Nuverra Announces Second Quarter and Year-to-Date 2018 Results
SCOTTSDALE, Ariz., Aug. 6, 2018 /PRNewswire/ -- Nuverra Environmental Solutions, Inc. (NYSE American: NES) ("Nuverra," the "Company," "we," "us" or "our") today announced financial and operating results for the second quarter and six months ended June 30, 2018.
SUMMARY OF QUARTERLY RESULTS
-- Second quarter revenue was $48.9 million, an increase of approximately 17.8%, or $7.4 million, when compared with revenue of $41.5 million in the second quarter of 2017. The increase is comprised of 3.3% for pricing increases and 14.5% for an increase in activities. -- Net loss for the second quarter was $11.2 million, an improvement of $8.4 million, or approximately 42.9%, when compared with a net loss of $19.6 million in the second quarter of 2017. -- Adjusted EBITDA for the second quarter was $4.1 million, an increase of $2.0 million compared with $2.1 million in the second quarter of 2017. -- Second quarter Adjusted EBITDA margin improved by 340 basis points from the second quarter of 2017. -- Total liquidity as of June 30, 2018 was $20.2 million.
"Nuverra's second quarter financial performance reflects the on-going recovery in the energy industry, particularly our operations in the Bakken region. Revenue grew by 18% and adjusted EBITDA almost doubled when compared to our second quarter results in 2017," said Charlie Thompson, Interim Chief Executive Officer.
"We recently added a number of key executives to our management, including Robert Fox as Chief Operating Officer. With the additions to our management team and increased capital spending, we are improving Nuverra's competitive position."
SECOND QUARTER 2018 RESULTS
Second quarter revenue was $48.9 million, an increase of $7.4 million, or 17.8%, from $41.5 million in the second quarter of 2017. Of this 17.8% increase, approximately 3.3% is attributable to pricing increases, 23.2% is a result of increases in activities, offset by (8.7)% due to the exit of the Eagle Ford Shale area.
As a result of increased activity and reliance on higher cost contract drivers, total costs and expenses, adjusted for special items, were $56.9 million, a 10.3% increase compared with $51.6 million in the second quarter of 2017. Primarily as a result of price increases, gross profit adjusted for special items improved 36.0% to $9.6 million in the second quarter of 2018.
Net loss for the second quarter was $11.2 million, an improvement of $8.4 million when compared with a net loss of $19.6 million in the second quarter of 2017. For the second quarter of 2018, the Company reported a net loss, adjusted for special items, of $9.0 million. Special items in the second quarter primarily included legal costs related to the bankruptcy confirmation order appeal, restructuring charges related to our exit of the Eagle Ford Shale area, stock-based compensation expense, and a gain from the change in the fair value of the derivative warrant liability. This compares with a net loss, adjusted for special items, of $15.3 million in the second quarter of 2017.
Adjusted EBITDA for the second quarter was $4.1 million, an increase of $2.0 million compared with $2.1 million in the second quarter of 2017. Second quarter adjusted EBITDA margin was 8.5%, compared with 5.1% in the second quarter of 2017.
YEAR-TO-DATE RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2018 ("YTD")
YTD revenue was $98.6 million, an increase of $17.8 million, or 22.1%, from $80.8 million for the same period in 2017. Of this 22.1% increase, approximately 5.6% is attributable to pricing increases, 21.7% is a result of increases in activities, offset by (5.2)% due to the exit of the Eagle Ford Shale area.
YTD net loss, adjusted for special items, was $22.7 million, an improvement of $20.5 million when compared with a net loss, adjusted for special items, of $43.2 million for the same period in 2017. YTD special items primarily included severance costs related to the departure of our former CEO and $4.5 million in long-lived asset impairment charges for assets held for sale primarily in the Southern division. Additionally, special items included restructuring charges related to our exit of the Eagle Ford Shale area, stock-based compensation expense, and a gain from the change in fair value of the derivative warrant liability.
YTD adjusted EBITDA was $6.5 million, an increase of $5.2 million, or 386.1%, when compared with the same period in 2017. Adjusted EBITDA margin for the 2018 YTD period was 6.6%, compared with 1.7% in 2017.
CASH FLOW AND LIQUIDITY
Net cash used in operating activities for the six months ended June 30, 2018 was $0.5 million, while asset sales net of capital expenditures provided proceeds of $10.5 million. Free cash flow, defined as cash from operations less net cash capital expenditures totaled $10.1 million in the second quarter of 2018, up from $(12.6) million in the second 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 during the remainder of 2018.
Total liquidity available for capital spending and other purposes as of June 30, 2018 was $30.8 million. This consisted of cash and available borrowings of $20.2 million, plus an additional $10.6 million of borrowings available under our revolving facility specifically for capital expenditures. As of June 30, 2018, total debt outstanding was $36.6 million, consisting of $13.2 million under our senior secured term loan facility, $20.6 million under our second lien term loan facility, and $2.8 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 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 changes in industry condition or our financial condition, which could constrain our liquidity and reduce availability under our revolving credit facility; difficulties in successfully executing our growth initiatives, including identifying and completing acquisitions and divestitures, and differences in the type and availability of consideration or financing for such acquisitions and divestitures; 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 changes in industry practices and operational 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, transportation costs, 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; 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; 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; and 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 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 Successor Predecessor --------- ----------- --------- ----------- Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ---- ---- ---- ---- Revenue: Service revenue $45,320 $37,538 $90,847 $72,956 Rental revenue 3,628 4,000 7,770 7,805 ----- ----- ----- ----- Total revenue 48,948 41,538 98,617 80,761 Costs and expenses: Direct operating expenses 39,069 34,825 80,696 69,114 General and administrative expenses 6,014 8,867 25,334 21,226 Depreciation and amortization 11,969 12,107 26,713 24,978 Impairment of long-lived assets 332 - 4,463 - Other, net 469 - 1,068 - --- --- ----- --- Total costs and expenses 57,853 55,799 138,274 115,318 ------ ------ ------- ------- Operating loss (8,905) (14,261) (39,657) (34,557) Interest expense, net (1,204) (5,338) (2,454) (19,546) Other income, net 587 5,698 514 4,240 Reorganization items, net (1,654) (5,704) (1,746) (5,704) ------ ------ ------ ------ Loss before income taxes (11,176) (19,605) (43,343) (55,567) Income tax benefit - 18 - 18 --- --- --- --- Net loss $(11,176) $(19,587) $(43,343) $(55,549) ======== ======== ======== ======== Net loss per common share: Net loss per basic common share $(0.96) $(0.13) $(3.71) $(0.37) ====== ====== ====== ====== - - --- --- Net loss per diluted common share $(0.96) $(0.13) $(3.71) $(0.37) ====== ====== ====== ====== Weighted average shares outstanding: Basic 11,696 150,941 11,696 150,938 Diluted 11,696 150,941 11,696 150,938
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) Successor June 30, December 31, 2018 2017 ---- ---- Assets Cash and cash equivalents $12,808 $5,488 Restricted cash 1,548 1,296 Accounts receivable, net 32,476 30,965 Inventories 3,846 4,089 Prepaid expenses and other receivables 3,334 8,594 Other current assets 483 226 Assets held for sale 3,381 2,765 ----- ----- Total current assets 57,876 53,423 ------ ------ Property, plant and equipment, net 192,899 229,874 Equity investments 41 48 Intangibles, net 454 547 Goodwill 27,139 27,139 Deferred income taxes 84 84 Other assets 144 207 Total assets $278,637 $311,322 ======== ======== Liabilities and Shareholders' Equity Accounts payable $7,889 $7,946 Accrued liabilities 15,874 13,939 Current contingent consideration 500 500 Current portion of long-term debt 4,698 5,525 Derivative warrant liability 188 477 Total current liabilities 29,149 28,387 ------ ------ Long-term debt 31,870 33,524 Other long-term liabilities 6,594 6,438 Total liabilities 67,613 68,349 ------ ------ Commitments and contingencies Shareholders' equity: Common stock 117 117 Additional paid-in capital 302,145 290,751 Accumulated deficit (91,238) (47,895) ------- ------- Total shareholders' equity 211,024 242,973 Total liabilities and shareholders' equity $278,637 $311,322 ======== ========
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Successor Predecessor --------- ----------- Six Months Ended June 30, 2018 2017 ---- ---- Cash flows from operating activities: Net loss $(43,343) $(55,549) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 26,713 24,978 Amortization of debt issuance costs, net - 2,135 Accrued interest added to debt principal 119 8,575 Stock-based compensation 11,394 421 Impairment of long-lived assets 4,463 - Gain on sale of UGSI (75) - Gain on disposal of property, plant and equipment (254) (223) Bad debt expense 120 784 Change in fair value of derivative warrant liability (289) (4,025) Other, net 221 106 Changes in operating assets and liabilities: Accounts receivable (1,631) (5,204) Prepaid expenses and other receivables (99) 710 Accounts payable and accrued liabilities 2,243 13,882 Other assets and liabilities, net (54) 135 Net cash used in operating activities (472) (13,275) ---- ------- Cash flows from investing activities: Proceeds from the sale of property, plant and equipment 17,649 3,027 Purchases of property, plant and equipment (7,103) (2,319) Proceeds from the sale of UGSI 75 - Net cash provided by investing activities 10,621 708 ------ --- Cash flows from financing activities: Proceeds from Predecessor revolving credit facility - 76,072 Payments on Predecessor revolving credit facility - (79,866) Proceeds from Predecessor term loan - 15,700 Proceeds from debtor in possession term loan - 6,875 Payments on Successor First and Second Lien Term Loans (1,597) - Proceeds from Successor revolving facility 117,092 - Payments on Successor revolving facility (117,092) - Payments on vehicle financing and other financing activities (980) (2,595) Net cash (used in) provided by financing activities (2,577) 16,186 Change in cash, cash equivalents and restricted cash 7,572 3,619 ===== ===== Cash and cash equivalents, beginning of period 5,488 994 Restricted cash, beginning of period 1,296 1,420 Cash, cash equivalents and restricted cash, beginning of period 6,784 2,414 ===== ===== Cash and cash equivalents, end of period 12,808 1,205 Restricted cash, end of period 1,548 4,828 Cash, cash equivalents and restricted cash, end of period $14,356 $6,033 ======= ======
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 Successor Predecessor --------- ----------- --------- ----------- Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ---- ---- ---- ---- Net loss $(11,176) $(19,587) $(43,343) $(55,549) Depreciation and amortization 11,969 12,107 26,713 24,978 Interest expense, net 1,204 5,338 2,454 19,546 Income tax benefit - (18) - (18) --- --- --- --- EBITDA 1,997 (2,160) (14,176) (11,043) Adjustments: Transaction-related costs, net 52 - 52 - Stock-based compensation 416 112 11,394 421 Change in fair value of derivative warrant liability (482) (5,643) (289) (4,025) Capital reorganization costs [1] - 3,746 - 9,448 Reorganization items, net [2] 1,654 5,704 1,746 5,704 Legal and environmental costs, net (49) 635 (371) 1,054 Impairment of long-lived assets 332 - 4,463 - Restructuring, exit and other costs 469 - 1,068 - Gain on sale of UGSI - - (75) - Executive and severance costs - - 2,937 - Gain on disposal of assets (246) (272) (254) (223) Total Adjusted EBITDA $4,143 $2,122 $6,495 $1,336 ====== ====== ====== ======
[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 June 30, 2018 -Successor Rocky Northeast Southern Corporate Total Mountain --- -------- Revenue $33,165 $9,606 $6,177 $ - $48,948 Direct operating expenses 25,599 8,510 4,960 - 39,069 General and administrative expenses 1,882 518 251 3,363 6,014 Depreciation and amortization 5,923 3,283 2,750 13 11,969 Operating loss (239) (2,705) (2,253) (3,708) (8,905) Operating margin % (0.7)% (28.2)% (36.5)% NA (18.2)% Loss before income taxes (203) (2,780) (2,295) (5,898) (11,176) Net loss (203) (2,780) (2,295) (5,898) (11,176) Depreciation and amortization 5,923 3,283 2,750 13 11,969 Interest expense, net 63 75 49 1,017 1,204 Income tax benefit - - - - - EBITDA $5,783 $578 $504 $(4,868) $1,997 Adjustments, net (163) (667) 1,059 1,917 2,146 Adjusted EBITDA $5,620 $(89) $1,563 $(2,951) $4,143 ====== ==== ====== ======= ====== Adjusted EBITDA margin % 16.9% (0.9)% 25.3% NA 8.5% Three months ended June 30, 2017 -Predecessor Rocky Northeast Southern Corporate Total Mountain --- -------- Revenue $23,759 $9,570 $8,209 $ - $41,538 Direct operating expenses 19,171 9,831 5,823 - 34,825 General and administrative expenses 1,505 817 650 5,895 8,867 Depreciation and amortization 6,803 2,182 3,068 54 12,107 Operating loss (3,720) (3,260) (1,332) (5,949) (14,261) Operating margin % (15.7)% (34.1)% (16.2)% NA (34.3)% Loss before income taxes (4,209) (3,325) (1,406) (10,665) (19,605) Net loss (4,209) (3,325) (1,406) (10,647) (19,587) Depreciation and amortization 6,803 2,182 3,068 54 12,107 Interest expense, net 81 43 36 5,178 5,338 Income tax benefit - - - (18) (18) EBITDA $2,675 $(1,100) $1,698 $(5,433) $(2,160) Adjustments, net 931 67 (234) 3,518 4,282 Adjusted EBITDA $3,606 $(1,033) $1,464 $(1,915) $2,122 ====== ======= ====== ======= ====== Adjusted EBITDA margin % 15.2% (10.8)% 17.8% NA 5.1%
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS (continued) (In thousands) (Unaudited) Reconciliation of YTD Segment Performance to Adjusted EBITDA ------------------------------------------------------------ Six months ended June 30, 2018 -Successor Rocky Northeast Southern Corporate Total Mountain --- -------- Revenue $63,935 $18,719 $15,963 $ - $98,617 Direct operating expenses 51,945 16,324 12,427 - 80,696 General and administrative expenses 3,158 1,280 829 20,067 25,334 Depreciation and amortization 12,212 7,589 6,874 38 26,713 Operating loss (3,380) (6,543) (9,297) (20,437) (39,657) Operating margin % (5.3)% (35.0)% (58.2)% NA (40.2)% Loss before income taxes (3,405) (6,679) (9,406) (23,853) (43,343) Net loss (3,405) (6,679) (9,406) (23,853) (43,343) Depreciation and amortization 12,212 7,589 6,874 38 26,713 Interest expense, net 168 137 116 2,033 2,454 Income tax benefit - - - - - --- --- --- --- --- EBITDA $8,975 $1,047 $(2,416) $(21,782) $(14,176) Adjustments, net (66) (1,585) 6,231 16,091 20,671 Adjusted EBITDA $8,909 $(538) $3,815 $(5,691) $6,495 ====== ===== ====== ======= ====== Adjusted EBITDA margin % 13.9% (2.9)% 23.9% NA 6.6% Six months ended June 30, 2017 -Predecessor Rocky Northeast Southern Corporate Total Mountain --- -------- Revenue $48,044 $17,327 $15,390 $ - $80,761 Direct operating expenses 40,403 17,788 10,923 - 69,114 General and administrative expenses 3,452 1,586 1,681 14,507 21,226 Depreciation and amortization 13,588 4,695 6,587 108 24,978 Operating loss (9,399) (6,742) (3,801) (14,615) (34,557) Operating margin % (19.6)% (38.9)% (24.7)% NA (42.8)% Loss before income taxes (9,910) (6,927) (3,933) (34,797) (55,567) Net loss (9,910) (6,927) (3,933) (34,779) (55,549) Depreciation and amortization 13,588 4,695 6,587 108 24,978 Interest expense, net 163 163 94 19,126 19,546 Income tax benefit - - - (18) (18) --- --- --- --- --- EBITDA $3,841 $(2,069) $2,748 $(15,563) $(11,043) Adjustments, net 1,121 115 (12) 11,155 12,379 Adjusted EBITDA $4,962 $(1,954) $2,736 $(4,408) $1,336 ====== ======= ====== ======= ====== Adjusted EBITDA margin % 10.3% (11.3)% 17.8% NA 1.7%
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 June 30, 2018 As Reported Special Items As Adjusted ----------- ----------- Revenue $48,948 $ - $48,948 Direct operating expenses 39,069 246 [A] 39,315 General and administrative expenses 6,014 (419) [B] 5,595 Total costs and expenses 57,853 (974) [C] 56,879 Operating loss (8,905) 974 [C] (7,931) Net loss (11,176) 2,146 [D] (9,030) Net loss $(11,176) $(9,030) Depreciation and amortization 11,969 11,969 Interest expense, net 1,204 1,204 Income tax benefit - - --- EBITDA and Adjusted EBITDA $1,997 $4,143 ====== ======
Description of 2018 Special Items: ---------------------------------- [A] Special items primarily relates to the gain on the sale of underutilized assets. [B] Primarily attributable to stock-based compensation. [C] Primarily includes the aforementioned adjustments along with $0.5 million in restructuring costs related to the exit of the Eagle Ford Shale area, and long-lived asset impairment charges of $0.3 million for assets classified as held-for-sale in the Corporate division. [D] Primarily includes the aforementioned adjustments along with $1.7 million in chapter 11 related fees recorded to "Reorganization items, net," offset by a gain of $0.5 million associated with the change in fair value of the derivative warrant liability. Additionally, our effective tax rate for the three months ended June 30, 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 June 30, 2017 As Reported Special Items As Adjusted ----------- ----------- Revenue $41,538 $ - $41,538 Direct operating expenses 34,825 (372) [E] 34,453 General and administrative expenses 8,867 (3,849) [F] 5,018 Total costs and expenses 55,799 (4,221) [G] 51,578 Operating loss (14,261) 4,221 [G] (10,040) Net loss (19,587) 4,278 [H] (15,309) Net loss $(19,587) $(15,309) Depreciation and amortization 12,107 12,107 Interest expense, net 5,338 5,338 Income tax benefit (18) (14) --- EBITDA and Adjusted EBITDA $(2,160) $2,122 ======= ======
Description of 2017 Special Items: ---------------------------------- [E] Special items primarily includes capital reorganization costs, offset by the gain on the sale of underutilized assets. [F] Primarily attributable to $3.1 million for capital reorganization costs incurred prior to the chapter 11 filing, as well as stock-based compensation, non-routine litigation expenses and non-routine professional fees. [G] Primarily includes the aforementioned adjustments. [H] Primarily includes the aforementioned adjustments along with $5.7 million of capital reorganization costs incurred after the chapter 11 filing recorded to "Reorganization items, net," offset by a gain of $5.6 million associated with the change in fair value of the derivative warrant liability. Additionally, our effective tax rate for the three months ended June 30, 2017 was near zero 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 ----------------------------------------------------------------------------- Six months ended June 30, 2018 As Reported Special Items As Adjusted ----------- ----------- Revenue $98,617 $ - $98,617 Direct operating expenses 80,696 192 [A] 80,888 General and administrative expenses 25,334 (13,950) [B] 11,384 Total costs and expenses 138,274 (19,289) [C] 118,985 Operating loss (39,657) 19,289 [C] (20,368) Net loss (43,343) 20,671 [D] (22,672) Net loss $(43,343) $(22,672) Depreciation and amortization 26,713 26,713 Interest expense, net 2,454 2,454 Income tax benefit - - --- --- EBITDA and Adjusted EBITDA $(14,176) $6,495 ======== ======
Description of 2018 Special Items: ---------------------------------- [A] Special items primarily relates to the gain 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 $1.1 million in restructuring costs related to the exit of the Eagle Ford Shale area, and long-lived asset impairment charges of $4.5 million for assets classified as held-for-sale in the Southern, Northeast and Corporate divisions. [D] Primarily includes the aforementioned adjustments along with $1.7 million in chapter 11 related fees recorded to "Reorganization items, net," offset by a gain of $0.3 million associated with the change in fair value of the derivative warrant liability. Additionally, our effective tax rate for the six months ended June 30, 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 ----------------------------------------------------------------------------- Six months ended June 30, 2017 As Reported Special Items As Adjusted ----------- ----------- Revenue $80,761 $ - $80,761 Direct operating expenses 69,114 (421) [E] 68,693 General and administrative expenses 21,226 (10,279) [F] 10,947 Total costs and expenses 115,318 (10,700) [G] 104,618 Operating loss (34,557) 10,700 [G] (23,857) Net loss (55,549) 12,375 [H] (43,174) Net loss $(55,549) $(43,174) Depreciation and amortization 24,978 24,978 Interest expense, net 19,546 19,546 Income tax benefit (18) (14) --- --- EBITDA and Adjusted EBITDA $(11,043) $1,336 ======== ======
Description of 2017 Special Items: ---------------------------------- [E] Special items primarily includes capital reorganization costs, offset by the gain on sale of underutilized assets. [F] Primarily attributable to capital reorganization costs of $8.8 million incurred prior to the chapter 11 filing, as well as stock-based compensation, non-routine litigation expenses, and non-routine professional fees. [G] Primarily includes the aforementioned adjustments. [H] Primarily includes the aforementioned adjustments, along with $5.7 million of capital reorganization costs incurred after the chapter 11 filing recorded to "Reorganization items, net," offset by a gain of $4.0 million associated with the change in fair value of the derivative warrant liability. Additionally, our effective tax rate for the six months ended June 30, 2017 was near zero 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 --------- ----------- Six Months Ended June 30, 2018 2017 ---- ---- Net cash used in operating activities $(472) $(13,275) Less: net proceeds from (purchases of) capital expenditures [1] 10,546 708 ------ --- Free Cash Flow $10,074 $(12,567) ======= ========
[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 Successor --------- --------- Three Months Ended Six Months Ended June 30, 2018 June 30, 2018 Breakdown of Total Revenue Growth: Price $1,354 3.3% $4,483 5.6% Activity 9,688 23.2 17,539 21.7 Acquisition/Closure (3,632) (8.7) (4,166) (5.2) Total Revenue Growth $7,410 17.8% $17,856 22.1% ====== ==== ======= ====
Year-Over-Year Adjusted EBITDA Growth by Price, Activity, Acquisition, and Corporate ------------------------------------------------------------------------------------ Successor Successor --------- --------- Three Months Ended Six Months Ended June 30, 2018 June 30, 2018 Breakdown of Total Adjusted EBITDA Growth: Price $1,209 56.9% 806 60.3% Activity/Expense 1,798 84.7 5,883 440.0 Acquisition/Closure 51 2.4 (245) (18.1) Corporate (1,037) (48.8) (1,285) (96.0) Total Adjusted EBITDA Growth $2,021 95.2% $5,159 386.2% ====== ==== ====== =====
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES SUPPLEMENTAL COMPANY AND INDUSTRY DATA (Unaudited) Company Assets and Utilization by Revenue Source ------------------------------------------------ Three Months Ended June 30, 2018 ------------- Water Trucks: Count (approximate) 470 % Utilized [1] 50.0% Salt Water Disposal Wells: Count 44 % Utilized [2] 45.0% Haynesville Pipeline: % Utilized [2] [3] 51% - 64%
[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 period.
Industry Statistics for the Basins in which Nuverra Operates [1] --------------------------------------------------------------- Average for the Year-Over-Year Three Months Ended June 30, 2018 2017 Growth % ---- ---- ------- Pricing: Oil price per barrel $68.07 $48.1 41.5% Natural gas price per tcf $2.85 $3.08 (7.2)% Operating Rigs 187 154 21.6% Oil Production (barrels in thousands) 1,402 1,183 18.5% Natural Gas Production (Mcf/d) 38,983 31,336 24.4% Wells Completed 878 717 22.4% Drilled Uncompleted Ending Inventory 1,680 1,749 (3.9)%
[1] All data obtained from EIA and Baker Hughes
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SOURCE Nuverra Environmental Solutions, Inc.