common stockholders |
$(127,763) |
$(144,986) |
$(161,573) |
$(179,710) |
||||
| Net loss per common share attributable to common stockholders: |
||||||||
| Basic and diluted loss from continuing operations |
$ (4.61) |
$ (3.73) |
$ (5.82) |
$ (5.28) |
||||
| Basic and diluted income (loss) from discontinued operations |
0.01 |
(1.71) |
(0.03) |
(1.70) |
||||
| Net loss per basic and diluted share |
$ (4.60) |
$ (5.44) |
$ (5.85) |
$ (6.98) |
||||
| Weighted average shares outstanding used in computing net loss per basic and diluted common share |
27,807 |
26,665 |
27,634 |
25,742 |
||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
|||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
|||
| (In thousands) |
|||
| September 30, |
December 31, |
||
| 2015 |
2014 |
||
| Assets |
(Unaudited) |
(Note 1) |
|
| Cash and cash equivalents |
$ 49,387 |
$ 13,367 |
|
| Restricted cash |
4,250 |
114 |
|
| Accounts receivable, net |
50,523 |
108,813 |
|
| Inventories |
2,933 |
4,413 |
|
| Prepaid expenses and other receivables |
5,213 |
4,147 |
|
| Deferred income taxes |
3,172 |
3,179 |
|
| Other current assets |
152 |
173 |
|
| Current assets held for sale |
- |
20,466 |
|
| Total current assets |
115,630 |
154,672 |
|
| Property, plant and equipment, net |
432,310 |
475,982 |
|
| Equity investments |
3,777 |
3,814 |
|
| Intangibles, net |
17,667 |
19,757 |
|
| Goodwill |
- |
104,721 |
|
| Other assets |
13,250 |
17,688 |
|
| Long-term assets held for sale |
- |
94,938 |
|
| Total assets |
$ 582,634 |
$ 871,572 |
|
| Liabilities and Equity |
|||
| Accounts payable |
$ 8,999 |
$ 18,859 |
|
| Accrued liabilities |
40,668 |
43,395 |
|
| Current portion of contingent consideration |
8,770 |
9,274 |
|
| Current portion of long-term debt |
7,238 |
4,863 |
|
| Financing obligation to acquire non-controlling interest |
- |
11,000 |
|
| Current liabilities of discontinued operations |
- |
8,802 |
|
| Total current liabilities |
65,675 |
96,193 |
|
| Deferred income taxes |
3,462 |
3,448 |
|
| Long-term portion of debt |
514,590 |
592,455 |
|
| Long-term portion of contingent consideration |
- |
550 |
|
| Other long-term liabilities |
3,770 |
3,874 |
|
| Long-term liabilities of discontinued operations |
- |
22,105 |
|
| Total liabilities |
587,497 |
718,625 |
|
| Commitments and contingencies |
|||
| Common stock |
30 |
29 |
|
| Additional paid-in capital |
1,369,447 |
1,365,537 |
|
| Treasury stock |
(19,799) |
(19,651) |
|
| Accumulated deficit |
(1,354,541) |
(1,192,968) |
|
| Total equity of Nuverra Environmental Solutions, Inc. |
(4,863) |
152,947 |
|
| Total liabilities and equity |
$ 582,634 |
$ 871,572 |
|
| Note 1: The condensed consolidated balance sheet at December 31, 2014 has been derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014. |
|||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| (In thousands) |
||||
| (Unaudited) |
||||
| Nine Months Ended |
||||
| 2015 |
2014 |
|||
| Cash flows from operating activities: |
||||
| Net loss |
$(161,573) |
$(179,710) |
||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||
| Income from discontinued operations, net of income taxes |
(906) |
43,656 |
||
| Loss on the sale of TFI |
1,724 |
- |
||
| Depreciation and amortization of intangible assets |
52,465 |
63,866 |
||
| Amortization of deferred financing costs and debt discounts, net |
3,638 |
2,930 |
||
| Stock-based compensation |
1,858 |
2,305 |
||
| Impairment of goodwill |
104,721 |
100,716 |
||
| Gain on disposal of property, plant and equipment |
(1,198) |
(4,752) |
||
| Bad debt expense |
(695) |
2,464 |
||
| Loss on extinguishment of debt |
1,011 |
3,177 |
||
| Deferred income taxes |
21 |
(11,320) |
||
| Other, net |
364 |
1,555 |
||
| Changes in operating assets and liabilities: |
||||
| Accounts receivable |
58,985 |
(21,675) |
||
| Prepaid expenses and other receivables |
(1,294) |
5,309 |
||
| Accounts payable and accrued liabilities |
(4,805) |
5,859 |
||
| Other assets and liabilities, net |
1,342 |
(1,435) |
||
| Net cash provided by operating activities from continuing operations |
55,658 |
12,945 |
||
| Net cash (used in) provided by operating activities from discontinued operations |
(708) |
4,754 |
||
| Net cash provided by operating activities |
54,950 |
17,699 |
||
| Cash flows from investing activities: |
||||
| Proceeds from the sale of TFI |
78,897 |
- |
||
| Proceeds from the sale of property, plant and equipment |
12,339 |
9,295 |
||
| Purchases of property, plant and equipment |
(16,564) |
(43,018) |
||
| Change in restricted cash |
(4,250) |
- |
||
| Net cash provided by (used in) investing activities from continuing operations |
70,422 |
(33,723) |
||
| Net cash used in investing activities from discontinued operations |
(181) |
(2,043) |
||
| Net cash provided by (used in) investing activities |
70,241 |
(35,766) |
||
| Cash flows from financing activities: |
||||
| Proceeds from revolving credit facility |
- |
68,725 |
||
| Payments on revolving credit facility |
(81,647) |
(48,700) |
||
| Payments for deferred financing costs |
- |
(796) |
||
| Payments on vehicle financing and other financing activities |
(9,468) |
(5,020) |
||
| Net cash (used in) provided by financing activities of continuing operations |
(91,115) |
14,209 |
||
| Net cash used in financing activities of discontinued operations |
(105) |
- |
||
| Net cash (used in) provided by financing activities |
(91,220) |
14,209 |
||
| Net increase (decrease) in cash and cash equivalents |
33,971 |
(3,858) |
||
| Cash and cash equivalents - beginning of period |
15,416 |
9,212 |
||
| Cash and cash equivalents - end of period |
49,387 |
5,354 |
||
| Less: cash and cash equivalents of discontinued operations - end of period |
- |
3,140 |
||
| Cash and cash equivalents of continuing operations - end of period |
$ 49,387 |
$ 2,214 |
||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
||||||||
| NON-GAAP RECONCILIATIONS |
||||||||
| (In thousands) |
||||||||
| (Unaudited) |
||||||||
| This press release contains non-GAAP financial measures as defined by the rules and regulations of the United States Securities and Exchange Commission. A non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations or balance sheets of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures are included in the attached financial tables. |
||||||||
| These non-GAAP financial measures are provided because management of the Company uses these financial measures in maintaining and evaluating the Company's ongoing financial results and trends. Management uses this non-GAAP information as an indicator of business results, and evaluates overall performance with respect to such indicators. Management believes that excluding items such as acquisition expenses, amortization of intangible assets, stock-based compensation, asset impairments, restructuring charges, expenses related to litigation and resolution of lawsuits, and other charges, which may or may not be non-recurring, among other items that are inconsistent in amount and frequency (as with acquisition expenses), or determined pursuant to complex formulas that incorporate factors, such as market volatility, that are beyond our control (as with stock-based compensation), for purposes of calculating these non-GAAP financial measures facilitates a more meaningful evaluation of the Company's current operating performance and comparisons to the past and future operating performance. The Company believes that providing non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per share, and operating working capital, in addition to related GAAP financial measures, provides investors with greater transparency to the information used by the Company's management. These non-GAAP financial measures are not substitutes for measures of performance or liquidity calculated in accordance with GAAP and may not necessarily be indicative of the Company's liquidity or ability to fund cash needs. Not all companies calculate non-GAAP financial measures in the same manner, and our presentation may not be comparable to the presentations of other companies. |
||||||||
| Reconciliation of Loss from Continuing Operations to EBITDA, Adjusted EBITDA from Continuing Operations and Total Adjusted EBITDA: |
||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
| 2015 |
2014 |
2015 |
2014 |
|||||
| Loss from continuing operations |
$(128,113) |
$ (99,418) |
$(160,755) |
$(136,054) |
||||
| Depreciation and amortization |
16,687 |
21,585 |
52,465 |
63,866 |
||||
| Interest expense, net |
12,097 |
12,956 |
37,137 |
37,975 |
||||
| Income tax benefit |
(31) |
(4,014) |
(40) |
(12,513) |
||||
| EBITDA |
(99,360) |
(68,891) |
(71,193) |
(46,726) |
||||
| Adjustments: |
||||||||
| Transaction-related costs, including earnout adjustments, net |
(13) |
- |
(145) |
513 |
||||
| Stock-based compensation |
342 |
897 |
1,858 |
2,305 |
||||
| Legal and environmental costs, net |
134 |
(2,326) |
538 |
12,312 |
||||
| Impairment of goodwill |
104,721 |
100,716 |
104,721 |
100,716 |
||||
| Restructuring, exit and other costs |
326 |
142 |
1,661 |
205 |
||||
| Loss on extinguishment of debt |
- |
- |
1,011 |
3,177 |
||||
| Integration, severance and rebranding costs |
- |
- |
- |
2,072 |
||||
| Loss (gain) on disposal of assets |
114 |
(2,504) |
(1,198) |
(4,752) |
||||
| Adjusted EBITDA from continuing operations |
6,264 |
28,034 |
37,253 |
69,822 |
||||
| Adjusted EBITDA from discontinued operations |
- |
3,374 |
1,197 |
9,488 |
||||
| Total Adjusted EBITDA |
$ 6,264 |
$ 31,408 |
$ 38,450 |
$ 79,310 |
||||
| Reconciliation of Income (Loss) from Discontinued Operations to EBITDA from Discontinued Operations and Adjusted EBITDA from Discontinued Operations: |
||||||||
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||
| 2015 |
2014 |
2015 |
2014 |
|||||
| Income (loss) from discontinued operations |
$ 350 |
$ (45,568) |
$ (818) |
$ (43,656) |
||||
| Income tax (benefit) expense |
- |
(329) |
265 |
1,336 |
||||
| EBITDA from discontinued operations |
350 |
(45,897) |
(553) |
(42,320) |
||||
| Adjustments: |
||||||||
| Transaction-related costs |
- |
3,806 |
26 |
5,737 |
||||
| Legal and environmental costs |
- |
- |
- |
733 |
||||
| Impairment of goodwill |
- |
45,463 |
- |
45,463 |
||||
| (Gain) loss on disposal of assets |
(350) |
2 |
1,724 |
(125) |
||||
| Adjusted EBITDA from discontinued operations |
$ - |
$ 3,374 |
$ 1,197 |
$ 9,488 |
||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
||||||||||
| NON-GAAP RECONCILIATIONS (continued) |
||||||||||
| (In thousands) |
||||||||||
| (Unaudited) |
||||||||||
| Reconciliation of QTD Segment Performance to Adjusted EBITDA |
||||||||||
| Three Months Ended September 30, 2015 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 41,325 |
$ 19,825 |
$ 15,378 |
$ - |
$ 76,528 |
|||||
| Direct operating expenses |
30,938 |
16,414 |
15,130 |
- |
62,482 |
|||||
| General and administrative expenses |
1,823 |
791 |
703 |
5,388 |
8,705 |
|||||
| Depreciation and amortization |
8,553 |
4,041 |
3,985 |
108 |
16,687 |
|||||
| Operating loss |
(104,710) |
(1,421) |
(4,441) |
(5,497) |
(116,069) |
|||||
| Operating margin % |
(253.4%) |
(7.2%) |
(28.9%) |
NA |
(151.7%) |
|||||
| Loss from continuing operations before income taxes |
(104,811) |
(1,569) |
(4,474) |
(17,290) |
(128,144) |
|||||
| Loss from continuing operations |
(104,811) |
(1,563) |
(4,470) |
(17,269) |
(128,113) |
|||||
| Depreciation and amortization |
8,553 |
4,041 |
3,985 |
108 |
16,687 |
|||||
| Interest expense, net |
110 |
146 |
48 |
11,793 |
12,097 |
|||||
| Income tax benefit |
- |
(6) |
(4) |
(21) |
(31) |
|||||
| EBITDA |
$ (96,148) |
$ 2,618 |
$ (441) |
$ (5,389) |
$ (99,360) |
|||||
| Adjustments, net |
104,590 |
(12) |
1,181 |
(135) |
105,624 |
|||||
| Adjusted EBITDA from continuing operations |
$ 8,442 |
$ 2,606 |
$ 740 |
$ (5,524) |
$ 6,264 |
|||||
| Adjusted EBITDA margin % |
20.4% |
13.1% |
4.8% |
NA |
8.2% |
|||||
| Three Months Ended September 30, 2014 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 87,596 |
$ 25,759 |
$ 26,288 |
$ - |
$ 139,643 |
|||||
| Direct operating expenses |
57,429 |
20,419 |
20,943 |
- |
98,791 |
|||||
| General and administrative expenses |
2,955 |
1,563 |
2,226 |
2,604 |
9,348 |
|||||
| Depreciation and amortization |
13,100 |
3,863 |
4,451 |
171 |
21,585 |
|||||
| Operating income (loss) |
14,112 |
(33,917) |
(68,217) |
(2,775) |
(90,797) |
|||||
| Operating margin % |
16.1% |
(131.7%) |
(259.5%) |
NA |
(65.0%) |
|||||
| Income (loss) from continuing operations before income taxes |
14,220 |
(33,996) |
(68,609) |
(15,047) |
(103,432) |
|||||
| Income (loss) from continuing operations |
14,220 |
(33,996) |
(68,609) |
(11,033) |
(99,418) |
|||||
| Depreciation and amortization |
13,100 |
3,863 |
4,451 |
171 |
21,585 |
|||||
| Interest expense, net |
181 |
398 |
104 |
12,273 |
12,956 |
|||||
| Income tax benefit |
- |
- |
- |
(4,014) |
(4,014) |
|||||
| EBITDA |
$ 27,501 |
$ (29,735) |
$ (64,054) |
$ (2,603) |
$ (68,891) |
|||||
| Adjustments, net |
(62) |
33,798 |
66,346 |
(3,157) |
96,925 |
|||||
| Adjusted EBITDA from continuing operations |
$ 27,439 |
$ 4,063 |
$ 2,292 |
$ (5,760) |
$ 28,034 |
|||||
| Adjusted EBITDA margin % |
31.3% |
15.8% |
8.7% |
NA |
20.1% |
|||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
||||||||||
| NON-GAAP RECONCILIATIONS (continued) |
||||||||||
| (In thousands) |
||||||||||
| (Unaudited) |
||||||||||
| Reconciliation of YTD Segment Performance to Adjusted EBITDA |
||||||||||
| Nine Months Ended September 30, 2015 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 158,336 |
$ 74,549 |
$ 55,182 |
$ - |
$ 288,067 |
|||||
| Direct operating expenses |
115,470 |
59,906 |
46,679 |
- |
222,055 |
|||||
| General and administrative expenses |
5,201 |
3,716 |
4,000 |
18,185 |
31,102 |
|||||
| Depreciation and amortization |
26,091 |
12,028 |
13,828 |
518 |
52,465 |
|||||
| Operating loss |
(93,147) |
(1,224) |
(9,923) |
(19,096) |
(123,390) |
|||||
| Operating margin % |
(58.8%) |
(1.6%) |
(18.0%) |
NA |
(42.8%) |
|||||
| Loss from continuing operations before income taxes |
(92,909) |
(1,756) |
(10,037) |
(56,093) |
(160,795) |
|||||
| Loss from continuing operations |
(92,909) |
(1,756) |
(10,037) |
(56,053) |
(160,755) |
|||||
| Depreciation and amortization |
26,091 |
12,028 |
13,828 |
518 |
52,465 |
|||||
| Interest expense, net |
363 |
646 |
142 |
35,986 |
37,137 |
|||||
| Income tax benefit |
- |
- |
- |
(40) |
(40) |
|||||
| EBITDA |
$ (66,455) |
$ 10,918 |
$ 3,933 |
$ (19,589) |
$ (71,193) |
|||||
| Adjustments, net |
104,015 |
134 |
1,050 |
3,247 |
108,446 |
|||||
| Adjusted EBITDA from continuing operations |
$ 37,560 |
$ 11,052 |
$ 4,983 |
$ (16,342) |
$ 37,253 |
|||||
| Adjusted EBITDA margin % |
23.7% |
14.8% |
9.0% |
NA |
12.9% |
|||||
| Nine Months Ended September 30, 2014 |
Rocky Mountain |
Northeast |
Southern |
Corporate |
Total |
|||||
| Revenue |
$ 246,981 |
$ 67,418 |
$ 80,120 |
$ - |
$ 394,519 |
|||||
| Direct operating expenses |
168,028 |
55,277 |
65,820 |
- |
289,125 |
|||||
| General and administrative expenses |
7,554 |
7,847 |
11,597 |
21,602 |
48,600 |
|||||
| Depreciation and amortization |
38,534 |
11,691 |
13,143 |
498 |
63,866 |
|||||
| Operating income (loss) |
32,865 |
(41,227) |
(77,326) |
(22,100) |
(107,788) |
|||||
| Operating margin % |
13.3% |
(61.2%) |
(96.5%) |
NA |
(27.3%) |
|||||
| Income (loss) from continuing operations before income taxes |
32,807 |
(39,885) |
(80,016) |
(61,473) |
(148,567) |
|||||
| Income (loss) from continuing operations |
32,807 |
(39,885) |
(80,016) |
(48,960) |
(136,054) |
|||||
| Depreciation and amortization |
38,534 |
11,691 |
13,143 |
498 |
63,866 |
|||||
| Interest expense, net |
502 |
901 |
376 |
36,196 |
37,975 |
|||||
| Income tax benefit |
- |
- |
- |
(12,513) |
(12,513) |
|||||
| EBITDA |
$ 71,843 |
$ (27,293) |
$(66,497) |
$ (24,779) |
$ (46,726) |
|||||
| Adjustments, net |
324 |
34,870 |
72,697 |
8,657 |
116,548 |
|||||
| Adjusted EBITDA from continuing operations |
$ 72,167 |
$ 7,577 |
$ 6,200 |
$ (16,122) |
$ 69,822 |
|||||
| Adjusted EBITDA margin % |
29.2% |
11.2% |
7.7% |
NA |
17.7% |
|||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
|||||||
| NON-GAAP RECONCILIATIONS (continued) |
|||||||
| (In thousands) |
|||||||
| (Unaudited) |
|||||||
| Reconciliation of Special Items to Adjusted Net Loss and to EBITDA and Adjusted EBITDA from Continuing Operations |
|||||||
| Three Months Ended September 30, 2015 |
|||||||
| As Reported |
Special Items |
As Adjusted |
|||||
| Revenue |
$ 76,528 |
$ - |
$ 76,528 |
||||
| Direct operating expenses |
62,482 |
(846) |
[A] |
61,636 |
|||
| General and administrative expenses |
8,705 |
(68) |
[B] |
8,637 |
|||
| Total costs and expenses |
192,597 |
(105,637) |
[C] |
86,960 |
|||
| Operating loss |
(116,069) |
105,637 |
[C] |
(10,432) |
|||
| Loss from continuing operations |
(128,113) |
105,624 |
[D] |
(22,489) |
|||
| Basic and diluted loss from continuing operations |
$ (4.61) |
$ (0.81) |
|||||
| Loss from continuing operations |
$ (128,113) |
$ (22,489) |
|||||
| Depreciation and amortization |
16,687 |
16,687 |
|||||
| Interest expense, net |
12,097 |
12,097 |
|||||
| Income tax benefit |
(31) |
(31) |
|||||
| EBITDA and Adjusted EBITDA from continuing operations |
$ (99,360) |
$ 6,264 |
|||||
| Description of 2015 Special Items: |
|||||||
| [A] |
Special items include a gain on sale related to the disposal of certain transportation related assets. |
||||||
| [B] |
Primarily attributable to stock-based compensation, non-routine litigation expenses, and a gain related to the sale of assets. |
||||||
| [C] |
Primarily includes the aforementioned adjustments, and approximately $104.7 million associated with a goodwill impairment charge recorded for the Rocky Mountain division. |
||||||
| [D] |
Primarily includes the aforementioned adjustments. Additionally, our effective tax rate for the three months ended September 30, 2015 was near zero percent and has been applied to the special items accordingly. |
||||||
| Three Months Ended September 30, 2014 |
||||||
| As Reported |
Special Items |
As Adjusted |
||||
| Revenue |
$ 139,643 |
$ - |
$ 139,643 |
|||
| Direct operating expenses |
98,791 |
642 |
[E] |
99,433 |
||
| General and administrative expenses |
9,348 |
3,149 |
[F] |
12,497 |
||
| Total costs and expenses |
230,440 |
(96,925) |
[G] |
133,515 |
||
| Operating (loss) income |
(90,797) |
96,925 |
[G] |
6,128 |
||
| Loss from continuing operations |
(99,418) |
93,145 |
[H] |
(6,273) |
||
| Basic and diluted loss from continuing operations |
$ (3.73) |
$ (0.24) |
||||
| Loss from continuing operations |
$ (99,418) |
$ (6,273) |
||||
| Depreciation and amortization |
21,585 |
21,585 |
||||
| Interest expense, net |
12,956 |
12,956 |
||||
| Income tax benefit |
(4,014) |
(234) |
||||
| EBITDA and Adjusted EBITDA from continuing operations |
$ (68,891) |
$ 28,034 |
||||
| Description of 2014 Special Items: |
|||||||
| [E] |
Special items include a gain on sale related to the disposal of certain transportation related assets, offset by a charge of $1.9 million related to a contract settlement. |
||||||
| [F] |
Primarily attributable to a $3.7 million reduction in litigation costs related to a decline in market value of the 0.8 million shares issued during the period in connection with the settlement of Shareholder Litigation. This reduction was offset by stock-based compensation and other non-routine litigation expenses. |
||||||
| [G] |
Primarily includes the aforementioned adjustments, and approximately $100.7 million associated with a goodwill impairment charge for the Northeast and Southeast divisions. |
||||||
| [H] |
Primarily includes the aforementioned adjustments. Additionally, our effective tax rate for the three months ended September 30, 2014 was 3.9% and has been applied to the special items accordingly. |
||||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
|||||||
| NON-GAAP RECONCILIATIONS (continued) |
|||||||
| (In thousands) |
|||||||
| (Unaudited) |
|||||||
| Reconciliation of Special Items to Adjusted Net Loss and to EBITDA and Adjusted EBITDA from Continuing Operations |
|||||||
| Nine Months Ended September 30, 2015 |
|||||||
| As Reported |
Special Items |
As Adjusted |
|||||
| Revenue |
$ 288,067 |
$ - |
$ 288,067 |
||||
| Direct operating expenses |
222,055 |
469 |
[A] |
222,524 |
|||
| General and administrative expenses |
31,102 |
(2,214) |
[B] |
28,888 |
|||
| Total costs and expenses |
411,457 |
(107,580) |
[C] |
303,877 |
|||
| Operating loss |
(123,390) |
107,580 |
[C] |
(15,810) |
|||
| Loss from continuing operations |
(160,755) |
108,446 |
[D] |
(52,309) |
|||
| Basic and diluted loss from continuing operations |
$ (5.82) |
$ (1.89) |
|||||
| Loss from continuing operations |
$ (160,755) |
$ (52,309) |
|||||
| Depreciation and amortization |
52,465 |
52,465 |
|||||
| Interest expense, net |
37,137 |
37,137 |
|||||
| Income tax benefit |
(40) |
(40) |
|||||
| EBITDA and Adjusted EBITDA from continuing operations |
$ (71,193) |
$ 37,253 |
|||||
| Description of 2015 Special Items: |
|||||||
| [A] |
Special items include a gain on sale related to the disposal of certain transportation related assets. |
||||||
| [B] |
Primarily attributable to stock-based compensation, non-routine litigation expenses, certain refinancing costs associated with our ABL Facility and a gain related to the sale of assets. |
||||||
| [C] |
Primarily includes the aforementioned adjustments, and a charge of approximately $1.1 million associated our restructuring initiative and other exit related costs from certain shale basins and approximately $104.7 million associated with a goodwill impairment charge recorded for the Rocky Mountain division. |
||||||
| [D] |
Primarily includes the aforementioned adjustments, along with a charge of $1.0 million in connection with a write-off of a portion of the unamortized deferred financing costs associated with our ABL Facility and a net reduction related to a prior acquisition earnout reserve of $0.1 million. Additionally, our effective tax rate for the nine months ended September 30, 2015 was zero percent and has been applied to the special items accordingly. |
||||||
| Nine Months Ended September 30, 2014 |
||||||
| As Reported |
Special Items |
As Adjusted |
||||
| Revenue |
$ 394,519 |
$ - |
$ 394,519 |
|||
| Direct operating expenses |
289,125 |
1,629 |
[E] |
290,754 |
||
| General and administrative expenses |
48,600 |
(13,869) |
[F] |
34,731 |
||
| Total costs and expenses |
502,307 |
(112,956) |
[G] |
389,351 |
||
| Operating (loss) income |
(107,788) |
112,956 |
[G] |
5,168 |
||
| Loss from continuing operations |
(136,054) |
106,758 |
[H] |
(29,296) |
||
| Basic and diluted loss from continuing operations |
$ (5.28) |
$ (1.14) |
||||
| Loss from continuing operations |
$ (136,054) |
$ (29,296) |
||||
| Depreciation and amortization |
63,866 |
63,866 |
||||
| Interest expense, net |
37,975 |
37,975 |
||||
| Income tax benefit |
(12,513) |
(2,723) |
||||
| EBITDA and Adjusted EBITDA from continuing operations |
$ (46,726) |
$ 69,822 |
||||
| Description of 2014 Special Items: |
|||||||
| [E] |
Special items include a gain on sale related to the disposal of certain transportation related assets. |
||||||
| [F] |
Primarily attributable to costs incurred as a result of our accounting and administrative integration efforts, stock-based compensation, and certain legal expenses associated with our Texas Cases and Shareholder litigation. |
||||||
| [G] |
Primarily includes the aforementioned adjustments, and approximately $100.7 million associated with a goodwill impairment charge for the Northeast and Southeast divisions. |
||||||
| [H] |
Primarily includes the aforementioned adjustments, along with a charge of $3.2 million in connection with a write-off of a portion of the unamortized deferred financing costs associated with our Amended Revolving Credit Facility, and a charge of $0.4 million associated with a prior acquisition earnout reserve. Additionally, our effective tax rate for the nine months ended September 30, 2014 was 8.4% and has been applied to the special items accordingly. |
||||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
|||||
| NON-GAAP RECONCILIATIONS (continued) |
|||||
| (In thousands) |
|||||
| (Unaudited) |
|||||
| Reconciliation of Free Cash Flow from Continuing Operations |
|||||
| Nine Months Ended September 30, |
|||||
| 2015 |
2014 |
||||
| Net cash provided by operating activities from continuing operations |
$ 55,658 |
$ 12,945 |
|||
| Less: net cash capital expenditures, [1] |
(4,225) |
(33,723) |
|||
| Free Cash Flow |
$ 51,433 |
$(20,778) |
|||
| [1] Purchases of property, plant and equipment net of proceeds received from sales of property, plant and equipment |
Logo - http://photos.prnewswire.com/prnh/20141008/150889
SOURCE Nuverra Environmental Solutions, Inc.
Share this article