Nuverra Environmental Solutions, Inc. (NYSE American: NES)
(“Nuverra” or the “Company”) today announced financial and
operating results for the second quarter and six months ended June
30, 2021.
SUMMARY OF FINANCIAL RESULTS
- Revenue for the second quarter of 2021 was $24.8 million
compared to $24.5 million for the second quarter of 2020.
- Net loss for the second quarter of 2021 was $3.9 million
compared to a net loss of $6.8 million for the second quarter of
2020, primarily due to a gain of $4.0 million on the forgiveness of
our Paycheck Protection Program (“PPP”) loan.
- Adjusted EBITDA for the second quarter of 2021 was a loss of
$0.2 million compared to a profit of $2.5 million for the second
quarter of 2020, mostly driven by higher operating costs which
include fuel and driver costs.
- Total liquidity available as of June 30, 2021 was $12.4 million
including $5.0 million available under the Company’s undrawn
operating line of credit.
- Principal payments on debt and finance lease payments during
the six months ended June 30, 2021 totaled $1.6 million.
- The Company invested $1.3 million in gross capital expenditures
during the six months ended June 30, 2021.
“As we climb out of the activity decline caused by the COVID-19
pandemic, we continue our ongoing efforts to lower our cost
structure. To better reflect the markets we serve, we are taking
steps to rationalize our fleet and facility footprint and
continuing our work on increasing efficiency in our service
dispatch processes and other back office systems. We expect our
G&A expense to be lower in the second half of 2021. While we
are focused on recovering pricing lost during the COVID-19 induced
downturn, we face significant inflationary pressures that offset
those hard fought price increases, including higher wage costs due
to competition for employees and fuel prices. Finally, I would like
to recognize that throughout all of the changes our industry has
undergone, the people at Nuverra continue to safely execute
excellent customer service. I would like to thank all of the great
people at Nuverra for their hard work, dedication and focus
throughout all of the challenges we have faced over the past year.”
said Pat Bond, Chief Executive Officer.
SECOND QUARTER 2021 RESULTS
For the second quarter of 2021 when compared to the second
quarter of 2020, revenue increased by 1%, or $0.3 million,
resulting primarily from increases in water transport services in
the Rocky Mountain and Southern divisions, offset by a decrease in
water transport services in the Northeast division and a decrease
in disposal services in the Southern division. Despite an increase
in the average commodity prices for both crude oil and natural gas
quarter over quarter, which increased 136% and 74%, respectively,
over this time, new drilling and completion activities have
remained low relative to the levels seen in the past. Rig count at
the end of the second quarter of 2021 compared to the end of the
second quarter of 2020 declined 24% in the Rocky Mountain division,
5% in the Northeast division and, offset by a 29% increase in the
Southern division.
The Rocky Mountain division has experienced a significant
slowdown as compared to the prior year, as evidenced by the rig
count declining 24% from 21 at June 30, 2020 to 16 at June 30,
2021. The average rig count for the first quarter of 2020 was 52,
representing a 69% decrease since that time. Although there was a
notable increase in WTI crude oil price per barrel, which averaged
$66.19 in the second quarter of 2021 versus an average of $28.00
for the same period in 2020, new drilling and completion activities
have been very low versus levels seen prior to the COVID-19
pandemic. Part of this decline in activity is the result of many of
the larger exploration and production companies either focusing
their capital spending in other basins or having a predetermined
drilling program and not looking to increase production as they
focus on drilling within cash flow at the request of their
investors. Revenues for the Rocky Mountain division increased by
$0.6 million, or 5%, during the three months ended June 30, 2021 as
compared to the three months ended June 30, 2020, primarily due to
a $0.4 million, or 4% increase in water transport revenues from
higher driver utilization. Company-owned trucking revenue declined
15%, or $1.2 million and third-party trucking revenue increased
145%, or $1.6 million. We continue to face a truck driver shortage
in the Rocky Mountain Division similar to other areas of the
country and industries. We are actively recruiting to attempt to
increase our driver count. Company-owned trucking activity is more
levered to production water volumes, and third-party trucking
activity is more sensitive to drilling and completion activity. The
principal factors in the increase in third-party trucking revenue
was a small increase in revenue per rental days (approximately
25%). Our rental and landfill businesses are our two service lines
most levered to drilling activity. Rental revenues increased by
11%, or $0.2 million, in the current year due to higher utilization
and pricing. Our landfill revenues decreased 64%, or $0.2 million,
compared to prior year due primarily to landfill being near
capacity. We actively managed the facility to keep volumes low and
are currently working on expanding the facility to take in
additional volumes. Our salt water disposal well revenue increased
$0.4 million or 33%, compared to prior year as higher completion
activity and production volumes in the areas near our wells led to
a 28% increase in average barrels per day disposed during the
current year. Other revenue, which derives from the sale of “junk”
or “slop” oil obtained through the skimming of disposal water,
decreased by $0.1 million.
Revenues for the Northeast division decreased by $0.3 million,
or 4%, during the second quarter of 2021 as compared to the second
quarter of 2020 due to decreases in water transport services of
$0.2 million, or 4%, and other revenue of $0.1 million or 41%.
During the quarter the Northeast division sought to consolidate
operations by identifying locations and customers that are not
profitable and try to recalibrate focus on fewer and more
profitable customers. Although natural gas prices per million Btu,
as measured by the Henry Hub Natural Gas Index, increased 73.5%
from an average of $1.70 for the three months ended June 30, 2020
to an average of $2.95 for the three months ended June 30, 2021,
producers continued their drilling activities at historically low
levels. The limited new drilling activities caused a 5% rig count
reduction in the Northeast operating area from 40 at June 30, 2020
to 38 at June 30, 2021. For our trucking services, revenues per
billed hour decreased by 5% which was a function of the increased
competition and the operator focus on reducing costs. The regional
driver count declined approximately 12% year over year which also
contributed to the lower revenue. We continue to face a truck
driver shortage in our Northeast Division similar to that seen in
our Rocky Mountain Division and similarly are actively recruiting
to attempt to increase our driver count. The combination of a lower
rig count, water reuse and sharing and competition, contributed to
the decline in disposal volumes and pricing. In addition to these
factors, we chose to close our Wellsboro truck yard in Northern
Pennsylvania and relocated certain trucks to other areas of
operation during the second quarter. This led to a decrease in
revenue as we ceased operations at that location.
The Southern division usually has experienced a lesser impact
relative to the other business units from the impact of the
COVID-19 downturn, driven by its focus on servicing customers who
are focused on dry natural gas, which has experienced a relatively
smaller impact from the downturn in commodity prices. Revenues for
the Southern division remained flat during the second quarter of
2021 as compared to the second quarter of 2020, primarily due to
lower disposal well volumes, whether connected to the pipeline or
not, resulting from an activity slowdown in the region. Rig count
increased 29% in the area, from 38 at June 30, 2020 to 49 at June
30, 2021 driving an increase in trucking revenue and an increase in
volumes received in our disposal wells not connected to our
pipeline by an average of 1,776 barrels per day (or 9%) during the
current year. Volumes received in the disposal wells connected to
the pipeline decreased by an average of 6,571 barrels per day (or
17%) during the current year.
Total costs and expenses for the second quarter of 2021 and 2020
were $32.0 million and $30.2 million, respectively. Total costs and
expenses, adjusted for special items, for the second quarter of
2021 were $30.8 million, or a 6% increase, when compared with $29.1
million in the second quarter of 2020. This is primarily a result
of $1.3 million of transitional costs, which include severance and
stock based compensation for executives, as well as an increase in
fleet-related expenses, including fuel and maintenance and repair
costs and compensation costs.
Net loss for the second quarter of 2021 was $3.9 million, a
decrease of $2.9 million as compared to a net loss for the second
quarter of 2020 of $6.8 million. For the second quarter of 2021,
the Company reported a net loss, adjusted for special items, of
$6.6 million. This compares with a net loss, adjusted for special
items, of $5.8 million in the second quarter of 2020.
Adjusted EBITDA for the second quarter of 2021 was a $0.2
million loss, a decrease of 109.7% as compared to adjusted EBITDA
for the second quarter of 2020 of $2.5 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 division. Second
quarter of 2021 adjusted EBITDA margin was (1)%, compared with 10%
in the second quarter of 2020 driven primarily by higher operating
costs during the second quarter of 2021.
YEAR-TO-DATE (“YTD”) RESULTS FOR THE SIX MONTHS ENDED JUNE
30, 2021
When compared to the six months ended 2020, 2021 revenue
decreased by 22.4%, or $14.0 million. The decline in service
revenue is primarily due to decreases in water transport services
in the Rocky Mountain and Southern divisions, coupled with a
decrease of disposal services in all three divisions. Although
there was a notable increase in commodity prices for both crude oil
and natural gas, which increased 69.0% and 77.9%, respectively,
over this time period, the impact of COVID-19 is the main driver
for the decline in demand for gasoline, diesel and jet fuel, which
has led to lower drilling and completion activity with fewer rigs
operating in the Rocky Mountain and Northeast divisions and
significant well shut-ins primarily in the Rocky Mountain division.
Further, as we saw demand for commodities begin to rise we did not
see a similar rise in production. A major driver for this has been
the focus of exploration and production companies on drilling
within cash flow at the request of their investors, versus growing
production volumes. Despite the rise in commodity prices we have
not seen the typical response in activity levels experienced
historically. In addition to the lack of additional production
during the six months ended June 30, 2021, we have seen our fuel
costs and driver costs both rise at significant rates. During the
second quarter of 2021, we began reaching out to customers
requesting price increases for our services to help cover these
costs, but it is unclear at this time to what extent we will be
successful. Rig count during the first half of 2021 compared to
2020 declined 62% in the Rocky Mountain division, 16% in the
Northeast division and increased 9% in the Southern division.
The Rocky Mountain division experienced a significant slowdown,
with rig count declining 24% from 37 during the six months ended
June 30, 2020 to 14 during the same period in June 30, 2021.
Although there was a notable increase in WTI crude oil price per
barrel, which averaged $62.21 during the first half of 2021 versus
an average of $36.82 for the same period in 2020, revenues for the
Rocky Mountain division decreased by $10.1 million, or 28%, during
the six months ended June 30, 2021 as compared to the same period
in 2020 primarily due to a $4.4 million, or 19%, decrease in water
transport revenues from lower trucking volumes. Third-party
trucking revenue decreased 15%, or $0.7 million, and revenue from
company-owned trucking revenue declined 19%, or $3.4 million.
Average total billable hours were down 22% 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. 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 by 40%, or $2.0 million, in the current year due
to lower utilization resulting from a significant decline in
drilling activity driving the return of rental equipment. Our
landfill revenues decreased 90%, or $1.6 million, compared to the
prior year primarily due to the landfill being near capacity. We
actively managed the facility to keep volumes low and are currently
working on expanding the facility to take in additional volumes.
Our salt water disposal well revenue decreased $4.4 million, or
19%, compared to the prior year as well shut-ins and lower
completion activity led to a 17% 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 $2.8 million,
or 15%, during six months ended June 30, 2021 as compared to the
same period in 2020 due to decreases in water transport services of
$2.0 million, or 15%, and disposal services of $0.3 million, or 8%.
Although natural gas prices per million Btu, as measured by the
Henry Hub Natural Gas Index, increased 77.9% from an average of
$1.81 for the six months ended June 30, 2020 to an average of $3.22
for the six months ended June 30, 2021, the rig count declined 5%
in the Northeast operating area, from 40 at June 30, 2020 to 38 at
June 30, 2021. This led to lower activity levels for both water
transport services and disposal services. Our customers continued
the industry trend of water reuse and water sharing in 2021. 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, total billable
hours were down 8% from the prior year and pricing decreases also
contributed to the decline, offset by disposal volumes increase in
our salt water disposal wells of 2% in average barrels per day.
Revenues for the Southern division decreased by $1.1 million, or
13%, during the six months ended June 30, 2021 as compared to the
same period in 2020. The decrease was due primarily to lower
disposal well volumes both on the pipeline and for saltwater
disposal assets not connected to our pipeline due in part to the
winter storm in the first quarter of 2021 resulting in lost revenue
days due to power outages and dangerous road conditions. Volumes
received in our disposal wells not connected to our pipeline
decreased by an average of 5,771 barrels per day (or 13%) during
the current period and volumes received in the disposal wells
connected to the pipeline decreased by an average of 16,801 barrels
per day (or 22%) during the current period.
Total costs and expenses for the six months ended June 30, 2021
and 2020 were $62.6 million and $90.1 million, respectively. Total
costs and expenses, adjusted for special items, for the six months
ended June 30, 2021 were $61.3 million, or a 16.3% decrease, when
compared with $73.2 million for the six months ended June 30, 2020.
This is primarily a result of lower volumes and related costs in
water transport services and disposal services and company cost
cutting initiatives resulting in a 25% decrease in the number of
drivers compared to the prior year period in the Rocky Mountain and
Northeast divisions as well as general and administrative
expenses.
Net loss for the six months ended June 30, 2021 was $11.5
million, a decrease of $18.4 million as compared to a net loss for
2020 of $29.8 million for the first half of 2020. For the first
half of 2021, the Company reported a net loss, adjusted for special
items, of $14.1 million. This compares with a net loss, adjusted
for special items, of $13.0 million for the same period in
2020.
Adjusted EBITDA for six months ended June 30, 2021 was $1.0
million, a decrease of 123% as compared to adjusted EBITDA of $4.4
million for the same period in 2020. 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 division. The year to date 2021
adjusted EBITDA margin was 2.1%, compared with 7.1% in 2020 driven
primarily by declines in revenue partially offset by cost
reductions in 2020.
CASH FLOW AND LIQUIDITY
Net cash used in operating activities for the six months ended
June 30, 2021 was $2.4 million, mainly attributable to a gain
recorded on PPP Loan forgiveness of $(4.0) million, increase of
$0.1 million in accounts receivable, increase of $0.7 million in
prepaid expenses, while capital expenditures net of asset sales
consumed $1.1 million. Asset sales were related to unused or
underutilized assets. Gross capital expenditures for the six months
ended June 30, 2021 of $1.3 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 June 30, 2021 was $12.4 million.
This consisted of $7.4 million of cash and $5.0 million available
under our operating line of credit. As of June 30, 2021, total debt
outstanding was $29.0 million, consisting of $13.0 million under
our equipment term loan, $9.7 million under our real estate loan,
$0.2 million under our vehicle term loan, $0.1 million for an
equipment term loan and $6.9 million of finance leases for vehicle
financings and real property leases, less $0.9 million of debt
issuance costs.
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; 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, or
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 and uncertainties associated with
the potential for a further appeal of the order confirming our
previously completed plan of reorganization; 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 and 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 CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (In thousands, except per share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Revenue:
Service revenue
$
23,113
$
22,956
$
45,439
$
57,427
Rental revenue
1,661
1,510
3,000
4,981
Total revenue
24,774
24,466
48,439
62,408
Costs and expenses:
Direct operating expenses
21,437
18,551
42,418
50,027
General and administrative expenses
4,844
4,445
8,371
9,369
Depreciation and amortization
5,734
7,156
11,804
15,145
Impairment of long-lived assets
—
—
—
15,579
Other, net
—
—
—
Total costs and expenses
32,015
30,152
62,593
90,120
Operating loss
(7,241
)
(5,686
)
(14,154
)
(27,712
)
Interest expense, net
(641
)
(1,116
)
(1,319
)
(2,276
)
Other income (expense), net
4,025
38
4,013
180
Reorganization items, net
—
—
—
—
Loss before income taxes
(3,857
)
(6,764
)
(11,460
)
(29,808
)
Income tax expense
—
(15
)
—
(15
)
Net loss
$
(3,857
)
$
(6,779
)
$
(11,460
)
$
(29,823
)
Loss per common share:
Net loss per basic common share
$
(0.24
)
$
(0.43
)
$
(0.72
)
$
(1.89
)
Net loss per diluted common share
$
(0.24
)
$
(0.43
)
$
(0.72
)
$
(1.89
)
Weighted average shares outstanding:
Basic
15,996
15,761
15,937
15,757
Diluted
15,996
15,761
15,937
15,757
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (In thousands) (Unaudited)
June 30,
December 31,
2021
2020
Assets
Cash and cash equivalents
$
7,374
$
12,880
Restricted cash
3,323
2,820
Accounts receivable, net
15,270
15,427
Inventories
2,881
2,852
Prepaid expenses and other receivables
2,421
3,119
Other current assets
—
—
Assets held for sale
778
778
Total current assets
32,047
37,876
Property, plant and equipment, net
140,705
151,164
Operating lease assets
1,526
1,691
Equity investments
—
35
Intangibles, net
168
194
Other assets
86
106
Deferred income taxes
—
—
Long-term assets held for sale
—
—
Total assets
$
174,532
$
191,066
Liabilities and Shareholders’
Equity
Accounts payable
$
4,851
$
5,130
Accrued and other current liabilities
9,617
9,550
Current portion of long-term debt
2,269
2,433
Current contingent consideration
—
—
Total current liabilities
16,737
17,113
Long-term debt
26,740
31,673
Noncurrent operating lease liabilities
1,259
1,360
Deferred income taxes
120
120
Long-term contingent consideration
500
500
Other long-term liabilities
8,164
8,017
Total liabilities
53,520
58,783
Commitments and contingencies
Shareholders’ equity:
Preferred stock
—
—
Common stock
161
158
Additional paid-in capital
340,185
339,663
Treasury stock
(813
)
(477
)
Accumulated deficit
(218,521
)
(207,061
)
Total shareholders’ equity
121,012
132,283
Total liabilities and shareholders’
equity
$
174,532
$
191,066
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended
June 30,
2021
2020
Cash flows from operating
activities:
Net loss
$
(11,460
)
$
(29,823
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
PPP Loan Forgiveness
(4,000
)
—
Depreciation and amortization
11,804
15,145
Amortization of debt issuance costs,
net
122
81
Stock-based compensation
525
612
Impairment of long-lived assets
—
15,579
Gain on disposal of property, plant and
equipment
(300
)
(342
)
Bad debt (recoveries) expense
27
(160
)
Deferred income taxes
—
40
Other, net
398
375
Changes in operating assets and
liabilities:
Accounts receivable
130
9,772
Prepaid expenses and other receivables
698
382
Accounts payable and accrued
liabilities
(277
)
(2,271
)
Other assets and liabilities, net
(60
)
435
Net cash provided by (used in) operating
activities
(2,393
)
9,825
Cash flows from investing
activities:
Proceeds from the sale of property, plant
and equipment
247
1,548
Purchases of property, plant and
equipment
(1,302
)
(2,328
)
Net cash used in investing activities
(1,055
)
(780
)
Cash flows from financing
activities:
Payments on Commercial real estate
loan
(280
)
—
Payments on First and Second Lien Term
Loans
—
(1,909
)
Proceeds from Revolving Facility
—
76,202
Payments on Revolving Facility
—
(76,202
)
Proceeds from PPP Loan
—
4,000
Payments on finance leases and other
financing activities
(1,275
)
(1,053
)
Net cash used in financing activities
(1,555
)
1,038
Change in cash, cash equivalents and
restricted cash
(5,003
)
10,083
Cash and cash equivalents, beginning of
period
12,880
4,788
Restricted cash, beginning of period
2,820
922
Cash, cash equivalents and restricted
cash, beginning of period
15,700
5,710
Cash and cash equivalents, end of
period
7,374
15,793
Restricted cash, end of period
3,323
—
Cash, cash equivalents and restricted
cash, end of period
$
10,697
$
15,793
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
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Net loss
$
(3,857
)
$
(6,779
)
$
(11,460
)
$
(29,823
)
Depreciation and amortization
5,734
7,156
11,804
15,145
Interest expense, net
641
1,116
1,319
2,276
Income tax expense
—
15
—
15
EBITDA
2,518
1,508
1,663
(12,387
)
Adjustments:
Stock-based compensation
392
322
525
612
Reorganization items, net
2
—
10
—
Transaction-related costs, net
(3,996
)
915
(3,991
)
889
Legal and environmental costs, net
0
0
0
(118
)
(Gain) loss on disposal of assets
(211
)
(242
)
(265
)
(342
)
Impairment of long-lived assets
—
—
—
15,579
Executive and severance costs
1,050
28
1,050
174
Total Adjusted EBITDA
$
(245
)
$
2,531
$
(1,008
)
$
4,407
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS
(continued) (In thousands) (Unaudited)
Reconciliation of QTD Segment Performance to Adjusted
EBITDA
Three months ended June 30,
2021
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
12,815
$
7,872
$
4,087
$
—
$
24,774
Direct operating expenses
11,151
7,198
3,088
—
21,437
General and administrative expenses
741
326
185
3,592
4,844
Depreciation and amortization
2,293
2,282
1,148
11
5,734
Operating loss
(1,370
)
(1,934
)
(334
)
(3,603
)
(7,241
)
Operating margin %
(10.7
)
%
(24.6
)
%
(8.2
)
%
N/A
(29.2
)
%
Loss before income taxes
2,510
(2,034
)
(385
)
(3,948
)
(3,857
)
Net loss
2,510
(2,034
)
(385
)
(3,948
)
(3,857
)
Depreciation and amortization
2,293
2,282
1,148
11
5,734
Interest expense, net
147
100
51
343
641
Income tax expense
—
—
—
—
—
EBITDA
$
4,950
$
348
$
814
$
(3,594
)
$
2,518
Adjustments, net
(4,026
)
(26
)
(159
)
1,448
(2,763
)
Adjusted EBITDA
$
924
$
322
$
655
$
(2,146
)
$
(245
)
Adjusted EBITDA margin %
7.2
%
4.1
%
16.0
%
N/A
(1.0
)
%
Three months ended June 30,
2020
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
12,222
$
8,162
$
4,082
$
—
$
24,466
Direct operating expenses
10,458
5,593
2,500
—
18,551
General and administrative expenses
1,524
434
240
2,247
4,445
Depreciation and amortization
2,874
2,532
1,746
4
7,156
Operating income (loss)
(2,634
)
(397
)
(404
)
(2,251
)
(5,686
)
Operating margin %
(21.6
)
%
(4.9
)
%
(9.9
)
%
N/A
(23.2
)
%
Income (loss) before income taxes
(2,786
)
(504
)
(457
)
(3,017
)
(6,764
)
Net income (loss)
(2,786
)
(504
)
(457
)
(3,032
)
(6,779
)
Depreciation and amortization
2,874
2,532
1,746
4
7,156
Interest expense, net
190
107
53
766
1,116
Income tax expense
—
—
—
15
15
EBITDA
$
278
$
2,135
$
1,342
$
(2,247
)
$
1,508
Adjustments, net
935
(175
)
(155
)
418
1,023
Adjusted EBITDA
$
1,213
$
1,960
$
1,187
$
(1,829
)
$
2,531
Adjusted EBITDA margin %
9.9
%
24.0
%
29.1
%
N/A
10.3
%
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS
(continued) (In thousands) (Unaudited)
Reconciliation of YTD Segment Performance to Adjusted
EBITDA
Six months ended June 30, 2021
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
25,604
$
15,178
$
7,657
$
—
$
48,439
Direct operating expenses
22,514
13,851
6,053
—
42,418
General and administrative expenses
1,662
685
343
5,681
8,371
Depreciation and amortization
4,605
4,637
2,540
22
11,804
Operating loss
(3,177
)
(3,995
)
(1,279
)
(5,703
)
(14,154
)
Operating margin %
(12.4
)
%
(26.3
)
%
(16.7
)
%
N/A
(29.2
)
%
Loss before income taxes
550
(4,198
)
(1,381
)
(6,431
)
(11,460
)
Net loss
550
(4,198
)
(1,381
)
(6,431
)
(11,460
)
Depreciation and amortization
4,605
4,637
2,540
22
11,804
Interest expense, net
296
203
102
718
1,319
Income tax expense
—
—
—
—
—
EBITDA
$
5,451
$
642
$
1,261
$
(5,691
)
$
1,663
Adjustments, net
(4,056
)
(50
)
(159
)
1,594
(2,671
)
Adjusted EBITDA
$
1,395
$
592
$
1,102
$
(4,097
)
$
(1,008
)
Adjusted EBITDA margin %
5.4
%
3.9
%
14.4
%
N/A
(2.1
)
%
Six months ended June 30, 2020
Rocky Mountain
Northeast
Southern
Corporate
Total
Revenue
$
35,690
$
17,956
$
8,762
$
—
$
62,408
Direct operating expenses
30,009
13,964
6,054
—
50,027
General and administrative expenses
3,013
1,068
510
4,778
9,369
Depreciation and amortization
6,339
5,083
3,715
8
15,145
Operating loss
(15,854
)
(2,159
)
(4,913
)
(4,786
)
(27,712
)
Operating margin %
(44.4
)
%
(12.0
)
%
(56.1
)
%
N/A
(44.4
)
%
Loss before income taxes
(16,041
)
(2,379
)
(5,020
)
(6,368
)
(29,808
)
Net loss
(16,041
)
(2,379
)
(5,020
)
(6,383
)
(29,823
)
Depreciation and amortization
6,339
5,083
3,715
8
15,145
Interest expense, net
367
220
107
1,582
2,276
Income tax expense
—
—
—
15
15
EBITDA
$
(9,335
)
$
2,924
$
(1,198
)
$
(4,778
)
$
(12,387
)
Adjustments, net
13,120
(236
)
3,228
682
16,794
Adjusted EBITDA
$
3,785
$
2,688
$
2,030
$
(4,096
)
$
4,407
Adjusted EBITDA margin %
10.6
%
15.0
%
23.2
%
N/A
7.1
%
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(continued)
(In thousands)
(Unaudited)
Reconciliation of Special Items to Net Loss and to EBITDA
and Adjusted EBITDA
Three months ended June 30,
2021
As Reported
Special Items
As Adjusted
Revenue
$
24,774
$
—
$
24,774
Direct operating expenses
21,437
211
[A]
21,648
General and administrative expenses
4,844
(1,446
)
[B]
3,398
Total costs and expenses
32,015
(1,235
)
[C]
30,780
Operating loss
(7,241
)
1,235
[C]
(6,006
)
Net loss
(3,857
)
(2,763
)
[D]
(6,620
)
Net loss
$
(3,857
)
$
(6,620
)
Depreciation and amortization
5,734
5,734
Interest expense, net
641
641
Income tax expense
—
—
EBITDA and Adjusted EBITDA
$
2,518
$
(245
)
Description of 2021 Special
Items:
[A]
Special items primarily relate to the gain
on the sale of underutilized assets.
[B]
Primarily attributable to transition
costs, which include but are not limited to severance and stock
based compensation for executives.
[C]
Primarily includes the aforementioned
adjustments.
[D]
Primarily includes the aforementioned
adjustments, along with a $4.0 million gain related to PPP loan
forgiveness.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS
(continued) (In thousands) (Unaudited)
Reconciliation of Special Items to Net Loss and to EBITDA
and Adjusted EBITDA
Three months ended June 30,
2020
As Reported
Special Items
As Adjusted
Revenue
$
24,466
$
—
$
24,466
Direct operating expenses
18,551
236
[D]
18,787
General and administrative expenses
4,445
(1,259
)
[E]
3,186
Total costs and expenses
30,152
(1,023
)
[F]
29,129
Operating loss
(5,686
)
1,023
[F]
(4,663
)
Net loss
(6,779
)
1,025
[G]
(5,754
)
Net loss
$
(6,779
)
$
(5,754
)
Depreciation and amortization
7,156
7,156
Interest expense, net
1,116
1,116
Income tax expense
15
13
EBITDA and Adjusted EBITDA
$
1,508
$
2,531
Description of 2020 Special
Items:
[D]
Special items primarily relate to the gain
on the sale of underutilized assets.
[E]
Primarily attributable to transaction
costs related to a discontinued project and stock-based
compensation expense.
[F]
Primarily includes the aforementioned
adjustments.
[G]
Primarily includes the aforementioned
adjustments. Additionally, our effective tax rate for the three
months ended June 30, 2020 was (0.2%) and was applied to the
special items accordingly.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS
(continued) (In thousands) (Unaudited)
Reconciliation of Special Items to Net Loss and to EBITDA
and Adjusted EBITDA
Six months ended June 30,
2021
As Reported
Special Items
As Adjusted
Revenue
$
48,439
$
—
$
48,439
Direct operating expenses
42,418
300
[A]
42,718
General and administrative expenses
8,371
(1,584
)
[B]
6,787
Total costs and expenses
62,593
(1,284
)
[C]
61,309
Operating loss
(14,154
)
1,284
[C]
(12,870
)
Net loss
(11,460
)
(2,671
)
[D]
(14,131
)
Net loss
$
(11,460
)
$
(14,131
)
Depreciation and amortization
11,804
11,804
Interest expense, net
1,319
1,319
Income tax expense
—
—
EBITDA and Adjusted EBITDA
$
1,663
$
(1,008
)
Description of 2021 Special
Items:
[A]
Special items primarily relate to the gain
on the sale of underutilized assets and severance costs.
[B]
Primarily attributable to transition
costs, which include but are not limited to severance and stock
based compensation for executives.
[C]
Primarily includes the aforementioned
adjustments.
[D]
Primarily includes the aforementioned
adjustments, along with a $4.0 million gain related to PPP loan
forgiveness.
NUVERRA ENVIRONMENTAL
SOLUTIONS, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS
(continued) (In thousands) (Unaudited)
Reconciliation of Special Items to Net Loss and to EBITDA
and Adjusted EBITDA
Six months ended June 30,
2020
As Reported
Special Items
As Adjusted
Revenue
$
62,408
$
—
$
62,408
Direct operating expenses
50,027
209
[E]
50,236
General and administrative expenses
9,369
(1,542
)
[F]
7,827
Total costs and expenses
90,120
(16,912
)
[G]
73,208
Operating loss
(27,712
)
16,912
[G]
(10,800
)
Net loss
(29,823
)
16,802
[H]
(13,021
)
Net loss
$
(29,823
)
$
(13,021
)
Depreciation and amortization
15,145
15,145
Interest expense, net
2,276
2,276
Income tax expense
15
7
EBITDA and Adjusted EBITDA
$
(12,387
)
$
4,407
Description of 2020 Special
Items:
[E]
Special items primarily relate to the gain
on the sale of underutilized assets and severance costs.
[F]
Primarily attributable to transaction
costs related to a discontinued project, stock-based compensation
expense, reversal of certain prior year transaction costs related
to the exploration of strategic opportunities, and severance
costs.
[G]
Primarily includes the aforementioned
adjustments along with long-lived asset impairment charges of $15.6
million for assets associated with the landfill in the Rocky
Mountain division, trucking equipment in the Southern division and
property classified as held-for-sale in the Rocky Mountain
division.
[H]
Primarily includes the aforementioned
adjustments. Additionally, our effective tax rate for the six
months ended June 30, 2020 was (0.1%) and was applied to the
special items accordingly.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210819005257/en/
Nuverra Environmental Solutions, Inc. Investor Relations
602-903-7802 ir@nuverra.com
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