Nuverra Environmental Solutions, Inc. (NYSE American: NES)
(“Nuverra” or the “Company”) today announced financial and
operating results for the fourth quarter and full year ended
December 31, 2020.
SUMMARY OF FINANCIAL RESULTS
- Revenue for the fourth quarter of 2020 was $24.1 million
compared to $37.3 million for the fourth quarter of 2019.
- Net loss for the fourth quarter of 2020 was $7.2 million
compared to a net loss of $37.5 million in the fourth quarter of
2019.
- Adjusted EBITDA for the fourth quarter of 2020 was $1.4 million
compared to $3.1 million in the fourth quarter of 2019.
- Revenue for the full year ended 2020 was $110.3 million
compared to $168.2 million for the full year ended 2019.
- Net loss for the full year ended 2020 was $44.1 million
compared to a net loss of $54.9 million for the full year ended
2019, including impairment charges of $30.3 million in 2019, and
$15.6 million in 2020.
- Adjusted EBITDA for the full year ended 2020 was $7.3 million
compared to $17.4 million for the full year ended 2019.
- For the full year ended 2020, the Company generated net cash
provided by operating activities of $13.2 million.
- Total liquidity available as of December 31, 2020 was $17.9
million including $5.0 million available under the Company’s
undrawn operating line of credit.
- The Company refinanced its debt, repaying outstanding loan
obligations of $20.9 million with proceeds from new debt of $23.0
million during the fourth quarter of 2020. In addition under the
operating line of credit there was availability of $5.0
million.
- The Southern division was shutdown for several days during the
first quarter of 2021 due to unprecedented winter weather.
“Based on all measures 2020 was an extremely challenging year
and business activity for the last three quarters of the year was
depressed, with our oil-focused Bakken region hurt the most. We saw
pressure on both pricing and volumes to varying degrees across all
our businesses in all three regions. We managed to reduce costs
across the board and generated cash as the balance sheet decreased
as a function of lower sales. In addition we refinanced all of our
term debt and ended the year in a healthy liquidity position. While
commodity prices have recovered over recent months, our customers
have been maintaining strict capital spending discipline and, as a
result, we thus far have seen limited improvement in activity or
pricing. We are reviewing our strategic and geographic positioning
and are committed to making any adjustments to continue serving the
customers that are important to our franchise,” said Charlie
Thompson, Chief Executive Officer.
FOURTH QUARTER 2020 RESULTS
For the fourth quarter of 2020 when compared to the same quarter
in 2019, revenue decreased by 35.4%, or $13.2 million, resulting
primarily from lower water transport services in the Rocky Mountain
and Northeast divisions and lower disposal services in all three
divisions, partially offset by an increase in water transport
services in the Southern division. The economic impact of COVID-19
was the main driver for the decline in demand for gasoline, diesel
and jet fuel, which led to lower drilling and completion activity
with fewer rigs operating in all three divisions. Commodity prices
for crude oil decreased 25% over this time while rig count during
the fourth quarter of 2020 compared to the fourth quarter of 2019
declined 79% in the Rocky Mountain division, 38% in the Northeast
division and 29% in the Southern division.
The Rocky Mountain division experienced a significant slowdown,
with producers reducing rigs due to the decline in WTI crude oil
price per barrel, which averaged $42.52 in the fourth quarter of
2020 versus an average of $56.84 for the same period in 2019,
resulting in a rig count decline of 79% from 53 during the fourth
quarter of 2019 to 11 during the same period in 2020. Revenues for
the Rocky Mountain division decreased by $9.3 million, or 43%,
during the fourth quarter of 2020 as compared to the fourth quarter
of 2019 primarily due to a $3.8 million, or 30%, decrease in water
transport revenues from lower trucking volumes. Revenue from
company-owned trucking revenue declined $3.9 million or 37%, while
third-party trucking revenue increased 12%, or $0.2 million.
Average total billable hours were down 27% compared to the prior
year. While company-owned trucking activity is more levered to
production water volumes, third-party trucking activity is more
sensitive to drilling and completion activity, which has declined
to historically low levels, thereby resulting in meaningful revenue
reduction coupled with an increase in competition for this service
resulting in unfavorable pressure on trucking rates. Though
third-party trucking saw a slight increase during the quarter on
account of some plug and abandonment projects and well completion
work, which boosted production water hauling and winch trucks
demand above our driver count capabilities at the time. Our rental
and landfill businesses are our two service lines most levered to
drilling activity, and therefore have declined by the highest
percentage versus the prior period. Rental revenues decreased in
the current year due to lower utilization resulting from a
significant decline in drilling activity driving the return of
previously rented equipment. Our landfill revenues decreased 89%,
or $0.9 million, compared to prior year due primarily to a 92%
decrease in disposal volumes at our landfill as rigs working in the
vicinity declined materially. Our salt water disposal well revenue
decreased $1.7 million, or 56%, compared to prior year as rig count
reductions and lower completion activity led to a 46% decrease in
average barrels per day disposed during the current year.
Revenues for the Northeast division decreased by $3.2 million,
or 29%, during the fourth quarter of 2020 as compared to the fourth
quarter of 2019 due to decreases in water transport and disposal
services. This decrease was partially due to prices of natural gas
which remained at historically low levels, averaging $2.52 and
$2.38 respectively, for the fourth quarter of 2020 and the same
period in 2019, contributing to a 38% rig count reduction in the
Northeast operating area from 52 during the fourth quarter of 2019
to 32 during the fourth quarter of 2020. In addition, as a result
of the low oil prices experienced earlier in the year, many of our
customers who had historically focused on production of
liquids-rich areas of the basin reduced new drilling activity and
temporarily shut in some production in our operating area. In
addition to reduced drilling and completion activity due to
commodity prices, our customers continued the industry trend of
water reuse during completion activities. Water reuse inherently
reduces trucking activity due to shorter hauling distances as water
is being transported between well sites rather than to disposal
wells. For our trucking services, revenue per billed hour was down
5% from the prior year which was partially offset by a 5%
improvement in driver utilization. Disposal volumes decreased in
our salt water disposal wells resulting in a 34% decrease in
average barrels per day, coupled with lower revenue per barrel.
The Southern division experienced the lowest revenue decline
relative to the other business units, driven by its focus on
servicing customers who are themselves focused on dry natural gas,
which has experienced a relatively smaller impact from the 2020
downturn in commodity prices. Revenues for the Southern division
decreased by $0.7 million, or 16%, during the fourth quarter of
2020 as compared to the fourth quarter of 2019. The decrease was
due primarily to lower disposal well volumes, whether connected to
the pipeline or not, resulting from an activity slowdown in the
region, as evidenced by fewer rigs operating in the area as well as
lower revenue per barrel. Rig count declined 29% in the area, from
55 during the fourth quarter of 2019 to 39 during the fourth
quarter of 2020. Volumes received in our disposal wells not
connected to our pipeline decreased by an average of 7,743 barrels
per day, or 29% during the current year and volumes received in the
disposal wells connected to the pipeline decreased by an average of
8,305 barrels per day, or 20% during the current year. Offsetting
the declines in disposal well revenues was a 9% increase in water
transport services. Subsequent to the year end, the Southern
division experienced unprecedented winter weather in February that
shutdown the business for several days. We are expecting this to
have a significant impact on the first quarter of 2021 revenue.
Total costs and expenses for the fourth quarter of 2020 and 2019
were $30.4 million and $73.9 million, respectively. Total costs and
expenses, adjusted for special items, for the fourth quarter of
2020 were $30.4 million, or a 29% decrease, when compared with
$43.1 million in the fourth quarter of 2019. This is primarily a
result of lower volumes and related costs in water transport
services and disposal services coupled with company initiatives to
match trucking capacity to demand, resulting in a 27% and 34%
decrease in the number of drivers compared to the prior year period
in the Rocky Mountain and Northeast divisions respectively, as well
as declines in third-party hauling costs and fleet-related
expenses, including maintenance and repair costs and fuel, and
general and administrative expenses.
Net loss for the fourth quarter of 2020 was $7.2 million, an
increase of $30.3 million as compared to a net loss for the fourth
quarter of 2019 of $37.5 million. For the fourth quarter of 2020,
the Company reported a net loss, adjusted for special items, of
$6.0 million. This compares with a net loss, adjusted for special
items, of $7.0 million in the fourth quarter of 2019.
Adjusted EBITDA for the fourth quarter of 2020 was $1.4 million,
a decrease of 55% as compared to adjusted EBITDA for the fourth
quarter of 2019 of $3.1 million. The decrease is a function of the
reasons discussed previously, with primary drivers being lower
trucking volumes, salt water disposal volumes and rental equipment
utilization in the Rocky Mountain and Northeast divisions. Fourth
quarter of 2020 adjusted EBITDA margin was 5.8%, compared with 8.2%
in the fourth quarter of 2019 driven primarily by declines in
revenue, partially offset by cost reductions in 2020.
YEAR-TO-DATE (“YTD”) RESULTS FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 2020
When compared to 2019, 2020 revenue decreased by 34%, or $58.0
million, due primarily to decreases in the available market for
water transport services, disposal services and third-party rentals
in all three divisions. The major underlying driver for this
decrease was lower commodity prices for both crude oil and natural
gas, which decreased 31% and 21%, respectively, over this time
period. The economic impact of COVID-19 is the main driver for the
decline in demand for gasoline, diesel and jet fuel, which led to
lower drilling and completion activity with fewer rigs operating in
all three divisions and significant well shut-ins primarily in the
Rocky Mountain division. Rig count during the year 2020 compared to
2019 declined 56% in the Rocky Mountain division, 27% in the
Northeast division and 18% in the Southern division.
Of our three divisions, the Rocky Mountain division experienced
the most significant slowdown, with rig count declining 56% from 52
during the year ended December 31, 2019 to 23 during the year ended
December 31, 2020. In addition, beginning in April 2020, some
producers shut in many wells due to the decline in WTI crude oil
price per barrel, which averaged $39.16 in 2020 versus an average
of $56.98 for the same period in 2019, resulting in their cash
costs of operations exceeding revenues per barrel. Revenues for the
Rocky Mountain division decreased by $44.2 million, or 43%, during
2020 as compared to 2019 primarily due to a $24.3 million, or
37.8%, decrease in water transport revenues from lower trucking
volumes. Company-owned trucking revenue declined $10.7 million or
25%, and third-party trucking revenue decreased $12.0 million, or
60%. Average total billable hours were down 19% compared to the
prior year. While company-owned trucking activity is more levered
to production water volumes, third-party trucking activity is more
sensitive to drilling and completion activity, which declined to
historically low levels, thereby resulting in meaningful
third-party revenue reduction. Our rental and landfill businesses
are our two service lines most levered to drilling activity, and
therefore have declined by the highest percentage versus the prior
period. Rental revenues decreased in the current year due to lower
utilization resulting from a significant decline in drilling
activity driving the return of previously rented rental equipment.
Our landfill revenues decreased 62%, or $3.2 million, compared to
prior year due primarily to a 61% decrease in disposal volumes at
our landfill as rigs working in the vicinity declined materially.
Our salt water disposal well revenue decreased $6.4 million, or
50%, compared to prior year as well shut-ins and lower completion
activity led to a 37% decrease in average barrels per day disposed
during the current year, with water from producing wells continuing
to maintain a base level of volume activity.
Revenues for the Northeast division decreased by $9.8 million,
or 22%, during 2020 as compared to 2019 due to decreases in water
transport services of $5.6 million, or 19%, and disposal services
of $3.9 million, or 32%. Natural gas prices per million Btu, as
measured by the Henry Hub Natural Gas Index, decreased 21% from an
average of $2.56 for 2019 to an average of $2.03 for 2020,
contributing to a 27% rig count reduction in the Northeast
operating area from 52 during the year ended December 31, 2019 to
38 during the year ended December 31, 2020. Additionally, as a
result of the 31% decline in WTI crude oil prices experienced
during the period, many of our customers who had historically
focused on production of liquids-rich gas wells also reduced
activity levels and shut-in some production in our operating area
due to lower realized prices for these products. This led to lower
activity levels for both water transport services and disposal
services despite the relatively lower decrease in natural gas
prices versus crude oil prices. In addition to reduced drilling and
completion activity due to commodity prices, our customers
continued the industry trend of water reuse during completion
activities. Water reuse inherently reduces trucking activity due to
shorter hauling distances as water is being transported between
well sites rather than to disposal wells. For our trucking
services, revenue per billed hour was down 7% from the prior year,
which was partially offset by a 6% improvement in driver
utilization. Disposal volumes decreased in our salt water disposal
wells resulting in a 5% decrease in average barrels per day.
Revenues for the Southern division decreased by $4.0 million, or
19%, during 2020 as compared to 2019. The decrease was due
primarily to lower disposal well volumes, whether connected to the
pipeline or not, resulting from a drilling and completion activity
slowdown in the region, as evidenced by fewer rigs operating in the
area, as well as lower revenue per barrel. Rig count declined 18%
in the area, from 49 during the year ended December 31, 2019 to 40
during the year ended December 31, 2020. Volumes received in our
disposal wells not connected to our pipeline decreased by an
average of 8,644 barrels per day, or 30%, during the current year
and volumes received in the disposal wells connected to the
pipeline decreased by an average of 7,557 barrels per day, or 17%
during the current year.
Total costs and expenses for 2020 and 2019 were $150.5 million
and $218.3 million, respectively. Total costs and expenses,
adjusted for special items, for 2020 were $131.7 million, or a 30%
decrease, when compared with $187.5 million for 2019. This is
primarily a result of lower volumes and related costs in water
transport services and disposal services and company initiatives to
match trucking capacity to demand, resulting in a 19% and 20%
decrease in the number of drivers compared to the prior year period
in the Rocky Mountain and Northeast divisions respectively, as well
as a decline in third-party hauling costs and fleet-related
expenses, including maintenance and repair costs and fuel, and
general and administrative expenses.
Net loss for 2020 was $44.1 million, an increase of $10.8
million as compared to a net loss for 2019 of $54.9 million. For
2020, the Company reported a net loss, adjusted for special items,
of $25.4 million. This compares with a net loss, adjusted for
special items, of $23.9 million for YTD 2019.
Adjusted EBITDA for 2020 was $7.3 million, a decrease of 58% as
compared to adjusted EBITDA for 2019 of $17.4 million. The decrease
is a function of the reasons discussed previously, with primary
drivers being lower trucking volumes, salt water disposal volumes
and rental equipment utilization in the Rocky Mountain and
Northeast divisions. During 2020, adjusted EBITDA margin was 7%,
compared with 10% in 2019 driven primarily by declines in revenue
partially offset by cost reductions in 2020.
CASH FLOW AND LIQUIDITY
Net cash provided by operating activities for 2020 was $13.2
million, mainly attributable to a decline in sales, which
contributed to a decrease of $11.2 million in accounts receivable,
while capital expenditures net of asset sales consumed cash of $0.2
million. Asset sales were related to unused or under-utilized
assets. Gross capital expenditures for 2020 of $3.4 million
primarily included the purchase of property, plant and equipment as
well as expenditures to extend the useful life and productivity of
our fleet, equipment and disposal wells.
Total liquidity available as of December 31, 2020 was $17.9
million. This consisted of $12.9 million of cash and $5.0 million
available under our operating line of credit. As of December 31,
2020, total debt outstanding was $35.0 million, consisting of $13.0
million under our equipment term loan, $9.9 million under our real
estate loan, $4.0 million under our Paycheck protection Program
loan, $0.4 million under our vehicle term loan, $0.2 million under
our equipment finance loan, and $7.6 million of finance leases for
vehicle financings and real property leases.
On November 24, 2020, the Company closed on a multi-faceted debt
refinancing with First International Bank and Trust based in
Watford City, North Dakota. The Company executed a $13.0 million
equipment term loan financed under the Main Street Priority Lending
program, a $10.0 million real estate loan, a $5.0 million operating
line of credit and a $4.839 million letter of credit facility.
Proceeds from the real estate loan and the equipment term loan
financing repaid all outstanding obligations owed under our First
Lien Credit Agreement (which included the outstanding letters of
credit) and all outstanding obligations under our Second Lien Term
Loan Credit Agreement.
About Nuverra
Nuverra Environmental Solutions, Inc. provides water logistics
and oilfield services to customers focused on the development and
ongoing production of oil and natural gas from shale formations in
the United States. Our services include the delivery, collection,
and disposal of solid and liquid materials that are used in and
generated by the drilling, completion, and ongoing production of
shale oil and natural gas. We provide a suite of solutions to
customers who demand safety, environmental compliance and
accountability from their service providers. Find additional
information about Nuverra in documents filed with the U.S.
Securities and Exchange Commission (“SEC”) at
http://www.sec.gov.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the United States Securities Act of
1933, as amended, and Section 21E of the United States Securities
Exchange Act of 1934, as amended. You can identify these and other
forward-looking statements by the use of words such as
“anticipates,” “expects,” “intends,” “plans,” “predicts,”
“believes,” “seeks,” “estimates,” “may,” “might,” “will,” “should,”
“would,” “could,” “potential,” “future,” “continue,” “ongoing,”
“forecast,” “project,” “target” or similar expressions, and
variations or negatives of these words.
These statements relate to our expectations for future events
and time periods. All statements other than statements of
historical fact are statements that could be deemed to be
forward-looking statements, and any forward-looking statements
contained herein are based on information available to us as of the
date of this press release and our current expectations, forecasts
and assumptions, and involve a number of risks and uncertainties.
Accordingly, forward-looking statements should not be relied upon
as representing our views as of any subsequent date. Future
performance cannot be ensured, and actual results may differ
materially from those in the forward-looking statements. Some
factors that could cause actual results to differ include, among
others: the severity, magnitude and duration of the coronavirus
disease 2019 ("COVID-19") pandemic and commodity market
disruptions; changes in commodity prices or general market
conditions; fluctuations in consumer trends, pricing pressures,
transportation costs, changes in raw material or labor prices or
rates related to our business and changing regulations or political
developments in the markets in which we operate; risks associated
with our indebtedness, including changes to interest rates,
decreases in our borrowing availability, our ability to manage our
liquidity needs and to comply with covenants under our credit
facilities, including as a result of COVID-19 and oil price
declines; the loss of one or more of our larger customers; delays
in customer payment of outstanding receivables and customer
bankruptcies; natural disasters, such as hurricanes, earthquakes
and floods, pandemics (including COVID-19), acts of terrorism, or
extreme weather conditions, that may impact our business locations,
assets, including wells or pipelines, distribution channels, or
which otherwise disrupt our customers' operations or the markets we
serve; disruptions impacting crude oil and natural gas
transportation, processing, refining, and export systems, including
vacated easements, environmental impact studies, forced shutdown by
governmental agencies and litigation affecting the Dakota Access
Pipeline; bans on drilling and fracking leases and permits on
federal land; our ability to attract and retain key executives and
qualified employees in strategic areas of our business; our ability
to attract and retain a sufficient number of qualified truck
drivers; the unfavorable change to credit and payment terms due to
changes in industry condition or our financial condition, which
could constrain our liquidity and reduce availability under our
operating line of credit; higher than forecasted capital
expenditures to maintain and repair our fleet of trucks, tanks,
pipeline, equipment and disposal wells; our ability to control
costs and expenses; changes in customer drilling, completion and
production activities, operating methods and capital expenditure
plans, including impacts due to low oil and/or natural gas prices,
shut-in production, decline in operating drilling rigs, closures or
pending closures of third-party pipelines or the economic or
regulatory environment; risks associated with the limited trading
volume of our common stock on the NYSE American Stock Exchange,
including potential fluctuation in the trading prices of our common
stock; risks associated with the reliance on third-party analyst
and expert market projections and data for the markets in which we
operate that is utilized in our business strategy; present and
possible future claims, litigation or enforcement actions or
investigations; risks associated with changes in industry practices
and operational technologies; risks associated with the operation,
construction, development and closure of salt water disposal wells,
solids and liquids transportation assets, landfills and pipelines,
including access to additional locations and rights-of-way,
permitting and licensing, environmental remediation obligations,
unscheduled delays or inefficiencies and reductions in volume due
to micro- and macro-economic factors or the availability of less
expensive alternatives; the effects of competition in the markets
in which we operate, including the adverse impact of competitive
product announcements or new entrants into our markets and
transfers of resources by competitors into our markets; changes in
economic conditions in the markets in which we operate or in the
world generally, including as a result of political uncertainty;
reduced demand for our services due to regulatory or other
influences related to extraction methods such as hydraulic
fracturing, shifts in production among shale areas in which we
operate or into shale areas in which we do not currently have
operations, and shifts to reuse of water or water sharing in
completion activities; the unknown future impact of changes in laws
and regulation on waste management and disposal activities,
including those impacting the delivery, storage, collection,
transportation, and disposal of waste products, as well as the use
or reuse of recycled or treated products or byproducts; and risks
involving developments in environmental or other governmental laws
and regulations in the markets in which we operate and our ability
to effectively respond to those developments including laws and
regulations relating to oil and natural gas extraction businesses,
particularly relating to water usage, and the disposal and
transportation of liquid and solid wastes.
The forward-looking statements contained, or incorporated by
reference, herein are also subject generally to other risks and
uncertainties that are described from time to time in the Company’s
filings with the SEC. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect
management’s views as of the date of this press release. The
Company undertakes no obligation to update any such forward-looking
statements, whether as a result of new information, future events,
changes in expectations or otherwise. Additional risks and
uncertainties are disclosed from time to time in the Company’s
filings with the SEC, including our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form
8-K.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In thousands, except per share
amounts)
Three Months Ended
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Revenue:
Service revenue
$
22,717
$
33,440
$
102,810
$
152,541
Rental revenue
1,366
3,833
7,477
15,697
Total revenue
24,083
37,273
110,287
168,238
Costs and expenses:
Direct operating expenses
18,250
29,648
87,299
131,019
General and administrative expenses
5,507
5,335
18,960
20,864
Depreciation and amortization
6,648
8,843
28,614
36,183
Impairment of long-lived assets
—
529
15,579
766
Impairment of goodwill
—
29,518
—
29,518
Other, net
—
—
—
(10
)
Total costs and expenses
30,405
73,873
150,452
218,340
Operating loss
(6,322
)
(36,600
)
(40,165
)
(50,102
)
Interest expense, net
(780
)
(1,230
)
(4,070
)
(5,227
)
Other income, net
16
45
216
502
Reorganization items, net
(111
)
—
(111
)
(200
)
Loss before income taxes
(7,197
)
(37,785
)
(44,130
)
(55,027
)
Income tax benefit (expense)
2
261
(13
)
90
Net loss
$
(7,195
)
$
(37,524
)
$
(44,143
)
$
(54,937
)
Earnings per common share:
Net loss per basic common share
$
(0.46
)
$
(2.39
)
$
(2.80
)
$
(3.50
)
Net loss per diluted common share
$
(0.46
)
$
(2.39
)
$
(2.80
)
$
(3.50
)
Weighted average shares outstanding:
Basic
15,772
15,731
15,764
15,676
Diluted
15,772
15,731
15,764
15,676
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In thousands)
December 31,
2020
2019
Assets
Cash and cash equivalents
$
12,880
$
4,788
Restricted cash
2,820
922
Accounts receivable, net
15,427
26,493
Inventories
2,852
3,177
Prepaid expenses and other receivables
3,119
3,264
Other current assets
—
231
Assets held for sale
778
2,664
Total current assets
37,876
41,539
Property, plant and equipment, net
151,164
190,817
Operating lease assets
1,691
2,886
Equity investments
35
39
Intangibles, net
194
640
Other assets
106
178
Total assets
191,066
236,099
Liabilities and Shareholders’
Equity
Accounts payable
$
5,130
$
5,633
Accrued and other current liabilities
9,550
10,064
Current portion of long-term debt
2,433
6,430
Total current liabilities
17,113
22,127
Long-term debt
31,673
30,005
Noncurrent operating lease liabilities
1,360
1,457
Deferred income taxes
120
91
Long-term contingent consideration
500
500
Other long-term liabilities
8,017
7,487
Total liabilities
58,783
61,667
Commitments and contingencies
Shareholders’ equity:
Preferred stock
—
—
Common stock
158
158
Additional paid-in capital
339,663
337,628
Treasury stock
(477
)
(436
)
Accumulated deficit
(207,061
)
(162,918
)
Total shareholders’ equity
132,283
174,432
Total liabilities and shareholders’
equity
191,066
236,099
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
Year Ended
December 31,
2020
2019
Cash flows from operating
activities:
Net loss
$
(44,143
)
$
(54,937
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
28,614
36,183
Amortization of debt issuance costs,
net
95
328
Accrued interest added to debt
principal
—
—
Stock-based compensation
2,035
2,026
Impairment of long-lived assets
15,579
766
Impairment of goodwill
—
29,518
Gain on sale of UGSI
—
—
Gain on disposal of property, plant and
equipment
(1,646
)
(1,967
)
Bad debt recoveries
(141
)
(22
)
Change in fair value of derivative warrant
liability
—
(34
)
Loss on extinguishment of debt
—
—
Deferred income taxes
29
(90
)
Other, net
768
340
Changes in operating assets and
liabilities:
Accounts receivable
11,207
4,921
Prepaid expenses and other receivables
145
(729
)
Accounts payable and accrued
liabilities
58
(11,014
)
Other assets and liabilities, net
565
1,230
Net cash provided by operating
activities
13,165
6,519
Cash flows from investing
activities:
Proceeds from the sale of property, plant
and equipment
3,225
6,979
Purchases of property, plant and
equipment
(3,390
)
(8,243
)
Net cash used in investing activities
(165
)
(1,264
)
Cash flows from financing
activities:
Proceeds from Equipment loan
13,000
—
Payments on Commercial real estate
loan
(68
)
—
Proceeds from Commercial real estate
loan
10,000
—
Proceeds from paycheck protection program
loan
4,000
—
Payments on First and Second Lien Term
Loans
(27,021
)
(4,949
)
Proceeds from Revolving Facility
115,028
184,912
Payments on Revolving Facility
(115,028
)
(184,912
)
Payments on Bridge Term Loan
—
(31,382
)
Payments for debt issuance costs
(928
)
—
Proceeds from the issuance of stock
—
31,057
Payments on finance leases and other
financing activities
(1,993
)
(2,229
)
Net cash (used in) provided by financing
activities
(3,010
)
(7,503
)
Change in cash, cash equivalents and
restricted cash
9,990
(2,248
)
Cash and cash equivalents, beginning of
period
4,788
7,302
Restricted cash, beginning of period
922
656
Cash, cash equivalents and restricted
cash, beginning of period
5,710
7,958
Cash and cash equivalents, end of
period
12,880
4,788
Restricted cash, end of period
2,820
922
Cash, cash equivalents and restricted
cash, end of period
$
15,700
$
5,710
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
evaluating the Company’s ongoing financial results and trends.
Management uses this non-GAAP information as an indicator of
business results, and evaluates overall performance with respect to
such indicators. Management believes that excluding items such as
acquisition expenses, amortization of intangible assets,
stock-based compensation, asset impairments, restructuring charges,
expenses related to litigation and resolution of lawsuits, and
other charges, which may or may not be non-recurring, among other
items that are inconsistent in amount and frequency (as with
acquisition expenses), or determined pursuant to complex formulas
that incorporate factors, such as market volatility, that are
beyond our control (as with stock-based compensation), for purposes
of calculating these non-GAAP financial measures facilitates a more
meaningful evaluation of the Company’s current operating
performance and comparisons to the past and future operating
performance. The Company believes that providing non-GAAP financial
measures such as EBITDA, adjusted EBITDA, adjusted net income
(loss), and adjusted net income (loss) per share, in addition to
related GAAP financial measures, provides investors with greater
transparency to the information used by the Company’s management.
These non-GAAP financial measures are not substitutes for measures
of performance or liquidity calculated in accordance with GAAP and
may not necessarily be indicative of the Company’s liquidity or
ability to fund cash needs. Not all companies calculate non-GAAP
financial measures in the same manner, and our presentation may not
be comparable to the presentations of other companies.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of Net Loss to EBITDA and Total Adjusted
EBITDA
Three Months Ended
Year Ended
December 31,
December 31,
2020
2019
2020
2019
Net loss
$
(7,195
)
$
(37,524
)
$
(44,143
)
$
(54,937
)
Depreciation and amortization
6,648
8,843
28,614
36,183
Interest expense, net
780
1,230
4,070
5,227
Income tax (benefit) expense
(2
)
(261
)
13
(90
)
EBITDA
231
(27,712
)
(11,446
)
(13,617
)
Adjustments:
Transaction-related costs
1,206
530
2,591
444
Stock-based compensation
1,099
286
2,035
2,026
Change in fair value of derivative warrant
liability
—
(2
)
—
(34
)
Reorganization items, net [1]
111
—
111
200
Legal and environmental costs, net
—
—
(138
)
53
Impairment of long-lived assets
—
529
15,579
766
Impairment of goodwill
—
29,518
—
29,518
Restructuring, exit and other costs
—
—
—
(10
)
Executive and severance costs
—
59
174
59
(Gain) loss on disposal of assets
(1,262
)
(139
)
(1,646
)
(1,967
)
Total Adjusted EBITDA
$
1,385
$
3,069
$
7,260
$
17,438
[1]
Reorganization items, net
represents the costs related to the chapter 11 filing incurred
after the May 1, 2017 filing date.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of QTD Segment Performance to Adjusted
EBITDA
Three months ended December 31,
2020
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
12,395
$
7,677
$
4,011
$
—
$
24,083
Direct operating expenses
9,536
5,671
3,043
—
18,250
General and administrative expenses
879
276
154
4,198
5,507
Depreciation and amortization
2,742
2,493
1,398
15
6,648
Operating loss
(762
)
(763
)
(584
)
(4,213
)
(6,322
)
Operating margin %
(6.1
)
%
(9.9
)
%
(14.6
)
%
N/A
(26.3
)
%
Loss before income taxes
(929
)
(864
)
(637
)
(4,767
)
(7,197
)
Net loss
(929
)
(864
)
(637
)
(4,765
)
(7,195
)
Depreciation and amortization
2,742
2,493
1,398
15
6,648
Interest expense, net
183
101
53
443
780
Income tax expense (benefit)
—
—
—
(2
)
(2
)
EBITDA
$
1,996
$
1,730
$
814
$
(4,309
)
$
231
Adjustments, net
(1,106
)
(77
)
(79
)
2,416
1,154
Adjusted EBITDA
$
890
$
1,653
$
735
$
(1,893
)
$
1,385
Adjusted EBITDA margin %
7.2
%
21.5
%
18.3
%
N/A
5.8
%
Three months ended December 31,
2019
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
21,686
$
10,836
$
4,751
$
—
$
37,273
Direct operating expenses
17,324
8,764
3,560
—
29,648
General and administrative expenses
1,392
658
279
3,006
5,335
Depreciation and amortization
4,185
2,603
2,051
4
8,843
Operating loss
(6,137
)
(23,579
)
(3,874
)
(3,010
)
(36,600
)
Operating margin %
(28.3
)
%
(217.6
)
%
(81.5
)
%
N/A
(98.2
)
%
Loss before income taxes
(6,298
)
(23,702
)
(3,928
)
(3,857
)
(37,785
)
Net loss
(6,298
)
(23,702
)
(3,928
)
(3,596
)
(37,524
)
Depreciation and amortization
4,185
2,603
2,051
4
8,843
Interest expense, net
204
124
54
848
1,230
Income tax benefit
—
—
—
(261
)
(261
)
EBITDA
$
(1,909
)
$
(20,975
)
$
(1,823
)
$
(3,005
)
$
(27,712
)
Adjustments, net
5,020
22,303
2,644
814
30,781
Adjusted EBITDA
$
3,111
$
1,328
$
821
$
(2,191
)
$
3,069
Adjusted EBITDA margin %
14.3
%
12.3
%
17.3
%
N/A
8.2
%
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of YTD Segment Performance to Adjusted
EBITDA
Year Ended December 31, 2020
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
59,393
$
34,173
$
16,721
$
—
$
110,287
Direct operating expenses
49,245
26,040
12,014
—
87,299
General and administrative expenses
4,728
1,804
858
11,570
18,960
Depreciation and amortization
11,891
10,090
6,599
34
28,614
Operating loss
(18,654
)
(3,761
)
(6,146
)
(11,604
)
(40,165
)
Operating margin %
(31.4
)
%
(11.0
)
%
(36.8
)
%
N/A
(36.4
)
%
Loss before income taxes
(19,173
)
(4,188
)
(6,355
)
(14,414
)
(44,130
)
Net loss
(19,173
)
(4,188
)
(6,355
)
(14,427
)
(44,143
)
Depreciation and amortization
11,891
10,090
6,599
34
28,614
Interest expense, net
735
427
209
2,699
4,070
Income tax expense (benefit)
—
—
—
13
13
EBITDA
$
(6,547
)
$
6,329
$
453
$
(11,681
)
$
(11,446
)
Adjustments, net
11,980
(336
)
3,144
3,918
18,706
Adjusted EBITDA
$
5,433
$
5,993
$
3,597
$
(7,763
)
$
7,260
Adjusted EBITDA margin %
9.1
%
17.5
%
21.5
%
N/A
6.6
%
Year Ended December 31, 2019
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
103,552
$
44,001
$
20,685
$
—
$
168,238
Direct operating expenses
81,529
35,836
13,654
—
131,019
General and administrative expenses
5,021
2,880
1,104
11,859
20,864
Depreciation and amortization
16,982
10,755
8,410
36
36,183
Operating loss
(5,022
)
(27,977
)
(5,208
)
(11,895
)
(50,102
)
Operating margin %
(4.8
)
%
(63.6
)
%
(25.2
)
%
N/A
(29.8
)
%
Loss before income taxes
(5,479
)
(28,212
)
(5,428
)
(15,908
)
(55,027
)
Net loss
(5,479
)
(28,212
)
(5,428
)
(15,818
)
(54,937
)
Depreciation and amortization
16,982
10,755
8,410
36
36,183
Interest expense, net
692
469
220
3,846
5,227
Income tax benefit
—
—
—
(90
)
(90
)
EBITDA
$
12,195
$
(16,988
)
$
3,202
$
(12,026
)
$
(13,617
)
Adjustments, net
4,464
21,713
2,242
2,636
31,055
Adjusted EBITDA
$
16,659
$
4,725
$
5,444
$
(9,390
)
$
17,438
Adjusted EBITDA margin %
16.1
%
10.7
%
26.3
%
N/A
10.4
%
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Net Loss and
to EBITDA and Adjusted EBITDA
Three months ended December
31, 2020
As Reported
Special Items
As Adjusted
Revenue
$
24,083
$
—
$
24,083
Direct operating expenses
18,250
1,262
[A]
19,512
General and administrative expenses
5,507
(2,305
)
[B]
3,202
Total costs and expenses
30,405
—
[C]
30,405
Operating loss
(6,322
)
1,043
[C]
(5,279
)
Net loss
(7,195
)
1,154
[D]
(6,041
)
Net loss
$
(7,195
)
$
(6,041
)
Depreciation and amortization
6,648
6,648
Interest expense, net
780
780
Income tax expense (benefit)
(2
)
(2
)
EBITDA and Adjusted EBITDA
$
231
$
1,385
Description of
2020 Special Items:
[A]
Special items primarily include
the gain on sale of underutilized assets.
[B]
Primarily attributable to
transaction fees related to debt financing and stock-based
compensation for three executives which vested on December 31,
2020.
[C]
Primarily includes the
aforementioned adjustments.
[D]
Primarily includes the
aforementioned adjustments along with $0.1 million of
reorganization items associated with legal fees. Our effective tax
rate for the three months ended December 31, 2020 was (0.03)% and
has been applied to the special items accordingly.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Net Loss and
to EBITDA and Adjusted EBITDA
Three months ended December
31, 2019
As Reported
Special Items
As Adjusted
Revenue
$
37,273
$
—
$
37,273
Direct operating expenses
29,648
135
[E]
29,783
General and administrative expenses
5,335
(871
)
[F]
4,464
Total costs and expenses
73,873
(30,783
)
[G]
43,090
Operating loss
(36,600
)
30,783
[G]
(5,817
)
Net loss
(37,524
)
30,568
[H]
(6,956
)
Net loss
$
(37,524
)
$
(6,956
)
Depreciation and amortization
8,843
8,843
Interest expense, net
1,230
1,230
Income tax benefit
(261
)
(48
)
EBITDA and Adjusted EBITDA
$
(27,712
)
$
3,069
Description of
2019 Special Items:
[E]
Special items primarily include
the gain on sale of underutilized assets.
[F]
Primarily attributable to
stock-based compensation expense and transaction costs related to
the exploration of strategic opportunities.
[G]
Primarily includes the
aforementioned adjustments along with goodwill impairment charges
of $29.5 million and long-lived asset impairment charges of $0.5
million for assets classified as held-for-sale in the Northeast
division.
[H]
Primarily includes the
aforementioned adjustments. Our effective tax rate for the three
months ended December 31, 2019 was 0.7% and has been applied to the
special items accordingly.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Net Loss and
to EBITDA and Adjusted EBITDA
Year Ended December 31,
2020
As Reported
Special Items
As Adjusted
Revenue
$
110,287
$
—
$
110,287
Direct operating expenses
87,299
1,533
[A]
88,832
General and administrative expenses
18,960
(4,667
)
[B]
14,293
Total costs and expenses
150,452
(18,713
)
[C]
131,739
Operating loss
(40,165
)
18,713
[C]
(21,452
)
Net loss
(44,143
)
18,712
[D]
(25,431
)
Net loss
$
(44,143
)
$
(25,431
)
Depreciation and amortization
28,614
28,614
Interest expense, net
4,070
4,070
Income tax (expense) benefit
13
7
EBITDA and Adjusted EBITDA
$
(11,446
)
$
7,260
Description of
2020 Special Items:
[A]
Special items primarily include
the gain on sale of underutilized assets.
[B]
Primarily attributable to
transaction fees related to debt financing and utilities in the
Rocky Mountain division, along with stock based compensation.
[C]
Primarily includes the
aforementioned adjustments along with $15.6 million of long-lived
asset impairment charges related to Rocky Mountain and Southern
divisions.
[D]
Primarily includes the
aforementioned adjustments along with $0.1 million of
reorganization items associated with legal fees, offset by $0.2
million of income from a legal settlement. Additionally, our
effective tax rate for the year ended December 31, 2020 was 0.03%
and has been applied to the special items accordingly.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Adjusted Net Loss and
to EBITDA and Adjusted EBITDA
Year Ended December 31,
2019
As Reported
Special Items
As Adjusted
Revenue
$
168,238
$
—
$
168,238
Direct operating expenses
131,019
1,963
[E]
132,982
General and administrative expenses
20,864
(2,578
)
[F]
18,286
Total costs and expenses
218,340
(30,889
)
[G]
187,451
Operating loss
(50,102
)
30,889
[G]
(19,213
)
Net loss
(54,937
)
31,004
[H]
(23,933
)
Net loss
$
(54,937
)
$
(23,933
)
Depreciation and amortization
36,183
36,183
Interest expense, net
5,227
5,227
Income tax benefit
(90
)
(39
)
EBITDA and Adjusted EBITDA
$
(13,617
)
$
17,438
Description of
2019 Special Items:
[E]
Special items primarily include
the gain on sale of underutilized assets.
[F]
Primarily attributable to
stock-based compensation expense and transaction costs related to
the exploration of strategic opportunities.
[G]
Primarily includes the
aforementioned adjustments along with goodwill impairment charges
of $29.5 million and long-lived asset impairment charges of $0.8
million for assets classified as held-for-sale in the Northeast and
Rocky Mountain divisions.
[H]
Primarily includes the
aforementioned adjustments along with $0.2 million of capital
reorganization costs incurred after the chapter 11 filing recorded
to “Reorganization items, net,” offset by a gain of $34 thousand
associated with the change in fair value of the derivative warrant
liability. Additionally, our effective tax rate for the year ended
December 31, 2019 was 0.2% and has been applied to the special
items accordingly.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210315005820/en/
Nuverra Environmental Solutions, Inc. Investor Relations
602-903-7802 ir@nuverra.com
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