Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Nuverra Environmental Solutions, Inc. | nesc_8-kx20170630.htm |
Exhibit 99.1
NUVERRA ANNOUNCES SECOND QUARTER AND YEAR-TO-DATE 2017 RESULTS
SCOTTSDALE, AZ (August 11, 2017) - Nuverra Environmental Solutions, Inc. (“Nuverra,” the “Company,” “we,” “us” or “our”) today announced financial and operating results for the second quarter and six months ended June 30, 2017.
SUMMARY OF QUARTERLY RESULTS
• | Second quarter revenue was $41.5 million, an increase of approximately 5.9%, or $2.3 million, when compared with revenue of $39.2 million in the first quarter of 2017. |
• | Total costs and expenses, adjusted for special items, were $51.6 million, or a 2.8% decrease when compared with $53.0 million in the first quarter of 2017. |
• | Loss from continuing operations for the second quarter was $19.6 million, or a loss of $0.13 per diluted share, compared with a loss from continuing operations of $36.0 million, or a loss of $0.24 per diluted share, in the first quarter of 2017. |
• | Adjusted EBITDA from continuing operations for the second quarter was $2.1 million, an increase of $2.9 million compared with adjusted EBITDA from continuing operations of $(0.8) million in the first quarter of 2017. |
SECOND QUARTER 2017 RESULTS
Second quarter revenue was $41.5 million, an increase of $2.3 million, or 5.9%, from $39.2 million in the first quarter of 2017. In the second quarter of 2016, the Company reported revenue of $34.0 million. Due to oil prices becoming more stable in 2017, demand has increased in all divisions as compared to the same period in the prior year. The primary driver of the increase in demand was a 111% increase in the number of average operating oil rigs in the basins we serve from those operating in the same period in the prior year.
Total costs and expenses, adjusted for special items, were $51.6 million, a 2.8% decrease compared with total costs and expenses, adjusted for special items, of $53.0 million in the first quarter of 2017. The Company reported total costs and expenses, adjusted for special items, of $48.9 million in the second quarter of 2016.
For the second quarter of 2017, the Company reported a net loss from continuing operations of $19.6 million, or a loss of $0.13 per diluted share. Special items in the second quarter totaled approximately $4.3 million and included $9.5 million for capital reorganization costs, partially offset by a $5.6 million gain on the change in fair value of the derivative warrant liability. Additionally, special items included the gain on the sale of underutilized assets, non-recurring legal and professional fees, and stock-based compensation expense. Excluding the impact of these special items, second quarter 2017 adjusted loss from continuing operations was $15.3 million, or a loss of $0.10 per diluted share. This compares with a loss from continuing operations, adjusted for special items, of $27.9 million, or a loss of $0.18 per diluted share, in the first quarter of 2017. The Company reported a loss from continuing operations, adjusted for special items, of $29.4 million, or a loss of $0.43 per diluted share, in the second quarter of 2016.
Adjusted EBITDA from continuing operations for the second quarter was $2.1 million, an increase of $2.9 million compared with $(0.8) million in the first quarter of 2017. Second quarter adjusted EBITDA margin from continuing operations was 5.1%, compared with (2.0)% in the first quarter of 2017. The Company reported adjusted EBITDA from continuing operations of $0.3 million and an adjusted EBITDA margin from continuing operations of 0.9% in the second quarter of 2016.
YEAR-TO-DATE RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2017 ("YTD")
YTD revenue was $80.8 million, a decrease of $0.2 million from $81.0 million for the same period in 2016. Although rig counts have increased in 2017 compared to those operating during the same period in 2016, there is a lag in revenue relative to newly added rigs, reactivating equipment, and rehiring drivers. Additionally, revenues in early 2016 were still influenced by higher rig counts at the end of 2015. These factors have led to revenue being nearly flat as compared to the same period in the prior year.
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YTD net loss from continuing operations was $55.5 million, or a loss of $0.37 per diluted share, compared with a loss of $67.9 million, or a loss of $1.42 per diluted share, for the same period in 2016. Excluding special items, YTD adjusted net loss from continuing operations was $43.2 million, or a loss of $0.29 per diluted share, compared with adjusted net loss from continuing operations of $55.9 million, or a loss of $1.17 per diluted share in 2016. The $12.4 million in YTD special items primarily included $15.2 million for capital reorganization costs and $1.0 million in legal and professional fees, partially offset by a $4.0 million gain on the change in fair value of the derivative warrant liability. Additionally, special items included the gain on the sale of underutilized assets and stock-based compensation expense.
YTD adjusted EBITDA from continuing operations was $1.3 million, a decrease of 28.9% when compared with the same period in 2016. Adjusted EBITDA margin for the 2017 YTD period was 1.7%, compared with 2.3% in 2016.
CASH FLOW AND LIQUIDITY
Net cash used in operating activities from continuing operations for the six months ended June 30, 2017 was $13.3 million, while capital expenditures net of asset sales from continuing operations provided cash of $0.7 million. For the six months ended June 30, 2017, free cash flow (defined as net cash used in or provided by operating activities, less purchases of property, plant and equipment net of proceeds received from sales of property, plant and equipment) was negative at $(12.6) million, compared with negative free cash flow of $(8.7) million during the six months ended June 30, 2016.
As of June 30, 2017, total debt outstanding was $519.9 million, including $40.4 million under our 9.875% Senior Notes due 2018 (the “2018 Notes”), $357.1 million under our 12.5%/10.0% Senior Secured Second Lien Notes due 2021 (the “2021 Notes”), $80.7 million under a term loan (the “Term Loan”), $24.4 million under a debtor in possession revolving credit facility, $7.5 million under a debtor in possession term loan (collectively with the debtor in possession revolving credit facility, the “DIP Facilities”), $9.8 million in capital leases for vehicle financings and a note payable for the purchase of the remaining interest in Appalachian Water Services, LLC.
EMERGENCE FROM CHAPTER 11 BANKRUPTCY PROCEEDINGS
On August 7, 2017 (the “Effective Date”), the Company and its material subsidiaries emerged from Bankruptcy protection under chapter 11 of the United States Bankruptcy Code. Pursuant to their Amended Joint Plans of Reorganization (collectively, the “Plan”), which were confirmed by the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), the Company eliminated over $500 million of previously outstanding debt and entered into a new $45 million First Lien Credit Agreement and a new $26.8 million Second Lien Term Loan Agreement. Among other uses, the Company will use the loans under the First Lien Credit Agreement and the Second Lien Term Loan Agreement to repay obligations outstanding under the Company’s pre-Effective Date asset based lending facility, make certain payments as provided in the Plan, and for working capital, transaction expenses, and other general corporate purposes.
The order confirming the Plan was entered by the Bankruptcy Court on July 25, 2017 (the “Confirmation Order”). On July 26, 2017, an individual holder of 2018 Notes appealed the Confirmation Order to the District Court for the District of Delaware and filed a motion for a stay pending appeal from the District Court. On August 3, 2017, the District Court denied the motion for a stay pending appeal, concluding that: “The Bankruptcy Court’s ruling is consistent with existing precedent . . . .” Notwithstanding the denial of the motion for stay pending appeal, the appeal remains pending in the District Court. The Company will seek dismissal or denial of the appeal, but it makes no assurances about the outcome of the appeal or the effects of the appeal on our businesses.
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, recycling, and disposal of restricted solids, water, wastewater, waste fluids, and hydrocarbons. The Company provides its suite of environmentally compliant and sustainable solutions to customers who demand stricter environmental compliance and accountability from their service providers. Find additional information about Nuverra 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, or the “Securities Act,” and Section 21E of the United States Securities Exchange Act of 1934, as amended, or the “Exchange Act.” 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-
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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 the 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 and our ability to execute the requirements of the Plan subsequent to the Effective Date; our ability to obtain approval of the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court; the Bankruptcy Court's rulings in our chapter 11 cases and the outcome of our chapter 11 cases in general; our ability to comply with the covenants and other terms of our credit facilities; potential impact of litigation; uncertainty relating to successful negotiation, execution and consummation of all necessary definitive agreements in connection with our strategic initiatives; whether certain markets grow as anticipated; pricing pressures; current and projected future uncertainties in commodities markets, including low oil and/or natural gas prices; changes in customer drilling and completion activities and capital expenditure plans; shifts in production in shale areas where we operate and/or shale areas where we currently do not have operations; control of costs and expenses, including uncertainty regarding the ability to successfully implement cost-management initiatives; liquidity and access to capital; compliance with the terms of agreements governing our financing; and the competitive and regulatory environment. 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 the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, as well as 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 -
3
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Non-rental revenue | $ | 37,538 | $ | 31,369 | $ | 72,956 | $ | 75,395 | |||||||
Rental revenue | 4,000 | 2,609 | 7,805 | 5,558 | |||||||||||
Total revenue | 41,538 | 33,978 | 80,761 | 80,953 | |||||||||||
Costs and expenses: | |||||||||||||||
Direct operating expenses | 34,825 | 30,283 | 69,114 | 68,900 | |||||||||||
General and administrative expenses | 8,867 | 14,204 | 21,226 | 21,656 | |||||||||||
Depreciation and amortization | 12,107 | 15,206 | 24,978 | 31,051 | |||||||||||
Impairment of long-lived assets | — | 2,664 | — | 2,664 | |||||||||||
Total costs and expenses | 55,799 | 62,357 | 115,318 | 124,271 | |||||||||||
Operating loss | (14,261 | ) | (28,379 | ) | (34,557 | ) | (43,318 | ) | |||||||
Interest expense, net | (5,338 | ) | (13,973 | ) | (19,546 | ) | (26,018 | ) | |||||||
Other income, net | 5,698 | 2,771 | 4,240 | 2,929 | |||||||||||
Loss on extinguishment of debt | — | (284 | ) | — | (674 | ) | |||||||||
Reorganization items, net | (5,704 | ) | — | (5,704 | ) | — | |||||||||
Loss from continuing operations before income taxes | (19,605 | ) | (39,865 | ) | (55,567 | ) | (67,081 | ) | |||||||
Income tax benefit (expense) | 18 | (773 | ) | 18 | (828 | ) | |||||||||
Loss from continuing operations | (19,587 | ) | (40,638 | ) | (55,549 | ) | (67,909 | ) | |||||||
Loss from discontinued operations, net of income taxes | — | (1,290 | ) | — | (1,235 | ) | |||||||||
Net loss attributable to common shareholders | $ | (19,587 | ) | $ | (41,928 | ) | $ | (55,549 | ) | $ | (69,144 | ) | |||
Net loss per common share attributable to common shareholders: | |||||||||||||||
Basic and diluted loss from continuing operations | $ | (0.13 | ) | $ | (0.60 | ) | $ | (0.37 | ) | $ | (1.42 | ) | |||
Basic and diluted loss from discontinued operations | — | (0.02 | ) | — | (0.03 | ) | |||||||||
Net loss per basic and diluted common share | $ | (0.13 | ) | $ | (0.62 | ) | $ | (0.37 | ) | $ | (1.45 | ) | |||
Weighted average shares outstanding used in computing net loss per basic and diluted common share | 150,941 | 67,699 | 150,938 | 47,803 | |||||||||||
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 30, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 1,205 | $ | 994 | |||
Restricted cash | 4,828 | 1,420 | |||||
Accounts receivable, net | 28,215 | 23,795 | |||||
Inventories | 3,980 | 2,464 | |||||
Prepaid expenses and other receivables | 3,244 | 3,516 | |||||
Other current assets | 6,163 | 107 | |||||
Assets held for sale | 631 | 1,182 | |||||
Total current assets | 48,266 | 33,478 | |||||
Property, plant and equipment, net | 268,785 | 294,179 | |||||
Equity investments | 59 | 73 | |||||
Intangibles, net | 13,268 | 14,310 | |||||
Other assets | 339 | 564 | |||||
Total assets | $ | 330,717 | $ | 342,604 | |||
Liabilities and Shareholders' Deficit | |||||||
Accounts payable | $ | 6,293 | $ | 4,047 | |||
Accrued liabilities | 27,351 | 18,787 | |||||
Current portion of long-term debt | 35,230 | 465,835 | |||||
Derivative warrant liability | — | 4,298 | |||||
Total current liabilities | 68,874 | 492,967 | |||||
Deferred income taxes | 495 | 495 | |||||
Long-term debt | 2,517 | 5,956 | |||||
Long-term contingent consideration | — | 8,500 | |||||
Other long-term liabilities | 3,689 | 3,752 | |||||
Liabilities subject to compromise | 479,338 | — | |||||
Total liabilities | 554,913 | 511,670 | |||||
Commitments and contingencies | |||||||
Shareholders' deficit: | |||||||
Common stock | 152 | 152 | |||||
Additional paid-in capital | 1,408,288 | 1,407,867 | |||||
Treasury stock | (19,809 | ) | (19,807 | ) | |||
Accumulated deficit | (1,612,827 | ) | (1,557,278 | ) | |||
Total shareholders' deficit | (224,196 | ) | (169,066 | ) | |||
Total liabilities and shareholders' deficit | $ | 330,717 | $ | 342,604 | |||
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended | |||||||
June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (55,549 | ) | $ | (69,144 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Loss on the sale of TFI | — | 1,235 | |||||
Depreciation and amortization of intangible assets | 24,978 | 31,051 | |||||
Amortization of debt issuance costs, net | 2,135 | 2,587 | |||||
Accrued interest added to debt principal | 8,575 | — | |||||
Stock-based compensation | 421 | 656 | |||||
Impairment of long-lived assets | — | 2,664 | |||||
Gain on sale of UGSI | — | (1,694 | ) | ||||
(Gain) loss on disposal of property, plant and equipment | (223 | ) | 727 | ||||
Bad debt expense | 784 | 254 | |||||
Change in fair value of derivative warrant liability | (4,025 | ) | (1,023 | ) | |||
Loss on extinguishment of debt | — | 674 | |||||
Deferred income taxes | — | 48 | |||||
Other, net | 106 | (33 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (5,204 | ) | 21,938 | ||||
Prepaid expenses and other receivables | 710 | (146 | ) | ||||
Accounts payable and accrued liabilities | 13,882 | 118 | |||||
Other assets and liabilities, net | 135 | (2,506 | ) | ||||
Net cash used in operating activities | (13,275 | ) | (12,594 | ) | |||
Cash flows from investing activities: | |||||||
Proceeds from the sale of property, plant and equipment | 3,027 | 5,995 | |||||
Purchases of property, plant and equipment | (2,319 | ) | (2,133 | ) | |||
Proceeds from the sale of UGSI | — | 4,979 | |||||
Change in restricted cash | (3,408 | ) | (1,254 | ) | |||
Net cash (used in) provided by investing activities | (2,700 | ) | 7,587 | ||||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 76,072 | 76,979 | |||||
Payments on revolving credit facility | (79,866 | ) | (130,667 | ) | |||
Proceeds from term loan | 15,700 | 24,000 | |||||
Proceeds from DIP term loan | 6,875 | — | |||||
Payments for debt issuance costs | — | (985 | ) | ||||
Payments on vehicle financing and other financing activities | (2,595 | ) | (3,326 | ) | |||
Net cash provided by (used in) financing activities | 16,186 | (33,999 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 211 | (39,006 | ) | ||||
Cash and cash equivalents - beginning of period | 994 | 39,309 | |||||
Cash and cash equivalents - end of period | $ | 1,205 | $ | 303 | |||
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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.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS (continued)
(In thousands)
(Unaudited)
Reconciliation of Loss from Continuing Operations to EBITDA, Adjusted EBITDA from Continuing Operations and Total Adjusted EBITDA:
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Loss from continuing operations | $ | (19,587 | ) | $ | (40,638 | ) | $ | (55,549 | ) | $ | (67,909 | ) | |||
Depreciation and amortization | 12,107 | 15,206 | 24,978 | 31,051 | |||||||||||
Interest expense, net | 5,338 | 13,973 | 19,546 | 26,018 | |||||||||||
Income tax (benefit) expense | (18 | ) | 773 | (18 | ) | 828 | |||||||||
EBITDA | (2,160 | ) | (10,686 | ) | (11,043 | ) | (10,012 | ) | |||||||
Adjustments: | |||||||||||||||
Transaction-related costs, including earnout adjustments, net | — | 2 | — | (117 | ) | ||||||||||
Stock-based compensation | 112 | 288 | 421 | 656 | |||||||||||
Change in fair value of derivative warrant liability | (5,643 | ) | (1,023 | ) | (4,025 | ) | (1,023 | ) | |||||||
Capital reorganization costs (a) | 9,450 | 8,391 | 15,152 | 8,404 | |||||||||||
Legal and environmental costs, net | 635 | 251 | 1,054 | 1,713 | |||||||||||
Impairment of long-lived assets | — | 2,664 | — | 2,664 | |||||||||||
Restructuring, exit and other costs | — | 59 | — | (113 | ) | ||||||||||
Loss on extinguishment of debt | — | 284 | — | 674 | |||||||||||
Gain on sale of UGSI | — | (1,694 | ) | — | (1,694 | ) | |||||||||
(Gain) loss on disposal of assets | (272 | ) | 1,784 | (223 | ) | 727 | |||||||||
Adjusted EBITDA from continuing operations | 2,122 | 320 | 1,336 | 1,879 | |||||||||||
Adjusted EBITDA from discontinued operations | — | — | — | — | |||||||||||
Total Adjusted EBITDA | $ | 2,122 | $ | 320 | $ | 1,336 | $ | 1,879 | |||||||
(a) Capital reorganization costs in 2017 represent costs incurred for the Company's chapter 11 reorganization. Capital reorganization costs in 2016 represent costs incurred for the debt exchange executed in 2016.
Reconciliation of Loss from Discontinued Operations to EBITDA from Discontinued Operations and Adjusted EBITDA from Discontinued Operations:
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Loss from discontinued operations | $ | — | $ | (1,290 | ) | $ | — | $ | (1,235 | ) | |||||
Income tax expense | — | — | — | — | |||||||||||
EBITDA from discontinued operations | — | (1,290 | ) | — | (1,235 | ) | |||||||||
Adjustments: | |||||||||||||||
Transaction-related costs | — | — | — | — | |||||||||||
Loss on sale of TFI | — | 1,290 | — | 1,235 | |||||||||||
Adjusted EBITDA from discontinued operations | $ | — | $ | — | $ | — | $ | — | |||||||
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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, 2017 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
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 from continuing operations before income taxes | (4,209 | ) | (3,325 | ) | (1,406 | ) | (10,665 | ) | (19,605 | ) | ||||||||||
Loss from continuing operations | (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 from continuing operations | $ | 3,606 | $ | (1,033 | ) | $ | 1,464 | $ | (1,915 | ) | $ | 2,122 | ||||||||
Adjusted EBITDA margin % | 15.2 | % | (10.8 | )% | 17.8 | % | NA | 5.1 | % | |||||||||||
Three months ended June 30, 2016 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
Revenue | $ | 18,952 | $ | 7,688 | $ | 7,338 | $ | — | $ | 33,978 | ||||||||||
Direct operating expenses | 16,232 | 8,126 | 5,925 | — | 30,283 | |||||||||||||||
General and administrative expenses | 1,695 | 339 | 973 | 11,197 | 14,204 | |||||||||||||||
Depreciation and amortization | 7,792 | 3,426 | 3,919 | 69 | 15,206 | |||||||||||||||
Operating loss | (6,767 | ) | (6,556 | ) | (3,790 | ) | (11,266 | ) | (28,379 | ) | ||||||||||
Operating margin % | (35.7 | )% | (85.3 | )% | (51.6 | )% | NA | (83.5 | )% | |||||||||||
Loss from continuing operations before income taxes | (6,818 | ) | (6,669 | ) | (3,825 | ) | (22,553 | ) | (39,865 | ) | ||||||||||
Loss from continuing operations | (6,818 | ) | (6,669 | ) | (3,825 | ) | (23,326 | ) | (40,638 | ) | ||||||||||
Depreciation and amortization | 7,792 | 3,426 | 3,919 | 69 | 15,206 | |||||||||||||||
Interest expense, net | 106 | 109 | 38 | 13,720 | 13,973 | |||||||||||||||
Income tax expense | — | — | — | 773 | 773 | |||||||||||||||
EBITDA | $ | 1,080 | $ | (3,134 | ) | $ | 132 | $ | (8,764 | ) | $ | (10,686 | ) | |||||||
Adjustments, net | 2,528 | 2,009 | 150 | 6,319 | 11,006 | |||||||||||||||
Adjusted EBITDA from continuing operations | $ | 3,608 | $ | (1,125 | ) | $ | 282 | $ | (2,445 | ) | $ | 320 | ||||||||
Adjusted EBITDA margin % | 19.0 | % | (14.6 | )% | 3.8 | % | NA | 0.9 | % | |||||||||||
9
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, 2017 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
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 from continuing operations before income taxes | (9,910 | ) | (6,927 | ) | (3,933 | ) | (34,797 | ) | (55,567 | ) | ||||||||||
Loss from continuing operations | (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 from continuing operations | $ | 4,962 | $ | (1,954 | ) | $ | 2,736 | $ | (4,408 | ) | $ | 1,336 | ||||||||
Adjusted EBITDA margin % | 10.3 | % | (11.3 | )% | 17.8 | % | NA | 1.7 | % | |||||||||||
Six months ended June 30, 2016 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
Revenue | $ | 43,857 | $ | 20,465 | $ | 16,631 | $ | — | $ | 80,953 | ||||||||||
Direct operating expenses | 35,790 | 19,694 | 13,416 | — | 68,900 | |||||||||||||||
General and administrative expenses | 3,547 | 1,529 | 1,893 | 14,687 | 21,656 | |||||||||||||||
Depreciation and amortization | 15,871 | 7,309 | 7,733 | 138 | 31,051 | |||||||||||||||
Operating loss | (11,351 | ) | (10,420 | ) | (6,722 | ) | (14,825 | ) | (43,318 | ) | ||||||||||
Operating margin % | (25.9 | )% | (50.9 | )% | (40.4 | )% | NA | (53.5 | )% | |||||||||||
Loss from continuing operations before income taxes | (11,470 | ) | (10,600 | ) | (6,751 | ) | (38,260 | ) | (67,081 | ) | ||||||||||
Loss from continuing operations | (11,470 | ) | (10,600 | ) | (6,751 | ) | (39,088 | ) | (67,909 | ) | ||||||||||
Depreciation and amortization | 15,871 | 7,309 | 7,733 | 138 | 31,051 | |||||||||||||||
Interest expense, net | 204 | 250 | 86 | 25,478 | 26,018 | |||||||||||||||
Income tax expense | — | — | — | 828 | 828 | |||||||||||||||
EBITDA | $ | 4,605 | $ | (3,041 | ) | $ | 1,068 | $ | (12,644 | ) | $ | (10,012 | ) | |||||||
Adjustments, net | 2,713 | 1,726 | (198 | ) | 7,650 | 11,891 | ||||||||||||||
Adjusted EBITDA from continuing operations | $ | 7,318 | $ | (1,315 | ) | $ | 870 | $ | (4,994 | ) | $ | 1,879 | ||||||||
Adjusted EBITDA margin % | 16.7 | % | (6.4 | )% | 5.2 | % | NA | 2.3 | % | |||||||||||
10
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS (continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Loss from Continuing Operations and to EBITDA and Adjusted EBITDA from Continuing Operations
Three months ended June 30, 2017 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 41,538 | $ | — | $ | 41,538 | ||||||
Direct operating expenses | 34,825 | (372 | ) | [A] | 34,453 | |||||||
General and administrative expenses | 8,867 | (3,849 | ) | [B] | 5,018 | |||||||
Total costs and expenses | 55,799 | (4,221 | ) | [C] | 51,578 | |||||||
Operating loss | (14,261 | ) | 4,221 | [C] | (10,040 | ) | ||||||
Loss from continuing operations | (19,587 | ) | 4,278 | [D] | (15,309 | ) | ||||||
Basic and diluted loss from continuing operations | $ | (0.13 | ) | $ | (0.10 | ) | ||||||
Loss from continuing operations | $ | (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 from continuing operations | $ | (2,160 | ) | $ | 2,122 | |||||||
Description of 2017 Special Items: | ||||
[A] | Special items primarily includes capital reorganization costs, offset by the gain on the sale of underutilized assets. | |||
[B] | 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. | |||
[C] | Primarily includes the aforementioned adjustments. | |||
[D] | 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. | |||
11
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS (continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Loss from Continuing Operations and to EBITDA and Adjusted EBITDA from Continuing Operations
Three months ended June 30, 2016 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 33,978 | $ | — | $ | 33,978 | ||||||
Direct operating expenses | 30,283 | (1,842 | ) | [E] | 28,441 | |||||||
General and administrative expenses | 14,204 | (8,933 | ) | [F] | 5,271 | |||||||
Total costs and expenses | 62,357 | (13,439 | ) | [G] | 48,918 | |||||||
Operating loss | (28,379 | ) | 13,439 | [G] | (14,940 | ) | ||||||
Loss from continuing operations | (40,638 | ) | 11,215 | [H] | (29,423 | ) | ||||||
Basic and diluted loss from continuing operations | $ | (0.60 | ) | $ | (0.43 | ) | ||||||
Loss from continuing operations | $ | (40,638 | ) | $ | (29,423 | ) | ||||||
Depreciation and amortization | 15,206 | 15,206 | ||||||||||
Interest expense, net | 13,973 | 13,973 | ||||||||||
Income tax expense | 773 | 564 | ||||||||||
EBITDA and Adjusted EBITDA from continuing operations | $ | (10,686 | ) | $ | 320 | |||||||
Description of 2016 Special Items: | ||||
[E] | Special items primarily includes the loss on sale of underutilized assets, and severance and environmental clean-up charges. | |||
[F] | Primarily attributable to stock-based compensation and non-routine legal and professional fees incurred in connection with the 2016 debt exchange. | |||
[G] | Primarily includes the aforementioned adjustments along with a long-lived asset impairment charge for assets classified as held-for-sale of $2.7 million. | |||
[H] | Primarily includes the aforementioned adjustments along with a gain of $1.0 million associated with the change in fair value of the derivative warrant liability, and a gain on the sale of Underground Solutions, Inc. of $1.7 million in the three months ended June 30, 2016. Additionally, our effective tax rate for the three months ended June 30, 2016 was 1.94% and has been applied to the special items accordingly. | |||
12
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS (continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Loss from Continuing Operations and to EBITDA and Adjusted EBITDA from Continuing Operations
Six months ended June 30, 2017 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 80,761 | $ | — | $ | 80,761 | ||||||
Direct operating expenses | 69,114 | (421 | ) | [A] | 68,693 | |||||||
General and administrative expenses | 21,226 | (10,279 | ) | [B] | 10,947 | |||||||
Total costs and expenses | 115,318 | (10,700 | ) | [C] | 104,618 | |||||||
Operating loss | (34,557 | ) | 10,700 | [C] | (23,857 | ) | ||||||
Loss from continuing operations | (55,549 | ) | 12,375 | [D] | (43,174 | ) | ||||||
Basic and diluted loss from continuing operations | $ | (0.37 | ) | $ | (0.29 | ) | ||||||
Loss from continuing operations | $ | (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 from continuing operations | $ | (11,043 | ) | $ | 1,336 | |||||||
Description of 2017 Special Items: | ||||
[A] | Special items primarily includes capital reorganization costs, offset by the gain on the sale of underutilized assets. | |||
[B] | 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. | |||
[C] | Primarily includes the aforementioned adjustments. | |||
[D] | 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. | |||
13
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS (continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Loss from Continuing Operations and to EBITDA and Adjusted EBITDA from Continuing Operations
Six months ended June 30, 2016 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 80,953 | $ | — | $ | 80,953 | ||||||
Direct operating expenses | 68,900 | (1,239 | ) | [E] | 67,661 | |||||||
General and administrative expenses | 21,656 | (10,159 | ) | [F] | 11,497 | |||||||
Total costs and expenses | 124,271 | (14,062 | ) | [G] | 110,209 | |||||||
Operating loss | (43,318 | ) | 14,062 | [G] | (29,256 | ) | ||||||
Loss from continuing operations | (67,909 | ) | 12,034 | [H] | (55,875 | ) | ||||||
Basic and diluted loss from continuing operations | $ | (1.42 | ) | $ | (1.17 | ) | ||||||
Loss from continuing operations | $ | (67,909 | ) | $ | (55,875 | ) | ||||||
Depreciation and amortization | 31,051 | 31,051 | ||||||||||
Interest expense, net | 26,018 | 26,018 | ||||||||||
Income tax expense | 828 | 685 | ||||||||||
EBITDA and Adjusted EBITDA from continuing operations | $ | (10,012 | ) | $ | 1,879 | |||||||
Description of 2016 Special Items: | ||||
[E] | Special items primarily includes the loss on sale of underutilized assets, and severance and environmental clean-up charges. | |||
[F] | Primarily attributable to stock-based compensation and non-routine legal and professional fees incurred in connection with the 2016 debt exchange. | |||
[G] | Primarily includes the aforementioned adjustments along with a long-lived asset impairment charge for assets classified as assets-held-for-sale of $2.7 million. | |||
[H] | Primarily includes the aforementioned adjustments, along with a charge of $0.7 million in connection with the write-off of a portion of the unamortized deferred financing costs as a result of an amendment to our ABL Facility, a gain of $1.0 million associated with the change in fair value of the derivative warrant liability, and a gain on the sale of Underground Solutions, Inc. for $1.7 million in the three months ended June 30, 2016. Additionally, our effective tax rate for the six months ended June 30, 2016 was 1.23% and has been applied to the special items accordingly. | |||
14
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS (continued)
(In thousands)
(Unaudited)
Reconciliation of Free Cash Flow
Six Months Ended | ||||||||
June 30, | ||||||||
2017 | 2016 | |||||||
Net cash used in operating activities | $ | (13,275 | ) | $ | (12,594 | ) | ||
Less: net cash capital expenditures [1] | 708 | 3,862 | ||||||
Free Cash Flow | $ | (12,567 | ) | $ | (8,732 | ) | ||
[1] | Purchases of property, plant and equipment, net of proceeds received from sales of property, plant and equipment |
15