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.