UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 8-K
__________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
November 4, 2014
__________________________________
Nuverra Environmental Solutions, Inc.
(Exact Name of Registrant as Specified in Charter)
__________________________________
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Delaware | | 001-33816 | | 26-0287117 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
14624 N. Scottsdale Road, Suite #300, Scottsdale, Arizona 85254
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code:
(602) 903-7802
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
__________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2.):
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Item 2.02 | Results of Operations and Financial Condition |
On November 6, 2014, Nuverra Environmental Solutions, Inc. issued a press release announcing its financial results for the third quarter ended September 30, 2014. A copy of the press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
The information contained in the press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
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Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On and effective as of November 4, 2014, Andrew D. Seidel resigned from the Company’s Board of Directors (the “Board”). The resignation was not a result of any disagreement with the Company, the Company’s management, or the Board. To fill Mr. Seidel’s position, the Board appointed William M. Austin, 68, to the Board on November 4, 2014. Pursuant to the Company’s Amended and Restated Certificate of Incorporation, as amended, Mr. Austin will serve as a member of the Board through the remainder of Mr. Seidel’s term, which is set to expire at the 2015 Annual Meeting of Stockholders. Mr. Austin will also become a member of the Board’s Audit Committee. Mr. Austin’s compensation will be consistent with that provided to all of the Company’s non-employee directors, as described in the Company’s most recent proxy statement filed with the Securities and Exchange Commission on March 27, 2014.
Mr. Austin joins the Board with over thirty years’ experience as a senior financial executive in the energy industry. He is currently the President of Austin Lee Ventures LTD, a Houston, Texas-based investment company, and a member of the board of directors of Express Energy LLP, a Houston, Texas-based oilfield services company. Mr. Austin served as Executive Vice President and Chief Financial Officer of Exterran Holdings from December 2011 until April 2014, and he also served as Senior Vice President and Director of Exterran GP, LLC from April 2012 until April 2014. Mr. Austin also served as a member of the board of directors of IROC Energy Services, a Canadian oilfield services company, from November 2004 until April 2013. From June 2009 to April 2010, he served as Senior Vice President and CFO of Valerus Compression Services, L.P., a natural gas services, production and processing company. Prior to his work with natural gas service companies, Mr. Austin was Senior Vice President and CFO of Key Energy Services, a publicly traded oilfield services firm, from January 2005 to February 2009. Earlier in his career, Mr. Austin was a Managing Director of Banker’s Trust Co., serving in the Leveraged Buyout group and head of the Energy Group in Houston, Texas for ten years. Mr. Austin holds a Bachelor of Science degree in electrical engineering from Brown University, a Master of Science degree from Stevens Institute of Technology and a Master of Business Administration from Columbia University.
There was no arrangement or understanding between Mr. Austin and any other person pursuant to which Mr. Austin was appointed as a director of the Company. There are no family relationships between Mr. Austin and any director or executive officer of the Company, and Mr. Austin does not have any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
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Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
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Exhibit Number | | Description | |
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99.1 | | Press Release, dated November 6, 2014 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | NUVERRA ENVIRONMENTAL SOLUTIONS, INC. |
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Date: November 6, 2014 | | | | By: | | /s/ Joseph M. Crabb |
| | | | Name: | | Joseph M. Crabb |
| | | | Title: | | Executive Vice President and Chief Legal Officer |
EXHIBIT INDEX
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Exhibit Number | | Description | |
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99.1 | | Press Release, dated November 6, 2014 |
Exhibit 99.1
Nuverra Reports 10.1% Sequential Increase in Shale Solutions Revenue to $139.6 Million for Third Quarter 2014
-- Adjusted EBITDA from Continuing Operations Up 22.5% Sequentially to $28.0 Million --
-- Energy Industry Financial Leader William M. Austin Appointed to Board of Directors --
SCOTTSDALE, Ariz. (November 6, 2014) - 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 the third quarter ended September 30, 2014.
Third-Quarter Summary
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▪ | Shale solutions revenue from continuing operations of $139.6 million, up 10.1% sequentially, 5.9% year-over-year. |
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▪ | Net loss from continuing operations of ($99.4) million, including a pre-tax, non-cash goodwill impairment charge of $100.7 million. |
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▪ | Adjusted EBITDA from continuing operations of $28.0 million, up 22.5% sequentially, 27.6% year-over-year. |
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▪ | $9.9 million of operating income from continuing operations before the goodwill impairment charge. |
Mark D. Johnsrud, Chairman and Chief Executive Officer, commented, “We are very pleased with our overall operating performance in the third quarter, with increases in revenue, adjusted EBITDA and margins. In addition, operating income before the non-cash goodwill impairment charge was $9.9 million. Third-quarter adjusted EBITDA margin of 20.1% on continuing operations represented an increase of more than 200 basis points sequentially and 340 basis points year-over-year and reflects our focus on initiatives to drive efficiency through better utilization of our people and equipment, in addition to effective pricing and increased sales activities.”
Mr. Johnsrud continued, “Our teams across the basins are concentrating on day-to-day operating activities to bring comprehensive solutions to our customers. By focusing on vertically integrating across all service lines to serve customers through the entire life cycle of their wells, we can create the operational leverage to maximize labor and equipment utilization and expand margins.”
Third-Quarter 2014 Financial Overview
Revenue from continuing operations for the three months ended September 30, 2014 was $139.6 million, compared with $126.9 million in the second quarter of 2014 and $131.8 million in the third quarter of 2013. Including results from Thermo Fluids Inc. (“TFI”), which is classified as a discontinued operation, revenue for the third quarter was $170.5 million, compared with $156.6 million in the second quarter of 2014 and $162.6 million in the third quarter of 2013.
Third-quarter adjusted EBITDA from continuing operations was $28.0 million, compared with $22.9 million in the second quarter of 2014 and $22.0 million in the third quarter of 2013. Including TFI, adjusted EBITDA for the third quarter was $31.4 million, compared with $25.9 million in the second quarter of 2014 and $25.1 million in the third quarter of 2013.
Growth in adjusted EBITDA from continuing operations in the third quarter resulted from increased customer activities, enhanced operating performance, improved utilization of labor and equipment, and effective pricing. In all operating divisions, third-quarter adjusted EBITDA and margins improved on a sequential basis.
The Company generated operating cash flow from continuing operations of $12.9 million ($17.7 million including TFI) year-to-date through September 30, 2014. Year-to-date net cash capital expenditures from continuing operations was $33.7 million, primarily relating to construction of the Company’s new facility for drilling solids in the Bakken Shale area.
On September 30, 2014, cash and cash equivalents were $2.2 million. Total debt was $577.3 million ($576.7 million, net of unamortized discount and premium), including $400.0 million of senior unsecured notes, $161.5 million drawn under the Company’s asset-based revolving credit facility and $15.8 million in capital leases.
During the third quarter, the Company completed a previously announced organizational realignment of its shale solutions business into three operating divisions: (1) the Northeast Division, which includes the Marcellus and Utica Shale areas, (2) the Southern Division, which includes the Haynesville, Eagle Ford, Mississippian, Permian and Tuscaloosa Marine Shale areas, and (3) the Rocky Mountain Division, which includes the Bakken Shale area. This change in operating segments, along with other factors, required the Company to conduct an interim impairment test of the goodwill allocated to the new operating divisions. The resulting $100.7 million pre-tax, non-cash charge represented a write-down of the carrying value of goodwill associated with the Northeast and Southern divisions.
Division Highlights
Rocky Mountain Division (Bakken)
Rocky Mountain Division revenue was up 13.1% sequentially in the third quarter to $87.6 million, compared to $77.5 million in the second quarter of 2014. On a year-over-year basis, revenue increased 17.0% when compared to 2013. The sequential increase was primarily due to higher trucking logistics, water disposal and solids disposal volumes.
Rental revenue in the Bakken was flat sequentially, primarily due to a persistent oversupply of rental assets in the region. To improve the utilization of its rental fleet, the Company implemented a number of initiatives, including adding resources to its sales team, and providing additional support specific to rental package sales efforts.
Northeast Division (Marcellus/Utica)
Northeast Division revenue increased 14.6% on a sequential basis to $25.8 million, compared to $22.5 million in the second quarter of 2014.
The increase was primarily due to sequential increases in trucking logistics services and disposal volumes. Activities continued to increase in October, with one of the Company’s largest customers in the region adding a third dedicated frac crew.
Southern Division (Haynesville/Eagle Ford/Mississippian/Permian/TMS)
Southern Division revenue was essentially flat sequentially at $26.3 million, compared to $26.9 million in the second quarter of 2014. On a year-over-year basis, Southern Division revenue was down by 8.5% when compared with the third quarter of 2013.
Despite a slight decline in revenue in the Haynesville Shale area due to a gradual shift in business from produced water transportation to servicing drilling and completion activities, increases in pipeline volumes and disposal well volumes in the third quarter led to overall improved financial performance.
In the Eagle Ford, operations continued to meet increasing customer activities and benefitted from improved labor and equipment utilization.
William M. Austin Appointed to Board of Directors
Nuverra has appointed William M. Austin, 68, to its Board of Directors, replacing Andrew D. Seidel. Mr. Austin has been a senior financial executive in the energy industry for more than 30 years, and is currently President of Austin Lee Ventures, a Houston-based investment company.
Previously, he was Senior Vice President and Director of Exterran GP, LLC, and Senior Vice President and CFO of Valerus Compression Services, LP, both natural gas service companies. Prior to that, he was Senior Vice President and CFO of Key Energy Services, a leading oilfield services company. Earlier in his career Mr. Austin was a Managing Director of Bankers Trust Co., serving in the Leveraged Buyout group and as head of the Energy Group in Houston for 10 years.
“Bill is a recognized leader in our industry and an outstanding addition to our Board,” said Mr. Johnsrud. “His financial expertise and industry knowledge will be an important resource in shaping our strategies as we focus on continuously improving our financial performance.”
TFI Update
The Company provided an update on the ongoing process to divest TFI, disclosing that it has been in discussions with multiple interested parties. Based on these discussions and a non-binding letter of intent executed with one prospective buyer, the Company recorded a charge related to TFI of $49.0 million, which included a $45.5 million non-cash reduction in goodwill, as well as $3.5 million in estimated transaction costs.
Business Outlook
Mr. Johnsrud provided commentary on the Company’s outlook for the fourth quarter of 2014 and into 2015 in light of the recent decline in crude oil prices and the potential impact to future activity levels.
“We are pleased with our third-quarter performance and the steady level of activities that continued through October as we remain highly focused on continuing to improve operational efficiencies and utilization,” Mr. Johnsrud said. “Our largest customers are signaling that at current price levels their capital spending plans will remain as planned for 2015. Therefore, we expect increased activity in 2015.
“We also expect our growth investments to begin contributing in 2015, particularly related to the start-up of the new solids management facility in the Bakken. We believe that the recent actions we have taken to improve operating efficiencies will position us well for 2015.”
Conference Call & Webcast
The Company will host a conference call to discuss its third quarter 2014 financial results at 4:30 p.m. ET (1:30 p.m. PT) today. To participate on the conference call, please dial +1-888-632-5007 (US) or +1-913-312-0378 (International) and reference conference ID 1771398. An audio replay of the call will be available approximately one hour following the conclusion of the call through November 13, 2014. The audio replay of the conference call can be accessed by dialing +1-888-203-1112 (US) or +1-719-457-0820 (International) and entering access code 1771398. The call will be webcast live and a replay available by accessing the “Investors” section of the Company’s web site at www.nuverra.com.
The Company will file its quarterly report on Form 10-Q with the Securities and Exchange Commission on Monday, November 10, 2014. The Form 10-Q will be available on the SEC website at www.sec.gov and the Nuverra website 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, expenses related to litigation and resolution of lawsuits, 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 contains "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," “confident,” 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, pipeline and solids treatment initiatives, and landfill and treatment facility activities, as well as statements regarding possible divestitures, timing of such divestitures, acquisitions, financings, business growth and expansion opportunities, availability of capital, ability to access capital markets, 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; 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; risks associated with our indebtedness; low oil and or natural gas prices; changes in customer drilling and completion activities and capital expenditure plans; shifts in production among shale areas in which we operate and/or 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 Form 10-Q for the three months ended September 30, 2014 (which will be filed on or before November 10, 2014), its 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 and the Company's web site at http://www.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 press release. 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.
Source: Nuverra Environmental Solutions
Nuverra Environmental Solutions, Inc.
Liz Merritt, 480-878-7452
VP-Investor Relations & Communications
ir@nuverra.com
- or -
The Piacente Group, Inc.
Don Markley or Glenn Garmont, 212-481-2050
nuverra@tpg-ir.com
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Revenue: | | | | | | | |
Non-rental revenue | $ | 122,474 |
| | $ | 112,484 |
| | $ | 339,617 |
| | $ | 336,303 |
|
Rental revenue | 17,169 |
| | 19,320 |
| | 54,902 |
| | 61,125 |
|
Total revenue | 139,643 |
| | 131,804 |
| | 394,519 |
| | 397,428 |
|
Costs and expenses: | | | | | | | |
Direct operating expenses | 97,037 |
| | 97,038 |
| | 283,420 |
| | 284,694 |
|
General and administrative expenses | 11,102 |
| | 34,256 |
| | 54,305 |
| | 63,738 |
|
Depreciation and amortization | 21,585 |
| | 23,767 |
| | 63,866 |
| | 79,821 |
|
Impairment of long-lived assets | — |
| | 108,401 |
| | — |
| | 111,900 |
|
Impairment of goodwill | 100,716 |
| | — |
| | 100,716 |
| | — |
|
Restructuring and exit costs | — |
| | — |
| | — |
| | 1,453 |
|
Total costs and expenses | 230,440 |
| | 263,462 |
| | 502,307 |
| | 541,606 |
|
Loss from operations | (90,797 | ) | | (131,658 | ) | | (107,788 | ) | | (144,178 | ) |
Interest expense, net | (12,956 | ) | | (13,459 | ) | | (37,975 | ) | | (40,130 | ) |
Other income (expense), net | 321 |
| | (4,196 | ) | | 373 |
| | (5,435 | ) |
Loss on extinguishment of debt | — |
| | — |
| | (3,177 | ) | | — |
|
Loss from continuing operations before income taxes | (103,432 | ) | | (149,313 | ) | | (148,567 | ) | | (189,743 | ) |
Income tax benefit | 4,014 |
| | 51,315 |
| | 12,513 |
| | 66,075 |
|
Loss from continuing operations | (99,418 | ) | | (97,998 | ) | | (136,054 | ) | | (123,668 | ) |
Loss from discontinued operations, net of income taxes | (45,568 | ) | | (95,740 | ) | | (43,656 | ) | | (95,551 | ) |
Net loss attributable to common stockholders | $ | (144,986 | ) | | $ | (193,738 | ) | | $ | (179,710 | ) | | $ | (219,219 | ) |
| | | | | | | |
Net loss per common share attributable to common stockholders: | | | | | | | |
Basic and diluted loss from continuing operations | $ | (3.73 | ) | | $ | (3.94 | ) | | $ | (5.28 | ) | | $ | (5.09 | ) |
Basic and diluted loss from discontinued operations | (1.71 | ) | | (3.85 | ) | | (1.70 | ) | | (3.93 | ) |
Net loss per basic and diluted common share | $ | (5.44 | ) | | $ | (7.79 | ) | | $ | (6.98 | ) | | $ | (9.02 | ) |
| | | | | | | |
Weighted average shares outstanding used in computing net loss per basic and diluted common share | 26,665 |
| | 24,854 |
| | 25,742 |
| | 24,316 |
|
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
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| | | | | | | |
| September 30, | | December 31, |
| 2014 | | 2013 |
| (Unaudited) | | (Note 1) |
Assets | | | |
Cash and cash equivalents | $ | 2,214 |
| | 8,783 |
|
Restricted cash | 112 |
| | 110 |
|
Accounts receivable, net | 106,297 |
| | 87,086 |
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Inventories | 4,713 |
| | 3,328 |
|
Prepaid expenses and other receivables | 5,148 |
| | 10,457 |
|
Deferred income taxes | 18,950 |
| | 30,072 |
|
Other current assets | 98 |
| | 409 |
|
Current assets held for sale | 25,008 |
| | 21,446 |
|
Total current assets | 162,540 |
| | 161,691 |
|
Property, plant and equipment, net | 482,402 |
| | 498,541 |
|
Equity investments | 3,818 |
| | 4,032 |
|
Intangibles, net | 136,456 |
| | 149,363 |
|
Goodwill | 307,980 |
| | 408,696 |
|
Other assets | 18,722 |
| | 21,136 |
|
Long-term assets held for sale | 123,492 |
| | 167,304 |
|
Total assets | $ | 1,235,410 |
| | $ | 1,410,763 |
|
Liabilities and Equity | | | |
Accounts payable | $ | 21,505 |
| | $ | 33,229 |
|
Accrued liabilities | 58,473 |
| | 63,431 |
|
Current portion of contingent consideration | 10,034 |
| | 13,113 |
|
Current portion of long-term debt | 5,046 |
| | 5,464 |
|
Financing obligation to acquire non-controlling interest | 10,693 |
| | — |
|
Current liabilities of discontinued operations | 13,000 |
| | 9,301 |
|
Total current liabilities | 118,751 |
| | 124,538 |
|
Deferred income taxes | 20,541 |
| | 42,982 |
|
Long-term portion of debt | 571,657 |
| | 549,713 |
|
Long-term portion of contingent consideration | 1,484 |
| | 2,344 |
|
Financing obligation to acquire non-controlling interest | — |
| | 10,104 |
|
Other long-term liabilities | 3,879 |
| | 4,324 |
|
Long-term liabilities of discontinued operations | 31,808 |
| | 32,389 |
|
Total liabilities | 748,120 |
| | 766,394 |
|
Commitments and contingencies | | | |
Common stock | 29 |
| | 27 |
|
Additional paid-in capital | 1,363,841 |
| | 1,341,209 |
|
Treasury stock | (19,506 | ) | | (19,503 | ) |
Accumulated deficit | (857,074 | ) | | (677,364 | ) |
Total equity of Nuverra Environmental Solutions, Inc. | 487,290 |
| | 644,369 |
|
Total liabilities and equity | $ | 1,235,410 |
| | $ | 1,410,763 |
|
Note 1: The condensed consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
| | | | | | | |
| Nine Months Ended |
| September 30, |
| 2014 | | 2013 |
Cash flows from operating activities: | | | |
Net loss | $ | (179,710 | ) | | $ | (219,219 | ) |
Adjustments to reconcile net loss to net cash provided by operating activities: | | | |
Loss from discontinued operations, net of income taxes | 43,656 |
| | 95,551 |
|
Depreciation | 50,959 |
| | 64,292 |
|
Amortization of intangible assets | 12,907 |
| | 15,529 |
|
Amortization of deferred financing costs | 2,818 |
| | 3,446 |
|
Amortization of original issue discounts and premiums, net | 112 |
| | 106 |
|
Stock-based compensation | 2,305 |
| | 3,295 |
|
Impairment of long-lived assets | — |
| | 111,900 |
|
Impairment of goodwill | 100,716 |
| | — |
|
(Gain) loss on disposal of property, plant and equipment | (4,752 | ) | | 381 |
|
Bad debt expense | 2,464 |
| | 1,720 |
|
Loss on extinguishment of debt | 3,177 |
| | — |
|
Deferred income taxes | (11,320 | ) | | (66,921 | ) |
Write-down of cost method investments | — |
| | 4,300 |
|
Other, net | 1,555 |
| | 491 |
|
Changes in operating assets and liabilities, net of business acquisitions and purchase price adjustments: | | | |
Accounts receivable | (21,675 | ) | | 14,987 |
|
Prepaid expenses and other receivables | 5,309 |
| | (191 | ) |
Accounts payable and accrued liabilities | 5,859 |
| | 43,396 |
|
Other assets and liabilities, net | (1,435 | ) | | 59 |
|
Net cash provided by operating activities from continuing operations | 12,945 |
| | 73,122 |
|
Net cash provided by operating activities from discontinued operations | 4,754 |
| | 3,253 |
|
Net cash provided by operating activities | 17,699 |
| | 76,375 |
|
Cash flows from investing activities: | | | |
Cash paid for acquisitions, net of cash acquired | — |
| | (10,570 | ) |
Proceeds from the sale of property, plant and equipment | 9,295 |
| | 1,397 |
|
Purchases of property, plant and equipment | (43,018 | ) | | (33,224 | ) |
Proceeds from acquisition-related working capital adjustment | — |
| | 2,067 |
|
Net cash used in investing activities from continuing operations | (33,723 | ) | | (40,330 | ) |
Net cash used in investing activities from discontinued operations | (2,043 | ) | | (2,393 | ) |
Net cash used in investing activities | (35,766 | ) | | (42,723 | ) |
Cash flows from financing activities | | | |
Proceeds from revolving credit facility | 68,725 |
| | 52,001 |
|
Payments on revolving credit facility | (48,700 | ) | | (84,501 | ) |
Payments for deferred financing costs | (796 | ) | | (828 | ) |
Payments on notes payable and capital leases | (4,005 | ) | | (4,007 | ) |
Other financing activities | (1,015 | ) | | (2,193 | ) |
Net cash provided by (used in) financing activities from continuing operations | 14,209 |
| | (39,528 | ) |
Net cash used in financing activities from discontinued operations | — |
| | (400 | ) |
Net cash provided by (used in) financing activities | 14,209 |
| | (39,928 | ) |
Net decrease in cash and cash equivalents | (3,858 | ) | | (6,276 | ) |
Cash and cash equivalents - beginning of period | 9,212 |
| | 16,211 |
|
Cash and cash equivalents - end of period | 5,354 |
| | 9,935 |
|
Less: cash and cash equivalents of discontinued operations - end of period | 3,140 |
| | 1,895 |
|
Cash and cash equivalents of continuing operations - end of period | $ | 2,214 |
| | $ | 8,040 |
|
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED NON-GAAP RECONCILIATIONS
(In thousands)
Reconciliation of Loss from continuing operations to EBITDA, Adjusted EBITDA from continuing operations
and Total Adjusted EBITDA:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Loss from continuing operations | $ | (99,418 | ) | | $ | (97,998 | ) | | $ | (136,054 | ) | | $ | (123,668 | ) |
Depreciation of property, plant and equipment | 17,378 |
| | 20,571 |
| | 50,959 |
| | 64,292 |
|
Amortization of intangible assets | 4,207 |
| | 3,196 |
| | 12,907 |
| | 15,529 |
|
Interest expense, net | 12,956 |
| | 13,459 |
| | 37,975 |
| | 40,130 |
|
Income tax benefit | (4,014 | ) | | (51,315 | ) | | (12,513 | ) | | (66,075 | ) |
EBITDA | (68,891 | ) | | (112,087 | ) | | (46,726 | ) | | (69,792 | ) |
Adjustments: | | | | | | | |
Transaction-related costs, including earnout adjustments, net | — |
| | 508 |
| | 513 |
| | 1,879 |
|
Stock-based compensation | 897 |
| | 1,172 |
| | 2,305 |
| | 3,295 |
|
Legal and environmental costs, net | (2,326 | ) | | 17,000 |
| | 12,312 |
| | 19,470 |
|
Impairment of long-lived assets | — |
| | 108,401 |
| | — |
| | 111,900 |
|
Impairment of goodwill | 100,716 |
| | — |
| | 100,716 |
| | — |
|
Restructuring, exit and other costs | 142 |
| | — |
| | 205 |
| | 1,453 |
|
Write-off of cost method investments | — |
| | 4,300 |
| | — |
| | 4,300 |
|
Loss on extinguishment of debt | — |
| | — |
| | 3,177 |
| | — |
|
Integration, severance and rebranding costs | — |
| | 2,684 |
| | 2,072 |
| | 5,686 |
|
Gain on disposal of assets | (2,504 | ) | | — |
| | (4,752 | ) | | — |
|
Adjusted EBITDA from continuing operations | 28,034 |
| | 21,978 |
| | 69,822 |
| | 78,191 |
|
Adjusted EBITDA from discontinued operations | 3,374 |
| | 3,116 |
| | 9,488 |
| | 12,253 |
|
Total Adjusted EBITDA | $ | 31,408 |
| | $ | 25,094 |
| | $ | 79,310 |
| | $ | 90,444 |
|
Reconciliation of Loss from discontinued operations to EBITDA from discontinued operations
and Adjusted EBITDA from discontinued operations:
|
| | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
| September 30, | | September 30, |
| 2014 | | 2013 | | 2014 | | 2013 |
Loss from discontinued operations | $ | (45,568 | ) | | $ | (95,740 | ) | | $ | (43,656 | ) | | $ | (95,551 | ) |
Depreciation of property, plant and equipment | — |
| | 693 |
| | — |
| | 2,033 |
|
Amortization of intangible assets | — |
| | 2,678 |
| | — |
| | 8,002 |
|
Interest expense, net | — |
| | 14 |
| | — |
| | 14 |
|
Income tax (benefit) expense | (329 | ) | | (3,600 | ) | | 1,336 |
| | (2,843 | ) |
EBITDA from discontinued operations | (45,897 | ) | | (95,955 | ) | | (42,320 | ) | | (88,345 | ) |
Adjustments: | | | | | | | |
Transaction-related costs | 3,806 |
| | 230 |
| | 5,737 |
| | 383 |
|
Legal and environmental costs, net | — |
| | 341 |
| | 733 |
| | 1,715 |
|
Impairment of goodwill | 45,463 |
| | 98,500 |
| | 45,463 |
| | 98,500 |
|
Loss (gain) on disposal of assets | 2 |
| | — |
| | (125 | ) | | — |
|
Adjusted EBITDA from discontinued operations | $ | 3,374 |
| | $ | 3,116 |
| | $ | 9,488 |
| | $ | 12,253 |
|
Reconciliation of Loss from operations to Operating income from continuing operations before impairment of goodwill:
|
| | | |
| Three Months Ended |
| September 30, 2014 |
Loss from operations | $ | (90,797 | ) |
Impairment of goodwill | 100,716 |
|
Operating income from continuing operations before impairment of goodwill | $ | 9,919 |
|