SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Nuverra Environmental Solutions (NYSE:NES) (“Nuverra” or “the Company”), a leading provider of full-cycle environmental solutions to the energy and industrial end-markets, today announced financial results for its fiscal 2013 fourth quarter ended December 31, 2013.
Summary of Key Financial Results1
- Fourth-quarter revenue was $128.4 million ($154.5 million including TFI).
- Fiscal 2013 full-year revenue was $525.8 million ($642.1 million including TFI)
- Net loss from continuing operations for the full year was $134.0 million (net loss of $232.3 million including TFI).
- Fourth-quarter adjusted EBITDA, excluding special items, was $23.3 million ($25.7 million including TFI)
- Fiscal 2013 full-year adjusted EBITDA was $101.5 million ($116.2 million including TFI).
- Net cash capital expenditures of $12.5 million in the fourth quarter ($14.3 million including TFI); $44.3 million for the full year ($48.5 million including TFI).
1 Results of operations of Thermo Fluids Inc. (“TFI”) are reflected as discontinued operations due to its pending divestiture.
Fourth-Quarter Commentary
Mark D. Johnsrud, Chief Executive Officer, commented, “We made significant strides during the fourth quarter to further strengthen our total environmental solutions business model and enhance our customer value proposition, including the development of new options for the thermal treatment of drilling solids and pipeline transportation networks for fresh water, flowback and produced liquids.
“Our actions are designed to support a rapidly changing shale industry that is moving from the discovery phase to the full-scale commercial development of shale resources. As such, we believe our customers, and the communities in which they operate, are increasingly demanding new and innovative approaches to environmental management. Nuverra will be there with leading environmental solutions to support ongoing shale development,” Mr. Johnsrud said.
“During the fourth quarter, we also executed on key initiatives announced during our third-quarter report. These activities included our announcement today that we have entered into a definitive agreement to sell TFI for $175 million to VeroLube, Inc. The transaction is comprised of $165 million in cash and $10 million in VeroLube stock. We are very pleased to make this announcement as we shift our strategic focus to expanding our core shale solutions business. Since our last call, we also revised our revolving credit facility to enhance liquidity and improve financial flexibility and completed a reverse stock split.”
Fourth-Quarter and Full-Year 2013 Financial Overview
Including TFI, fourth-quarter revenue was $154.5 million, compared to $113.2 million in the fourth quarter of fiscal 2012, and $162.6 million in the third quarter of 2013. Full-year revenue including TFI was $642.1 million, of which $525.8 million was generated by the Shale Solutions segment and $116.3 million was generated by the discontinued Industrial Solutions segment, which consists solely of TFI. This compares to fiscal 2012 total revenue of $352.0 million, of which $256.7 million was attributable to Shale Solutions and $95.3 million was attributable to Industrial Solutions.
Adjusted EBITDA for the fourth quarter including TFI was $25.7 million, compared to $14.7 million for the same prior-year period, and $25.1 million in the third quarter of 2013. Adjustments to EBITDA in the period included a $7.0 million accrual related to the China Water and Drinks, Inc. (“China Water”) class action settlement (detailed below), as well as other net adjustments of $0.7 million. For the full year, adjusted EBITDA including TFI was $116.2 million.
Investors should note the Company’s Form 10-K for the fiscal year ended December 31, 2013 reflects the former Industrial Solutions Segment, comprised solely of TFI, as discontinued operations.
Jay C. Parkinson, Chief Financial Officer, commented, “The planned divestiture of TFI and the recent refinancing of our revolving credit facility represent two key strategic actions taken to support our growth platform for the future. The amended credit facility provides us flexible capital, free of most of the ongoing maintenance covenants in our previous facility, and also allows us to be opportunistic in making isolated, open-market repurchases of our Senior Notes to reduce our overall cost of debt, a strategy we will consider after the planned sale of TFI. Additionally, we currently have preliminary commitments to upsize the facility, which our borrowing base would support. We remain committed to increasing liquidity, driving down leverage and reducing cash interest expenses.” In the first quarter of 2014, the Company expects to capitalize approximately $3.5 million of costs associated with the revised facility as deferred financing costs and will incur a non-cash charge relating to the write-off of unamortized financing costs from the previous facility of approximately $3.0 million.
On December 31, 2013, cash and cash equivalents were approximately $8.8 million and total debt was approximately $555.9 million2, which included $400.0 million2 of senior unsecured notes, approximately $136.0 million drawn under the Company’s amended credit facility and approximately $19.9 million in capital leases.
Net cash capital expenditures including TFI in the fourth quarter totaled $14.3 million, primarily related to the development of the thermal desorption system to expand the Company’s solids treatment capabilities in the Bakken Shale area. Net cash capital expenditures for the full year including TFI, and excluding acquisitions, totaled $48.5 million, compared to $38.3 million in 2012, and included completion of the pipeline in the Haynesville Shale area; new and upgraded saltwater disposal wells, including an expansion in the Utica Shale area; and completion of the initial phase of the Bakken landfill. The Company incurred additional capital expenditures in the first quarter of 2014 related to the construction of the thermal desorption system.
2 Excludes unamortized discount and premium of $0.8 million, net.
Operational Highlights
Nuverra’s shale divisions provide comprehensive environmental solutions, including the delivery, collection, treatment, recycling and disposal of restricted environmental products for unconventional oil and gas development in the Bakken, Utica, Eagle Ford and Mississippian Lime Shale areas, as well as the Permian Basin, which are oil-rich plays, and the Marcellus, Haynesville and Barnett Shale areas, which are gas-rich plays.
For the fourth quarter, total revenue from the Company’s Shale Solutions business was $128.4 million, of which approximately $94.9 million was derived from predominately oil-rich areas and $33.5 million was derived from predominately gas-rich areas. This represented a $44.6 million, or 53.3% increase in total revenue when compared to the same prior-year period, which included only one month of Power Fuels.
In the Bakken Shale area, revenues increased sequentially from the third quarter as the Company saw increased activity levels in the basin. Margins increased compared to the prior quarter as well, due in part to increased activity levels which absorbed fixed costs. The Company saw encouraging signs of operator activity during the quarter, as well as increased landfill volumes.
In the Marcellus and Utica Shale areas, revenues and adjusted EBITDA decreased sequentially as customer activity slowed due to the holiday schedule as well as severe winter-weather conditions that resulted in slowdowns in drilling and completion. Because Nuverra also provides water recycling services to select customers in the Marcellus basin, the reduction in activity also affected volumes at its AWS treatment center.
In the Haynesville Shale area, revenues and adjusted EBITDA were nearly flat on a sequential basis. The Company continued to see signs that customers are beginning to increase drilling and completion activities, moving additional rigs into the basin to meet their 2014 programs. “We believe the Haynesville presents promising opportunities to expand, and during the fourth quarter, we strengthened the Haynesville management team with the addition of a regional vice president who has a proven track record for exceptional performance,” Mr. Parkinson said.
Operational performance continued to be challenging in the Eagle Ford Shale area. The Company is focused on its turnaround plan, including aggressive cost control.
During its third-quarter report, the Company discussed plans to develop a treatment and recycling center for oilfield solids located at its Bakken landfill site. “Our goal is to develop beneficial applications for the byproducts of the treatment process, including recycled diesel fuel, and provide a solution that will also reduce the environmental footprint for customers,” Mr. Parkinson commented. “The thermal desorption facility is currently on track to be operational in the fourth quarter of 2014 and will further expand our suite of solutions for solids.”
Nuverra has also expanded its focus on pipeline initiatives designed to provide an additional transportation option for flowback and produced water which will complement the Company’s current solutions, including its ongoing treatment and recycling efforts. “As the operator of one of the largest shale water pipelines in the country, our belief is that as shale plays mature and well counts increase, the volumes of water also increase and the need for additional product transportation options becomes more important,” Mr. Parkinson explained. “We intend to leverage our institutional knowledge with the Haynesville pipelines and are actively engaged in discussions with multiple customers to determine their future needs for pipeline networks. We expect to begin construction in late 2014 or early 2015 in the Bakken Shale area.”
Business Outlook
Mr. Johnsrud provided commentary on the Company’s business outlook for 2014. “We are seeing an increase in E&P capital spending, growth in rig counts and the operational efficiencies of multi-well pads. This activity is significantly reducing the number of days to drill and complete a well and driving up the volume of fluids and solids that must be managed at the surface.
“Nuverra’s growth strategy in 2014 is focused on three key objectives: 1) expand our service offerings by consolidating companies that complement our business; 2) increase market share in existing basins by taking business from competitors; and 3) grow organically by developing and introducing innovative new solutions to our service line mix. We are keenly focused on basin-by-basin profitability and return on capital, evaluating the full market potential for each business division, and developing the strategies to achieve our objectives.
“Looking to the first quarter of 2014, severe winter weather extended into January and February, with the Bakken, Marcellus and Utica regions experiencing the majority of the impact. We expect first-quarter 2014 performance to reflect lower weather-related levels of activity that are not reflective of what we believe are positive overall industry trends in 2014. As the weather improves, we expect operators will resume their drilling and completion programs,” concluded Mr. Johnsrud.
CEO Mark Johnsrud Appointed Chairman of the Board
The Company also announced today that Mr. Johnsrud will be appointed Chairman of the Board effective as of the upcoming Annual Meeting of Stockholders on May 6, 2014 (the “Annual Meeting”), replacing the retiring Executive Chairman Richard J. Heckmann. Additionally, Director Lou L. Holtz’s current term expires on May 6, 2014, and he has elected to not stand for re-election. Both directors have reached the age guideline of 70 in accordance with the Company’s Corporate Governance Guidelines and have elected to retire effective as of the Annual Meeting.
Mr. Heckmann commented, “Nuverra has embarked on a new and exciting phase of the Company’s evolution, and it has an exceptionally experienced and visionary team of strategic leaders at the helm. I fully support the Company’s direction and believe this is the right time to begin enjoying retirement and to implement the succession plan we put into place over a year ago.”
Mr. Johnsrud was named Vice Chairman of the Board following the merger of Power Fuels. He was Chief Executive Officer of Power Fuels from the time he acquired the business in 2005 until the merger.
The Company’s Board of Directors also amended the terms of the 2012 stockholder’s agreement between Mark Johnsrud and the Company, including the waiver of restrictions in the agreement that limited Mr. Johnsrud’s ability to acquire additional shares of Nuverra common stock. The limitations included in the stockholder’s agreement on Mr. Johnsrud’s ability to sell shares of Nuverra common stock were not amended and will remain in effect through November 2014, as provided in the original agreement.
China Water Class Action Settlement
The Company announced it has entered into a Stipulation of Settlement (the “Settlement Agreement”) to settle a securities class action pending in the United States District Court for the District of Delaware (the “District Court”). The lawsuit relates to matters alleged to have occurred in connection with the acquisition by Heckmann Corporation of China Water in 2008. The Company anticipates final court approval of the Stipulation of Settlement in the second half of 2014 (“Closure”), at which time all claims asserted against the Company and the individual defendants will be resolved.
Under the terms of the Settlement Agreement, which must be approved by the District Court, the Company has agreed to make at Closure a cash payment of $13.5 million (“Cash Portion”), as well as a grant of 847,990 shares of Nuverra common stock (“Equity Portion”), to the plaintiffs in the lawsuit.
- Cash Portion. The Company currently has approximately $7 million of available coverage under the applicable insurance policy. The net cash cost to Nuverra would be $13.5 million less the amount of available coverage under the insurance policy at the time of Closure. The Company currently estimates the amount of available insurance at Closure will be in the range of $2 million to $4 million, which would equate to a cash payment by the Company at Closure of approximately $9.5 million to $11.5 million. The amount of available insurance at Closure could increase based on the outcome of disputed legal fees, which have been accrued but unpaid by the insurance policy and would reduce the required cash payment by the Company. Under the terms of the Settlement Agreement, the $13.5 million cash portion less available insurance coverage will be deposited into escrow at the time the District Court grants preliminary approval of the settlement, which is expected to occur in the first or second quarter of 2014. The escrow would then be released at Closure upon final District Court approval.
- Equity Portion. The Company has agreed to provide a floor value of $13.5 million on the value at Closure of the Equity Portion of the Settlement Agreement. Therefore, to the extent that the 847,990 shares of Company common stock do not equate to $13.5 million in value at the time of Closure (an equivalent value of $15.92 per share), the Company would be required to contribute additional shares or cash, at the Company’s sole option, to make the value of the Equity Portion at Closure be no less than $13.5 million.
The Company established a $16.0 million accrual in the third quarter of 2013 related to the China Water matter, and as a result of this pending settlement, recorded an additional $7.0 million charge in the fourth quarter. If the value of the 847,990 shares at Closure exceeds $13.5 million, the Company would incur a non-cash charge at Closure for the excess of the market value of those shares at Closure above $13.5 million.
The Company and the individual defendants continue to deny all assertions of wrongdoing or liability and continue to believe the claims asserted in the litigation are without merit. The Company has concluded it is in the best interest of all stakeholders to settle this matter and move forward with its business and growth strategy.
Conference Call & Webcast
The Company will host a conference call to discuss its fourth quarter and full year 2013 financial results at 4:30 p.m. ET (1:30 p.m. PT) today. To participate on the conference call, please dial +1-877-941-4776 or +1-480-629-9716 and reference conference ID 4664378. An audio replay of the call will be available approximately one hour following the conclusion of the call through March 24, 2014. The audio replay can be accessed by dialing +1-800-406-7325 or +1-303-590-3030 and entering access code 4664378. The call will be webcast live and a replay available for 12 months. Both may be accessed in the “Investors” section of the Nuverra web site at www.nuverra.com.
About Nuverra
Nuverra Environmental Solutions is among the largest companies in the United States dedicated to providing comprehensive and full-cycle environmental solutions to customers in energy and industrial end-markets. Nuverra focuses on the delivery, collection, treatment, recycling, and disposal of restricted solids, water, wastewater, used motor oil, spent antifreeze, waste fluids and hydrocarbons. The Company continues to expand its suite of environmentally compliant and sustainable solutions to customers who demand stricter environmental compliance and accountability from their service providers. Interested parties can access additional information about Nuverra on the Company's web site at http://www.nuverra.com, and in documents filed with the United States Securities and Exchange Commission, on the SEC's web site at http://www.sec.gov.
About Non-GAAP Financial Measures
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 performance, and evaluates overall management 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 and other non-recurring charges, among other items that are inconsistent in amount and frequency (as with acquisition expenses), or determined pursuant to complex formulas that incorporate factors, such as market volatility, that are beyond our control (as with stock-based compensation), for purposes of calculating these non-GAAP financial measures facilitates a more meaningful evaluation of the Company’s current operating performance and comparisons to the past and future operating performance. The Company believes that providing non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income (loss), adjusted net income (loss) per share, and operating working capital, in addition to related GAAP financial measures, provides investors with greater transparency to the information used by the Company’s management
Forward-Looking Statements
This press release may contain "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," "continue," and similar expressions are intended to identify such forward-looking statements. Forward-looking statements in the press release include, without limitation, forecasts of growth, revenues, business activity, adjusted EBITDA and pipeline expansion, statements regarding possible divestitures, timing of such divestitures, acquisitions, financings and other matters that involve known and unknown risks, uncertainties and other factors that may cause results, levels of activity, performance or achievements to differ materially from results expressed or implied by this press release. Such risk factors include, among others: difficulties encountered in acquiring and integrating businesses; uncertainties in evaluating goodwill and long-lived assets for potential impairment; potential impact of litigation; risks of successfully consummating expected transactions within the timeframes or on the terms contemplated, including risks that such transactions may fail to close due to unsatisfied closing conditions; whether certain markets grow as anticipated; pricing pressures; risks associated with our indebtedness; low oil and or natural gas prices; changes in customer drilling activities and capital expenditure plans; shifts in production into shale areas in which we currently do not have operations; control of costs and expenses; and the competitive and regulatory environment. Additional risks and uncertainties are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, as well as the Company's other reports filed with the United States Securities and Exchange Commission, which are available at http://www.sec.gov/ as well as the Company's web site at http://nuverra.com/. As a result of the foregoing considerations and the other limitations of non-GAAP measures described elsewhere herein, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. All forward-looking statements are qualified in their entirety by this cautionary statement. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except per share data) |
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(Years ended December 31, 2013, 2012 and 2011 are audited) |
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| Three Months Ended | |||||||||||||||||||||||||
| December 31, | Years Ended December 31, | ||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | 2011 | |||||||||||||||||||||
| Non-rental revenue | $ | 106,778 | $ | 76,515 | $ | 441,421 | $ | 241,230 | $ | 144,291 | |||||||||||||||
| Rental revenue | 21,610 | 7,228 | 84,395 | 15,441 | 12,546 | ||||||||||||||||||||
| Total revenue | 128,388 | 83,743 | 525,816 | 256,671 | 156,837 | ||||||||||||||||||||
| Cost of revenues | (108,516 | ) | (82,327 | ) | (456,167 | ) | (237,962 | ) | (123,509 | ) | |||||||||||||||
| Gross profit | 19,872 | 1,416 | 69,649 | 18,709 | 33,328 | ||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||
| General and administrative expenses | 20,835 | 18,521 | 86,085 | 42,742 | 32,783 | ||||||||||||||||||||
| Amortization of intangible assets | 4,895 | 3,476 | 20,424 | 7,511 | 3,868 | ||||||||||||||||||||
| Impairment of long-lived assets | - | 6,030 | 111,900 | 6,030 | - | ||||||||||||||||||||
| Other, net | (554 | ) | - | 899 | - | 2,089 | |||||||||||||||||||
| Total operating expenses | 25,176 | 28,027 | 219,308 | 56,283 | 38,740 | ||||||||||||||||||||
| Loss from operations | (5,304 | ) | (26,611 | ) | (149,659 | ) | (37,574 | ) | (5,412 | ) | |||||||||||||||
| Interest expense, net | (13,573 | ) | (10,665 | ) | (53,703 | ) | (26,607 | ) | (4,243 | ) | |||||||||||||||
| Other income (expense) , net | 1,484 | 2,667 | (3,773 | ) | (2,538 | ) | 5,770 | ||||||||||||||||||
| Loss on extinguishment of debt | - | (2,638 | ) | - | (2,638 | ) | - | ||||||||||||||||||
| Loss from continuing operations before income taxes | (17,393 | ) | (37,247 | ) | (207,135 | ) | (69,357 | ) | (3,885 | ) | |||||||||||||||
| Income tax benefit | 7,021 | 43,258 | 73,095 | 62,760 | 3,777 | ||||||||||||||||||||
| (Loss) income from continuing operations | (10,372 | ) | 6,011 | (134,040 | ) | (6,597 | ) | (108 | ) | ||||||||||||||||
| (Loss) income from discontinued operations, net of income taxes | (2,700 | ) | (1,019 | ) | (98,251 | ) | 9,124 | (22,898 | ) | ||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (13,072 | ) | $ | 4,992 | $ | (232,291 | ) | $ | 2,527 | $ | (23,006 | ) | ||||||||||||
| Net (loss) income per common share attributable to common stockholders (1): | |||||||||||||||||||||||||
| Basic: | |||||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (0.42 | ) | $ | 0.33 | $ | (5.47 | ) | $ | (0.44 | ) | $ | (0.01 | ) | |||||||||||
| (Loss) income from discontinued operations | (0.11 | ) | (0.05 | ) | (4.01 | ) | 0.61 | (2.00 | ) | ||||||||||||||||
| Net (loss) income per basic share | $ | (0.53 | ) | $ | 0.28 | $ | (9.48 | ) | $ | 0.17 | $ | (2.01 | ) | ||||||||||||
| Diluted: | |||||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (0.42 | ) | $ | 0.30 | $ | (5.47 | ) | $ | (0.44 | ) | $ | (0.01 | ) | |||||||||||
| (Loss) income from discontinued operations | (0.11 | ) | (0.05 | ) | (4.01 | ) | 0.61 | (2.00 | ) | ||||||||||||||||
| Net (loss) income per diluted share | $ | (0.53 | ) | $ | 0.25 | $ | (9.48 | ) | $ | 0.17 | $ | (2.01 | ) | ||||||||||||
| Weighted average shares outstanding used in computing net (loss) income per common share | |||||||||||||||||||||||||
| Basic | 24,952 | 18,125 | 24,492 | 14,994 | 11,457 | ||||||||||||||||||||
| Diluted | 24,952 | 19,786 | 24,492 | 14,994 | 11,457 | ||||||||||||||||||||
| (1) Totals may not equal corresponding amounts on the Consolidated Statements of Operations due to rounding. | |||||||||||||||||||||||||
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
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CONSOLIDATED BALANCE SHEETS |
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(In thousands, except par values) |
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| December 31, | ||||||||||
| 2013 | 2012 | |||||||||
| Assets | ||||||||||
| Cash and cash equivalents | $ | 8,783 | $ | 14,776 | ||||||
| Restricted cash | 110 | 3,536 | ||||||||
| Accounts receivable, net | 87,086 | 103,627 | ||||||||
| Inventories | 3,328 | 3,772 | ||||||||
| Prepaid expenses and other receivables | 10,457 | 6,616 | ||||||||
| Deferred income taxes | 30,072 | 11,684 | ||||||||
| Other current assets | 409 | 1,556 | ||||||||
| Current assets held for sale | 21,446 | 20,324 | ||||||||
| Total current assets | 161,691 | 165,891 | ||||||||
| Property, plant and equipment, net | 498,541 | 579,022 | ||||||||
| Equity investments | 4,032 | 8,279 | ||||||||
| Intangibles, net | 149,363 | 173,876 | ||||||||
| Goodwill | 408,696 | 415,176 | ||||||||
| Other assets | 21,136 | 25,510 | ||||||||
| Long-term assets held for sale | 167,304 | 276,585 | ||||||||
| Total assets | $ | 1,410,763 | $ | 1,644,339 | ||||||
| Liabilities and Equity | ||||||||||
| Accounts payable | $ | 33,229 | $ | 23,401 | ||||||
| Accrued liabilities | 63,431 | 46,546 | ||||||||
| Current portion of contingent consideration | 13,113 | 1,568 | ||||||||
| Current portion of long-term debt | 5,464 | 4,699 | ||||||||
| Current liabilities of discontinued operations | 9,301 | 10,256 | ||||||||
| Total current liabilities | 124,538 | 86,470 | ||||||||
| Deferred income taxes | 42,982 | 88,396 | ||||||||
| Long-term debt | 549,713 | 561,427 | ||||||||
| Long-term contingent consideration | 2,344 | 8,863 | ||||||||
| Financing obligation to acquire non-controlling interest | 10,104 | 9,021 | ||||||||
| Other long-term liabilities | 4,324 | 1,805 | ||||||||
| Long-term liabilities of discontinued operations | 32,389 | 40,596 | ||||||||
| Total liabilities | 766,394 | 796,578 | ||||||||
| Commitments and contingencies | ||||||||||
| Preferred stock $0.001 par value, (1,000 shares authorized, no shares issued and outstanding at December 31, 2013 and December 31, 2012) | - | - | ||||||||
| Common stock, $0.001 par value (50,000 shares authorized, 27,425 shares issued and 25,994 outstanding at December 31, 2013 and 26,612 shares issued and 25,181 outstanding at December 31,2012) | 27 | 27 | ||||||||
| Additional paid-in capital | 1,341,209 | 1,318,419 | ||||||||
| Purchased warrants | - | (6,844 | ) | |||||||
| Treasury stock | (19,503 | ) | (19,503 | ) | ||||||
| Accumulated deficit | (677,364 | ) | (444,338 | ) | ||||||
| Total equity of Nuverra Environmental Solutions, Inc. | 644,369 | 847,761 | ||||||||
| Total liabilities and equity | $ | 1,410,763 | $ | 1,644,339 | ||||||
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NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In thousands) |
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| Years Ended December 31, | |||||||||||||||
| 2013 | 2012 | 2011 | |||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net (loss) income | $ | (232,291 | ) | $ | 2,527 | $ | (23,006 | ) | |||||||
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||||||||||||||
| Loss (income) from discontinued operations, net of income taxes | 98,251 | (9,124 | ) | 22,898 | |||||||||||
| Depreciation | 78,812 | 40,130 | 21,413 | ||||||||||||
| Amortization of intangible assets | 20,424 | 7,511 | 3,868 | ||||||||||||
| Amortization of deferred financing costs | 4,492 | 1,762 | - | ||||||||||||
| Amortization of original issue discounts and premiums, net | 142 | 108 | - | ||||||||||||
| Stock-based compensation | 3,708 | 3,610 | 2,401 | ||||||||||||
| Loss on disposal of property, plant and equipment | 708 | 1,672 | - | ||||||||||||
| Impairment of property, plant and equipment and intangible assets | 111,900 | 6,030 | - | ||||||||||||
| Bad debt expense | 3,275 | 6,517 | 2,206 | ||||||||||||
| Change in fair value of contingent consideration | 23 | (1,004 | ) | (5,777 | ) | ||||||||||
| Loss on extinguishment of debt | - | 2,638 | |||||||||||||
| Deferred income taxes | (68,599 | ) | (56,678 | ) | (4,277 | ) | |||||||||
| Write-down of cost method investments | 4,300 | - | - | ||||||||||||
| Other, net | 871 | 839 | 100 | ||||||||||||
| Changes in operating assets and liabilities, net of business acquisitions and purchase price adjustments: | |||||||||||||||
| Accounts receivable | 15,492 | (2,101 | ) | (31,205 | ) | ||||||||||
| Inventories | 444 | 432 | 243 | ||||||||||||
| Prepaid expenses and other receivables | (2,864 | ) | (1,096 | ) | (4,306 | ) | |||||||||
| Accounts payable and accrued liabilities | 27,331 | 22,938 | 5,584 | ||||||||||||
| Other assets and liabilities, net | 249 | (1,633 | ) | 579 | |||||||||||
| Net cash provided by (used in) operating activities from continuing operations | 66,668 | 25,078 | (9,279 | ) | |||||||||||
| Net cash provided by (used in) operating activities from discontinued operations | 3,589 | 5,593 | (4,683 | ) | |||||||||||
| Net cash provided by (used in) operating activities | 70,257 | 30,671 | (13,962 | ) | |||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Cash paid for acquisitions, net of cash acquired | (10,570 | ) | (357,346 | ) | (88,334 | ) | |||||||||
| Proceeds from the sale of property, plant and equipment | 2,308 | 7,235 | - | ||||||||||||
| Purchases of property, plant and equipment | (46,593 | ) | (43,516 | ) | (150,921 | ) | |||||||||
| Proceeds from the sale of available for sale securities | - | 5,169 | 120,062 | ||||||||||||
| Purchases of available-for-sale securities | - | - | (34,947 | ) | |||||||||||
| Proceeds from acquisition-related working capital adjustment | 2,067 | - | - | ||||||||||||
| Other investing activities | - | (82 | ) | (16 | ) | ||||||||||
| Proceeds from certificates of deposit | - | - | 11,830 | ||||||||||||
| Net cash used in investing activities from continuing operations | (52,788 | ) | (388,540 | ) | (142,326 | ) | |||||||||
| Net cash used in investing activities from discontinued operations | (4,195 | ) | (4,158 | ) | (5,777 | ) | |||||||||
| Net cash used in investing activities | (56,983 | ) | (392,698 | ) | (148,103 | ) | |||||||||
| Cash flows from financing activities | |||||||||||||||
| Proceeds from revolving credit facility | 98,501 | 193,490 | 72,799 | ||||||||||||
| Payments on revolving credit facility | (109,501 | ) | (186,674 | ) | - | ||||||||||
| Proceeds from other debt | - | 398,980 | 109,885 | ||||||||||||
| Payments on other debt | - | (150,367 | ) | (73,914 | ) | ||||||||||
| Proceeds from equity offering | - | 74,448 | - | ||||||||||||
| Payments for deferred financing costs | (855 | ) | (26,170 | ) | (2,764 | ) | |||||||||
| Payments on notes payable and capital leases | (5,416 | ) | (4,605 | ) | - | ||||||||||
| Payments of contingent consideration and other financing activities | (2,602 | ) | (1,058 | ) | 1,543 | ||||||||||
| Cash paid to purchase treasury stock | - | - | (4,414 | ) | |||||||||||
| Cash proceeds from exercise of warrants | - | - | 47,912 | ||||||||||||
| Net cash (used in) provided by financing activities of continuing operations | (19,873 | ) | 298,044 | 151,047 | |||||||||||
| Net cash used in financing activities of discontinued operations | (400 | ) | - | - | |||||||||||
| Net cash (used in) provided by financing activities | (20,273 | ) | 298,044 | 151,047 | |||||||||||
| Net decrease in cash and cash equivalents | (6,999 | ) | (63,983 | ) | (11,018 | ) | |||||||||
| Cash and cash equivalents at beginning of year | 16,211 | 80,194 | 91,212 | ||||||||||||
| Cash and cash equivalents at end of year | 9,212 | 16,211 | 80,194 | ||||||||||||
| Less: cash and cash equivalents of discontinued operations at year-end | 429 | 1,435 | - | ||||||||||||
| Cash and cash equivalents of continuing operations at end of year | $ | 8,783 | $ | 14,776 | $ | 80,194 | |||||||||
| Supplemental disclosure of cash flow information: | |||||||||||||||
| Cash paid for interest | $ | (48,175 | ) | $ | (13,605 | ) | $ | (2,784 | ) | ||||||
| Cash paid for taxes, net | (554 | ) | (1,759 | ) | (162 | ) | |||||||||
| Supplemental schedule of non-cash investing and financing activities: | |||||||||||||||
| Common stock issued for business acquisitions | $ | 24,286 | $ | 417,733 | $ | 16,925 | |||||||||
| Common stock issued for contingent consideration | 47 | 7,770 | - | ||||||||||||
| Common stock issued for legal settlements | 1,621 | - | - | ||||||||||||
| Purchases of property, plant and equipment under capital leases | 5,774 | 20,771 | - | ||||||||||||
| Property, plant and equipment purchases in accounts payable | 7,863 | 4,238 | 7,890 | ||||||||||||
| Restricted cash payable to former sole owner of Power Fuels | 110 | 3,536 | - | ||||||||||||
|
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES |
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|
ADJUSTED EBITDA GAAP RECONCILIATION |
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|
(In thousands) |
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|
(Unaudited) |
|||||||||||||||||||||||||
| Twelve Months Ended December 31, | Three Months Ended December 31, | ||||||||||||||||||||||||
| 2013 | 2012 | 2011 | 2013 | 2012 | |||||||||||||||||||||
| (Loss) income from continuing operations | $ | (134,040 | ) | $ | (6,597 | ) | $ | (108 | ) | (10,372 | ) | 6,011 | |||||||||||||
| Depreciation of property, plant and equipment | 78,812 | 40,130 | 21,413 | 14,520 | 13,610 | ||||||||||||||||||||
| Amortization of intangible assets | 20,424 | 7,511 | 3,868 | 4,895 | 3,476 | ||||||||||||||||||||
| Interest expense, net | 53,703 | 26,607 | 4,243 | 13,573 | 10,665 | ||||||||||||||||||||
| Income tax benefit | (73,095 | ) | (62,760 | ) | (3,777 | ) | (7,021 | ) | (43,258 | ) | |||||||||||||||
| EBITDA | $ | (54,196 | ) | $ | 4,891 | $ | 25,639 | $ | 15,595 | $ | (9,496 | ) | |||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Transaction-related costs, including earnout adjustments, net | (116 | ) | 6,694 | (3,200 | ) | (1,995 | ) | 3,450 | |||||||||||||||||
| Stock-based compensation | 3,708 | 3,654 | 2,100 | 413 | 1,232 | ||||||||||||||||||||
| Legal, environmental and insurance, net | 26,480 | 2,996 | 1,900 | 7,010 | 2,682 | ||||||||||||||||||||
| Impairment of goodwill and long-lived assets | 111,900 | 5,655 | - | - | 5,655 | ||||||||||||||||||||
| Restructuring, exit costs, and other | 899 | 11,361 | 2,100 | (554 | ) | 5,479 | |||||||||||||||||||
| Write-off of cost-method investments | 4,300 | - | - | - | - | ||||||||||||||||||||
| Integration and rebranding costs | 8,198 | - | - | 2,512 | - | ||||||||||||||||||||
| Gain/loss on disposal of assets | 326 | 2,120 | - | 326 | 375 | ||||||||||||||||||||
| Adjusted EBITDA from continuing operations | 101,499 | 37,371 | 28,539 | 23,307 | 9,377 | ||||||||||||||||||||
| Adjusted EBITDA from discontinued operations | 14,672 | 24,183 | (21,598 | ) | 2,420 | 5,302 | |||||||||||||||||||
| Total Adjusted EBITDA | $ | 116,171 | $ | 61,554 | $ | 6,941 | $ | 25,727 | $ | 14,679 | |||||||||||||||
| Reconciliation of (loss) income from discontinued operations to EBITDA and Adjusted EBITDA from discontinued operations: | |||||||||||||||||||||||||
| Twelve Months Ended December 31, | Three Months Ended December 31, | ||||||||||||||||||||||||
| 2013 | 2012 | 2011 | 2013 | 2012 | |||||||||||||||||||||
| (Loss) income from discontinued operations | $ | (98,251 | ) | $ | 9,124 | $ | (22,898 | ) | $ | (2,700 | ) | $ | (1,019 | ) | |||||||||||
| Depreciation of property, plant and equipment | 2,502 | 1,822 | 1,000 | 469 | 703 | ||||||||||||||||||||
| Amortization of intangible assets | 9,787 | 9,072 | 200 | 1,785 | 1,694 | ||||||||||||||||||||
| Interest expense, net | 14 | 10 | - | - | 22 | ||||||||||||||||||||
| Income tax benefit | 14 | 4,155 | 100 | 2,858 | 3,902 | ||||||||||||||||||||
| EBITDA from discontinued operations | $ | (85,934 | ) | $ | 24,183 | $ | (21,598 | ) | $ | 2,412 | $ | 5,302 | |||||||||||||
| Adjustments: | |||||||||||||||||||||||||
| Transaction-related costs, including earnout adjustments, net | 383 | - | - | - | - | ||||||||||||||||||||
| Legal, environmental and insurance, net | 1,715 | - | - | - | - | ||||||||||||||||||||
| Impairment of goodwill and long-lived assets | 98,500 | - | - | - | - | ||||||||||||||||||||
| Gain/loss on disposal of assets | 8 | - | - | 8 | - | ||||||||||||||||||||
| Adjusted EBITDA from discontinued operations | $ | 14,672 | $ | 24,183 | $ | (21,598 | ) | $ | 2,420 | $ | 5,302 | ||||||||||||||
| NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES | ||||||||
| CAPITAL EXPENDITURES RECONCILIATION | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Year Ended | Quarter Ended | |||||||
| December 31, | December 31, | |||||||
| 2013 | 2013 | |||||||
| Net cash capital expenditures from continuing operations | $ | 44,285 | $ | 12,458 | ||||
| Net cash capital expenditures from discontinued operations | 4,195 | 1,802 | ||||||
| Total net cash capital expenditures | $ | 48,480 | $ | 14,260 | ||||
| Year Ended | Quarter Ended | |||||||
| December 31, | December 31, | |||||||
| 2013 | 2013 | |||||||
| Cash capital expenditures from continuing operations | $ | 46,593 | $ | 13,369 | ||||
| Cash capital expenditures from discontinued operations | 4,195 | 1,802 | ||||||
| Total cash capital expenditures | $ | 50,788 | $ | 15,171 | ||||
