Nuverra Announces First Quarter 2018 Results

Nuverra Announces First Quarter 2018 Results

SCOTTSDALE, Ariz., May 8, 2018 /PRNewswire/ -- Nuverra Environmental Solutions, Inc. (NYSE American: NES) ("Nuverra," the "Company," "we," "us" or "our") today announced financial and operating results for the first quarter ended March 31, 2018.

SUMMARY OF QUARTERLY RESULTS

    --  First quarter revenue was $49.7 million, an increase of approximately
        26.6%, or $10.5 million, when compared with revenue of $39.2 million in
        the first quarter of 2017.
    --  Net loss for the first quarter was $32.2 million, an improvement of $3.8
        million, or approximately 10.6%, when compared with a net loss of $36.0
        million in the first quarter of 2017.
    --  Net loss, adjusted for special items, for the first quarter was $13.6
        million, compared with $27.9 million in the first quarter of 2017.
    --  Adjusted EBITDA for the first quarter was $2.4 million, an increase of
        $3.1 million compared with $(0.8) million in the first quarter of 2017.
    --  First quarter Adjusted EBITDA margin improved by 670 basis points from
        the first quarter of 2017.
    --  Total liquidity as of March 31, 2018 was $16.1 million

"Despite the effects of difficult winter weather in the first quarter in our main operating regions, Nuverra posted increased revenue and EBITDA when compared to the same period last year," said Charlie Thompson, Interim Chief Executive Officer.

"We have been extremely focused, and will continue to be, on improving operating margins and utilizing our assets efficiently. Our recent announcement regarding the closure of our Eagle Ford operations and other equipment sales supports this strategy. We believe that actions like these will allow us to generate better returns, grow our business, serve our customers and make Nuverra a desirable place for our employees."

FIRST QUARTER 2018 RESULTS

First quarter revenue was $49.7 million, an increase of $10.5 million, or 26.6%, from $39.2 million in the first quarter of 2017. Of this 26.6% increase, approximately 8.0% is attributable to pricing increases, while 18.6% is a result of increases in activities.

As a result of increased activity, reliance on higher cost contract drivers and costs related to severe winter weather in our Northeast division, total costs and expenses, adjusted for special items, were $62.1 million, a 17.1% increase compared with $53.0 million in the first quarter of 2017. Primarily as a result of price increases, gross profit adjusted for special items improved 62.5% to $8.1 million and gross margin improved 360 basis points to 16.3% of revenue in the first quarter of 2018.

Net loss for the first quarter was $32.2 million, an improvement of $3.8 million when compared with a net loss of $36.0 million in the first quarter of 2017. For the first quarter of 2018, the Company reported a net loss, adjusted for special items, of $13.6 million. Special items in the first quarter primarily included severance costs related to the departure of our former CEO and $4.1 million in long-lived asset impairment charges for assets held for sale primarily in the Southern division. This compares with a net loss, adjusted for special items, of $27.9 million in the first quarter of 2017.

Adjusted EBITDA for the first quarter was $2.4 million, an increase of $3.1 million compared with $(0.8) million in the first quarter of 2017. First quarter adjusted EBITDA margin was 4.7%, compared with (2.0)% in the first quarter of 2017.

CASH FLOW AND LIQUIDITY

Net cash used in operating activities for the three months ended March 31, 2018 was $7.3 million, while asset sales net of capital expenditures provided proceeds of $8.5 million. Free cash flow, defined as cash from operations less net cash capital expenditures totaled $1.2 million in the first quarter of 2018, up from $(7.9) million in the first quarter of 2017. Asset sales were related to unused or underutilized assets, the proceeds of which are expected to be reinvested in returns-driven growth projects in 2018. We expect additional asset sales in 2018, particularly in the second quarter, related to the closure of our operations in the Eagle Ford Basin.

Total liquidity as of March 31, 2018, consisting of cash and available borrowings, was $16.1 million. Not included in the $16.1 million of liquidity, was an additional $7.1 million of borrowings available under our revolving facility that could be spent only on capital expenditures. As of March 31, 2018, total debt outstanding was $37.9 million, consisting of $13.7 million under our senior secured term loan facility, $20.9 million under our second lien term loan facility, and $3.3 million of capital leases for vehicle financings.

BASIS OF PRESENTATION

As previously disclosed, the Company emerged from chapter 11 bankruptcy on August 7, 2017, or the "Effective Date," and elected to apply fresh start accounting as of July 31, 2017 to coincide with the timing of the normal accounting period close. References to "Successor" relate to the financial position and results of operations of the reorganized Company subsequent to July 31, 2017, while references to "Predecessor" refer to the financial position and results of operations of the Company on and prior to July 31, 2017. The Successor and Predecessor GAAP results for the applicable periods are presented in the tables following this release. As a result of various adjustments to the condensed consolidated financial statements in connection with the application of fresh start accounting, the results of operations for the Successor period are not comparable to those of the Predecessor period.

About Nuverra

Nuverra Environmental Solutions, Inc. 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, 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 in documents filed with the U.S. Securities and Exchange Commission ("SEC") at http://www.sec.gov.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. You can identify these and other forward-looking statements by the use of words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "might," "will," "should," "would," "could," "potential," "future," "continue," "ongoing," "forecast," "project," "target" or similar expressions, and variations or negatives of these words.

These statements relate to our expectations for future events and time periods. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, and any forward-looking statements contained herein are based on information available to us as of the date of this press release and our current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. Future performance cannot be ensured, and actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include, among others: the effects of our completed restructuring on the Company and the interests of various constituents; risks and uncertainties associated with the restructuring process, including the outcome of a pending appeal of the order confirming the plan of reorganization and our ability to execute the requirements of the plan of reorganization subsequent to the effective date; the bankruptcy and, as applicable, the appellate court's rulings in our chapter 11 cases, including appeals thereof, and the outcome of our chapter 11 cases in general; the effects of the increased advisory costs to execute a reorganization; our inability to maintain relationships with customers, suppliers, employees and other third parties as a result of our chapter 11 filing; the loss of one or more of our larger customers; our ability to attract and retain key executives and qualified employees in key areas of our business; our ability to attract and retain a sufficient number of qualified truck drivers in light of industry-wide driver shortages and high-turnover; risks associated with our indebtedness, including changes to interest rates, decreases in our borrowing availability, our ability to manage our liquidity needs and to comply with covenants under our credit facilities; the availability of less favorable credit and payment terms due to the downturn in our industry, our financial condition, and the chapter 11 proceeding, including more stringent or costly payment terms from our vendors, which may constrain our liquidity and reduce availability under our revolving credit facility; risks associated with our ability to collect outstanding receivables as a result of liquidity constraints on our customers resulting from low oil and/or natural gas prices; difficulties in identifying and completing acquisitions and divestitures, and differences in the type and availability of consideration or financing for such acquisitions and divestitures; difficulties in successfully executing our growth initiatives, including difficulties in permitting, financing and constructing pipelines and waste treatment assets and in structuring economically viable agreements with potential customers, joint venture partners, financing sources and other parties; higher than forecasted capital expenditures to maintain and repair our fleet of trucks, tanks, equipment and disposal wells; control of costs and expenses; risks associated with the limited trading volume of our common stock on the NYSE American Stock Exchange, including potential fluctuations in the trading prices of our common stock; risks associated with the reliance on third-party analyst and expert market projections and data for the markets in which we operate; risks associated with new technologies and the impact on our business; present and possible future claims, litigation or enforcement actions or investigations; financial results that may be volatile and may not reflect historical trends due to, among other things, changes in commodity prices or general market conditions, acquisition and disposition activities, fluctuations in consumer trends, pricing pressures, changes in raw material or labor prices or rates related to our business and changing regulations or political developments in the markets in which we operate; changes in customer drilling, completion and production activities, operating methods and capital expenditure plans, including impacts due to low oil and/or natural gas prices or the economic or regulatory environment; fluctuations in prices, transportation costs and demand for commodities such as oil and natural gas; risks associated with the operation, construction, development and closure of saltwater disposal wells, solids and liquids treatment and transportation assets, landfills and pipelines, including access to additional locations and rights-of-way, environmental remediation obligations, unscheduled delays or inefficiencies and reductions in volume due to micro- and macro-economic factors or the availability of less expensive alternatives; the effects of competition in the markets in which we operate, including the adverse impact of competitive product announcements or new entrants into our markets and transfers of resources by competitors into our markets; changes in economic conditions in the markets in which we operate or in the world generally, including as a result of political uncertainty; reduced demand for our services due to regulatory or other influences related to extraction methods such as hydraulic fracturing, shifts in production among shale areas in which we operate or into shale areas in which we do not currently have operations; the impact of changes in laws and regulation on waste management and disposal activities, including those impacting the delivery, storage, collection, transportation, treatment and disposal of waste products, as well as the use or reuse of recycled or treated products or byproducts; natural disasters, such as hurricanes, earthquakes and floods, or acts of terrorism, or extreme weather conditions, that may impact our business locations, assets, including wells or pipelines, distribution channels, or which otherwise disrupt our or our customers' operations or the markets we serve; the unknown future impact on our business from legislation and governmental rulemaking; and risks involving developments in environmental or other governmental laws and regulations in the markets in which we operate and our ability to effectively respond to those developments including laws and regulations relating to oil and natural gas extraction businesses, particularly relating to water usage, and the disposal, transportation and treatment of liquid and solid wastes.

The forward-looking statements contained, or incorporated by reference, herein are also subject generally to other risks and uncertainties that are described from time to time in the Company's filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's views as of the date of this press release. The Company undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, changes in expectations or otherwise. Additional risks and uncertainties are disclosed from time to time in the Company's filings with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.

Source: Nuverra Environmental Solutions, Inc.
602-903-7802
ir@nuverra.com

- Tables to Follow -


                            NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (In thousands, except per share amounts)

                                                  (Unaudited)


                                             Successor                     Predecessor
                                             ---------                    -----------

                                                        Three Months Ended

                                                            March 31,

                                                   2018                              2017
                                                   ----                              ----

    Revenue:

    Service
     revenue                                                $45,527                            $35,418

    Rental
     revenue                                      4,142                               3,805
                                                  -----                               -----

    Total
     revenue                                     49,669                              39,223

    Costs and expenses:

    Direct
     operating
     expenses                                    41,627                              34,289

    General
     and
     administrative
     expenses                                    19,320                              12,359

     Depreciation
     and
     amortization                                14,744                              12,871

     Impairment
     of
     long-
     lived
     assets                                       4,131                                   -

    Other,
     net                                            599                                   -
                                                    ---                                 ---

    Total
     costs
     and
     expenses                                    80,421                              59,519
                                                 ------                              ------

     Operating
     loss                                      (30,752)                           (20,296)

    Interest
     expense,
     net                                        (1,250)                           (14,208)

    Other
     expense,
     net                                           (73)                            (1,458)

     Reorganization
     items,
     net                                           (92)                                  -
                                                    ---                                 ---

    Loss
     before
     income
     taxes                                     (32,167)                           (35,962)

    Income
     tax
     expense                                          -                                  -
                                                    ---                                ---

    Net loss                                              $(32,167)                         $(35,962)
                                                           ========                           ========


    Net loss per common
     share:

    Net loss
     per
     basic
     common
     share                                                  $(2.75)                           $(0.24)
                                                             ======                             ======


    Net loss
     per
     diluted
     common
     share                                                  $(2.75)                           $(0.24)
                                                             ======                             ======


    Weighted average shares
     outstanding:

    Basic                                        11,696                             150,934

    Diluted                                      11,696                             150,934


                                 NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

                                          CONDENSED CONSOLIDATED BALANCE SHEETS

                                                     (In thousands)

                                                       (Unaudited)


                                                                     Successor

                                                    March 31,                   December 31,

                                                          2018                              2017
                                                          ----                              ----

                            Assets

    Cash and
     cash
     equivalents                                                    $4,088                           $5,488

    Restricted
     cash                                                2,084                               1,296

    Accounts
     receivable,
     net                                                36,186                              30,965

    Inventories                                          3,750                               4,089

    Prepaid
     expenses
     and other
     receivables                                         5,822                               8,594

    Other
     current
     assets                                                107                                 226

    Assets
     held for
     sale                                                9,530                               2,765
                                                         -----                               -----

    Total
     current
     assets                                             61,567                              53,423
                                                        ------                              ------

    Property,
     plant and
     equipment,
     net                                               202,892                             229,874

    Equity
     investments                                            42                                  48

     Intangibles,
     net                                                   503                                 547

    Goodwill                                            27,139                              27,139

    Deferred
     income
     taxes                                                  84                                  84

    Other
     assets                                                196                                 207

    Total
     assets                                                       $292,423                         $311,322
                                                                  ========                         ========

                        Liabilities and
                      Shareholders' Equity

    Accounts
     payable                                                        $9,602                           $7,946

    Accrued
     liabilities                                        15,458                              13,939

    Current
     contingent
     consideration                                         500                                 500

    Current
     portion
     of long-
     term debt                                           5,108                               5,525

    Derivative
     warrant
     liability                                             669                                 477

    Total
     current
     liabilities                                        31,337                              28,387
                                                        ------                              ------

    Long-term
     debt                                               32,784                              33,524

    Other
     long-
     term
     liabilities                                         6,518                               6,438

    Total
     liabilities                                        70,639                              68,349
                                                        ------                              ------

    Commitments and
     contingencies

    Shareholders' equity:

    Common
     stock                                                 117                                 117

    Additional
     paid-in
     capital                                           301,729                             290,751

     Accumulated
     deficit                                          (80,062)                           (47,895)
                                                       -------                             -------

    Total
     shareholders'
     equity                                            221,784                             242,973


    Total
     liabilities
     and
     shareholders'
     equity                                                       $292,423                         $311,322
                                                                  ========                         ========


                            NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

                               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                (In thousands)

                                                 (Unaudited)


                                           Successor                     Predecessor
                                           ---------                    -----------

                                                      Three Months Ended

                                                          March 31,

                                                 2018                              2017
                                                 ----                              ----

    Cash flows from
     operating activities:

    Net
     loss                                               $(32,167)                         $(35,962)

    Adjustments to
     reconcile net loss to
     net cash used in
     operating activities:

        Depreciation
        and
        amortization
        of
        intangible
        assets                                 14,744                              12,871

        Amortization
        of
        debt
        issuance
        costs,
        net                                         -                              1,756

        Accrued
        interest
        added
        to
        debt
        principal                                 119                               6,340

       Stock-
        based
        compensation                           10,978                                 309

        Impairment
        of
        long-
        lived
        assets                                  4,131                                   -

       Gain
        on
        sale
        of
        UGSI                                     (75)                                  -

       (Gain)
        loss
        on
        disposal
        of
        property,
        plant
        and
        equipment                                 (8)                                 49

       Bad
        debt
        expense                                   313                                 778

       Change
        in
        fair
        value
        of
        derivative
        warrant
        liability                                 192                               1,618

       Other,
        net                                       149                                  56

       Changes in operating
        assets and
        liabilities:

           Accounts
           receivable                         (5,534)                              (462)

           Prepaid
           expenses
           and
           other
           receivables                        (2,573)                              (433)

           Accounts
           payable
           and
           accrued
           liabilities                          2,110                               5,872

          Other
           assets
           and
           liabilities,
           net                                    368                                (78)

    Net
     cash
     used
     in
     operating
     activities                               (7,253)                            (7,286)
                                               ------                              ------

    Cash flows from
     investing activities:

        Proceeds
        from
        the
        sale
        of
        property,
        plant
        and
        equipment                              11,881                                 371

        Purchases
        of
        property,
        plant
        and
        equipment                             (3,380)                            (1,029)

        Proceeds
        from
        the
        sale
        of
        UGSI                                       75                                   -

    Net
     cash
     provided
     by
     (used
     in)
     investing
     activities                                 8,576                               (658)
                                                -----                                ----

    Cash flows from
     financing activities:

        Proceeds
        from
        Predecessor
        revolving
        credit
        facility                                    -                             48,536

        Payments
        on
        Predecessor
        revolving
        credit
        facility                                    -                           (40,006)

        Payments
        on
        Successor
        First
        and
        Second
        Lien
        Term
        Loans                                   (799)                                  -

        Proceeds
        from
        Successor
        revolving
        facility                               55,321                                   -

        Payments
        on
        Successor
        revolving
        facility                             (56,001)                                  -

        Payments
        on
        vehicle
        financing
        and
        other
        financing
        activities                              (456)                            (1,468)

    Net
     cash
     (used
     in)
     provided
     by
     financing
     activities                               (1,935)                              7,062
                                               ------                               -----

    Net
     decrease
     in
     cash,
     cash
     equivalents
     and
     restricted
     cash                                       (612)                              (882)

    Cash,
     cash
     equivalents
     and
     restricted
     cash
     -
     beginning
     of
     period                                     6,784                               2,414

    Cash,
     cash
     equivalents
     and
     restricted
     cash
     -end
     of
     period                                                $6,172                             $1,532
                                                           ======                             ======

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), and adjusted net income (loss) per share, 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.


                                   NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

                                            NON-GAAP RECONCILIATIONS (continued)

                                                       (In thousands)

                                                         (Unaudited)


                               Reconciliation of Net loss to EBITDA and Total Adjusted EBITDA:
                           ---------------------------------------------------------------


                                                        Successor                   Predecessor
                                                        ---------                   -----------

                                                                   Three Months Ended

                                                                       March 31,

                                                              2018                             2017
                                                              ----                             ----

    Net loss                                                         $(32,167)                        $(35,962)

    Depreciation and amortization                           14,744                             12,871

    Interest expense, net                                    1,250                             14,208

    EBITDA                                                (16,173)                           (8,883)

    Adjustments:

    Stock-based compensation                                10,978                                309

    Change in fair value of
     derivative warrant liability                              192                              1,618

    Capital reorganization costs [1]                             -                             5,702

    Reorganization items, net [2]                              118                                  -

    Legal and environmental costs,
     net                                                     (347)                               419

    Impairment of long-lived assets                          4,131                                  -

    Restructuring, exit and other
     costs                                                     599                                  -

    Gain on sale of UGSI                                      (75)                                 -

    Executive and severance costs                            2,937                                  -

    (Gain) loss on disposal of assets                          (8)                                49

    Total Adjusted EBITDA                                               $2,352                            $(786)
                                                                        ======                             =====


    [1] Capital reorganization costs in
     2017 represent costs related to the
     chapter 11 filing incurred prior to
     the May 1, 2017 filing date.

    [2] Reorganization items, net
     represents the costs related to the
     chapter 11 filing incurred after the
     May 1, 2017 filing date.


                                                                                          NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

                                                                                                   NON-GAAP RECONCILIATIONS (continued)

                                                                                                        (In thousands) (Unaudited)


                                                                                       Reconciliation of QTD Segment Performance to Adjusted EBITDA
                                                                                       ------------------------------------------------------------


    Three months ended March 31, 2018
     -Successor                         Rocky            Northeast            Southern                 Corporate                      Total
                                      Mountain
    ---                               --------

    Revenue                                      $30,770                                      $9,113                                                  $9,786             $           -    $49,669

    Direct operating expenses             26,346                        7,814                                 7,467                                         -       41,627

    General and administrative
     expenses                              1,276                          762                                   578                                    16,704        19,320

    Depreciation and amortization          6,289                        4,306                                 4,124                                        25        14,744

    Operating loss                       (3,141)                     (3,838)                              (7,044)                                 (16,729)     (30,752)

    Operating margin %                 (10.2)%                     (42.1)%                              (72.0)%                                       NA      (61.9)%

    Reorganization items, net                  -                           1                                     -                                     (93)         (92)

    Loss before income taxes             (3,202)                     (3,899)                              (7,111)                                 (17,955)     (32,167)


    Net loss                             (3,202)                     (3,899)                              (7,111)                                 (17,955)     (32,167)

    Depreciation and amortization          6,289                        4,306                                 4,124                                        25        14,744

    Interest expense, net                    105                           62                                    67                                     1,016         1,250

    Income tax expense                         -                           -                                    -                                        -            -

    EBITDA                                        $3,192                                        $469                                                $(2,920)                $(16,914)  $(16,173)


    Adjustments, net                          97                        (918)                                5,172                                    14,174        18,525

    Adjusted EBITDA                               $3,289                                      $(449)                                                 $2,252                  $(2,740)     $2,352
                                                  ======                                       =====                                                  ======                   =======      ======

    Adjusted EBITDA margin %             10.7%                      (4.9)%                                23.0%                                       NA         4.7%



    Three months ended March 31, 2017
     -Predecessor                       Rocky            Northeast            Southern                 Corporate                      Total
                                      Mountain
    ---                               --------

    Revenue                                      $24,285                                      $7,757                                                  $7,181             $           -    $39,223

    Direct operating expenses             21,232                        7,957                                 5,100                                         -       34,289

    General and administrative
     expenses                              1,947                          769                                 1,031                                     8,612        12,359

    Depreciation and amortization          6,785                        2,513                                 3,519                                        54        12,871

    Operating loss                       (5,679)                     (3,482)                              (2,469)                                  (8,666)     (20,296)

    Operating margin %                 (23.4)%                     (44.9)%                              (34.4)%                                       NA      (51.7)%

    Loss before income taxes             (5,701)                     (3,602)                              (2,527)                                 (24,132)     (35,962)


    Net loss                             (5,701)                     (3,602)                              (2,527)                                 (24,132)     (35,962)

    Depreciation and amortization          6,785                        2,513                                 3,519                                        54        12,871

    Interest expense, net                     82                          120                                    58                                    13,948        14,208

    Income tax expense                         -                           -                                    -                                        -            -

    EBITDA                                        $1,166                                      $(969)                                                 $1,050                 $(10,130)   $(8,883)


    Adjustments, net                         190                           48                                   222                                     7,637         8,097

    Adjusted EBITDA                               $1,356                                      $(921)                                                 $1,272                  $(2,493)     $(786)
                                                  ======                                       =====                                                  ======                   =======       =====

    Adjusted EBITDA margin %              5.6%                     (11.9)%                                17.7%                                       NA       (2.0)%


                                          NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

                                                   NON-GAAP RECONCILIATIONS (continued)

                                                              (In thousands)

                                                               (Unaudited)


                              Reconciliation of Special Items to Net Loss and to EBITDA and Adjusted EBITDA
                          -----------------------------------------------------------------------------


                                    Three months ended March 31, 2018

                           As Reported                  Special Items                  As Adjusted
                           -----------                                                 -----------

    Revenue                                $49,669                                    $              -                                  $49,669

    Direct operating
     expenses                   41,627                                (54)                [A]                        41,573

    General and
     administrative
     expenses                   19,320                            (13,506)                 [B]                         5,814

    Total costs and
     expenses                   80,421                            (18,290)                 [C]                        62,131

    Operating loss            (30,752)                             18,290                 [C]                      (12,462)

    Net loss                  (32,167)                             18,525                 [D]                      (13,642)


    Net loss                             $(32,167)                                                                           $(13,642)

    Depreciation and
     amortization               14,744                                                                      14,744

    Interest expense, net        1,250                                                                       1,250

    Income tax expense               -                                                                          -
                                   ---

    EBITDA and Adjusted
     EBITDA                              $(16,173)                                                                              $2,352
                                          ========                                                                               ======


    Description of 2018 Special Items:
    ----------------------------------

    [A]              Special items primarily relates to the
                     loss on the sale of underutilized
                     assets.

    [B]              Primarily attributable to severance,
                     stock-based compensation and non-
                     routine litigation expenses.

    [C]              Primarily includes the aforementioned
                     adjustments along with long-lived
                     asset impairment charges of $4.1
                     million for assets classified as
                     held-for-sale primarily in the
                     Southern division.

    [D]              Primarily includes the aforementioned
                     adjustments along with a loss of $0.2
                     million associated with the change in
                     fair value of the derivative warrant
                     liability.  Additionally, our
                     effective tax rate for the three
                     months ended March 31, 2018 was zero
                     percent 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 Net Loss and to EBITDA and Adjusted EBITDA
                          -----------------------------------------------------------------------------


                                     Three months ended March 31, 2017

                            As Reported                 Special Items                  As Adjusted
                            -----------                                                -----------

    Revenue                                 $39,223                                   $              -                                  $39,223

    Direct operating
     expenses                    34,289                               (49)                [E]                        34,240

    General and
     administrative
     expenses                    12,359                            (6,430)                 [F]                         5,929

    Total costs and
     expenses                    59,519                            (6,479)                 [G]                        53,040

    Operating loss             (20,296)                             6,479                 [G]                      (13,817)

    Net loss                   (35,962)                             8,097                 [H]                      (27,865)


    Net loss                              $(35,962)                                                                          $(27,865)

    Depreciation and
     amortization                12,871                                                                     12,871

    Interest expense, net        14,208                                                                     14,208

    Income tax expense                -                                                                         -
                                    ---

    EBITDA and Adjusted
     EBITDA                                $(8,883)                                                                             $(786)
                                            =======                                                                               =====


    Description of 2017 Special Items:
    ----------------------------------

    [E]              Special items primarily includes the
                     loss on sale of underutilized assets.

    [F]              Primarily attributable to stock-based
                     compensation, non-routine litigation
                     expenses, non-routine professional
                     fees and $5.7 million for capital re-
                     organization costs.

    [G]              Primarily includes the aforementioned
                     adjustments.

    [H]              Primarily includes the aforementioned
                     adjustments along with a loss of $1.6
                     million associated with the change in
                     fair value of the derivative warrant
                     liability.  Additionally, our
                     effective tax rate for the three
                     months ended March 31, 2017 was zero
                     percent 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
                          --------------------------------


                                    Successor               Predecessor
                                    ---------               -----------

                                           Three Months Ended

                                               March 31,

                                          2018                      2017
                                          ----                      ----

    Net cash used
     in operating
     activities                                  $(7,253)                      $(7,286)

    Less: net
     proceeds
     from
     (purchases
     of) capital
     expenditures
     [1]                                 8,501                           (658)
                                         -----                            ----

    Free Cash
     Flow                                          $1,248                       $(7,944)
                                                   ======                        =======


    [1]             Proceeds received from sales
                    of property, plant and
                    equipment, net of purchases
                    of property, plant and
                    equipment.


              Year-Over-Year Revenue Growth by Price, Activity and Acquisition
              ----------------------------------------------------------------


                                                        Successor
                                                        ---------

                                                    Three Months Ended

                                                      March 31, 2018

    Breakdown of
     Total
     Revenue
     Growth:

       Price                                                $3,130                   8.0%

       Activity                                   7,316                        18.6

       Acquisition                                    -                              -

    Total Revenue
     Growth                                                $10,446                  26.6%
                                                           =======                   ====


             Year-Over-Year Adjusted EBITDA Growth by Price, Activity, Acquisition, and Corporate
             ------------------------------------------------------------------------------------


                                                                      Successor
                                                                      ---------

                                                                 Three Months Ended

                                                                   March 31, 2018

    Breakdown of Total
     Adjusted EBITDA Growth:

       Price                                                            $2,731                        347.7%

       Activity/Expense                                          654                             83.2

       Acquisition                                                 -                                    -

       Corporate                                               (247)                          (31.5)

    Total Adjusted EBITDA
     Growth                                                             $3,138                        399.4%
                                                                        ======                         =====


       NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

               SUPPLEMENTAL COMPANY AND INDUSTRY DATA

                             (Unaudited)


          Company Assets and Utilization by Revenue Source
          ------------------------------------------------


                                                      Three Months
                                                         Ended

                                                        March 31,
                                                          2018
                                                       ----------

    Water Trucks:

       Count (approximate)                                     540

       % Utilized [1]                                        47.0%


    Salt Water Disposal Wells:

       Count                                                    46

       % Utilized [2]                                        46.0%


    Haynesville Pipeline:

       % Utilized [2] [3]                                56% - 75%


    [1]             Trucking utilization assumes a
                    five day work-week and
                    running twelve hours per day.

    [2]             Salt Water Disposal Well and
                    Pipeline utilization is
                    calculated based on daily
                    functional capacity rather
                    than permitted capacity.
                    Functional capacity reflects
                    any factors limiting volume
                    such as pressure limits, pump
                    or tank capacity, etc. and
                    can potentially be increased
                    with additional capital
                    investment.

    [3]             The range of utilization for
                    the Haynesville Pipeline
                    represents the high and low
                    for the year.


                         Industry Statistics for the Basins in which Nuverra Operates [1]
                         ---------------------------------------------------------------


                                                    Average for the                       Year-
                                                                                           Over-
                                                                                            Year

                                             Three Months Ended March 31,

                                              2018                       2017             Growth %
                                              ----                       ----              -------

    Pricing:

       Oil price per
        barrel                                        $62.91                                 $51.62       21.9%

       Natural gas price
        per tcf                                        $3.08                                  $3.02        2.0%


    Operating Rigs                             245                          192                     27.6%


    Oil Production
     (barrels in
     thousands)                              2,646                        2,343                     12.9%


    Natural Gas
     Production (Mcf/
     d)                                     43,442                       36,640                     18.6%


    Wells Completed                          1,250                          916                     36.5%


    Drilled
     Uncompleted
     Ending Inventory                        3,110                        3,070                      1.3%


    [1]             All data obtained from
                    EIA and Baker Hughes

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SOURCE Nuverra Environmental Solutions, Inc.