Nuverra Reports Second-Quarter And Year-To-Date 2015 Results
PR Newswire
SCOTTSDALE, Ariz.

SCOTTSDALE, Ariz., Aug. 10, 2015 /PRNewswire/ -- Nuverra Environmental Solutions, Inc. (NYSE: NES) ("Nuverra" or the "Company") announced financial and operating results today for the second quarter and six months ended June 30, 2015.

SUMMARY OF QUARTERLY RESULTS

  • Revenue from continuing operations for the second quarter of $92.4 million, a decrease of $26.7 million, or 22.4%, sequentially from the first quarter of 2015, and down $34.4 million, or 27.1%, from the second quarter of 2014.
  • Second-quarter net loss from continuing operations of $20.6 million, or a loss of $0.75 per diluted share, compared with a net loss of $24.7 million, or a loss of $0.97 per diluted share, in the second quarter of 2014.
  • Adjusted net loss from continuing operations, excluding special items, of $18.5 million, or a loss of $0.67 per diluted share, compared with adjusted net loss of $11.6 million, or a loss of $0.45 per diluted share, in the second quarter of 2014.
  • EBITDA from continuing operations of $10.1 million, an increase of $194,000, or 2.0%, from the second quarter of 2014.   
  • Adjusted EBITDA from continuing operations of $12.3 million, a decrease of $10.6 million, or 46.3% from the second quarter of 2014.
  • Total costs and expenses in the second quarter down $38.8 million, or 28%, compared with the second quarter of 2014. On a year-to-date basis, total costs and expenses down by $53.0 million, or 19.5%, compared with the first half of 2014.
  • Year-to-date net cash provided by operating activities from continuing operations of $42.3 million; year-to-date free cash flow of $35.0 million.

Mark D. Johnsrud, Chairman of the Board and Chief Executive Officer, commented, "As expected, the industry environment proved to be challenging throughout the second quarter, with a further decline in overall drilling and completion activities coupled with pricing concessions that impacted the full quarter. The effect of the energy market downturn was more pronounced in the Bakken, where we have most recently seen a 62% drop in rig count from a year ago, compared with the overall decline in North American land rigs of 53%.

"In view of the current industry conditions, our expectation is for lower levels of drilling and completion activities to continue into the second half of the year," Mr. Johnsrud said. "As such, we will remain consistent in our strategy to further proactively manage costs, drive operating efficiencies, preserve capital, optimize asset utilization and deliver the best services to our customers so that we can emerge a stronger company positioned for growth in the recovery."

SECOND QUARTER 2015 RESULTS

Second-quarter 2015 revenue from continuing operations was $92.4 million, a decrease of approximately $34.4 million or 27.1%, compared with revenue from continuing operations of $126.9 million in the second quarter of 2014. Revenue was down 22.4% sequentially when compared to the 2015 first quarter. The decline was primarily due to the substantial quarterly decrease in overall water logistics, solids management and rental activities in the Rocky Mountain Division, as well as a decrease in water logistics and fresh water transfer services in the Southern Division. These decreases were partly offset by increases in water logistics and salt water recycling activities in the Northeast Division.

Proactive cost-management initiatives across the organization contributed to a 28% reduction in total costs and expenses in the second quarter when compared with the second quarter of 2014.  During the second quarter, total costs and expenses decreased by $38.8 million, primarily attributable to $11.5 million in lower payroll and related expenses with an associated 14.9% reduction in total personnel, $6.2 million in fuel savings, $12.4 million in lower legal and environmental costs and $8.7 million in all other savings. On a year-to-date basis, the Company's cost-management efforts have contributed to a 19.5% reduction in total costs and expenses, including a 21.6% reduction in personnel.

Second-quarter 2015 net loss from continuing operations was $20.6 million, or a loss of $0.75 per diluted share, compared with a loss of $24.7 million, or a loss of $0.97 per diluted share, in the second quarter of 2014.  Adjusted net loss from continuing operations, excluding special items, was $18.5 million for the quarter, or a loss of $0.67 per diluted share, compared with adjusted net loss from continuing operations of $11.6 million, or a loss of $0.45 per share in the second quarter of 2014. Due to the valuation allowance against deferred tax assets, the Company does not record tax benefits attributable to its pre-tax loss.

Adjusted EBITDA from continuing operations for the second quarter was $12.3 million, a 46.3% year-over-year decrease when compared with $22.9 million in the second quarter of 2014. Adjusted EBITDA margin for the second quarter was 13.3%, compared with 18.0% in the second quarter of 2014. The decrease was due to the lower overall base of fluids logistics, solids management and rental revenue driven primarily by significant declines in the Rocky Mountain Division, offset in part by overall cost savings achieved in the second quarter. A reconciliation of excluded items and adjusted EBITDA to the most directly comparable GAAP financial measure can be found in the financial tables included with this press release.

YEAR-TO-DATE RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2015 ("YTD")

YTD revenue from continuing operations was $211.5 million, a decrease of $43.3 million or 17.0%, compared with $254.9 million for the same period in 2014. The difference was primarily a result of lower overall levels of water logistics, solids management and rental activities in the Rocky Mountain Division and a decline in water logistics and fresh water transfer services in the Southern Division. These decreases were partly offset by increases in water logistics and salt water recycling activities in the Northeast Division.

YTD net loss from continuing operations was $32.6 million, or a loss of $1.18 per diluted share, compared with a loss of $36.6 million, or a loss of $1.45 per diluted share, for the same period in 2014.  Excluding special items, YTD adjusted net loss from continuing operations was $29.8 million, or a loss of $1.08 per diluted share, compared with adjusted net loss from continuing operations of $20.7 million, or a loss of $0.82 per share in 2014.

YTD adjusted EBITDA from continuing operations was $31.0 million, a 25.8% decrease when compared with the same period in 2014. Adjusted EBITDA margin for the 2015 YTD period was 14.6%, compared with 16.4% in 2014. The decrease was due primarily to the lower overall base of water logistics, solids management and rental revenue, offset in part by cost savings achieved in the first half of the year.

CASH FLOW AND LIQUIDITY

Net cash provided by operating activities from continuing operations through June 30, 2015 was $42.3 million. Year-to-date net cash capital expenditures for continuing operations were $7.4 million, and related primarily to targeted investments in the Terrafficient solids recycling facility and other transportation-related equipment in the Rocky Mountain Division. The Company's disciplined capital spending and measured cost controls generated $35.0 million in free cash flow during the six-month period.

As of June 30, 2015, total debt outstanding, excluding $0.5 million of discounts and premiums, was $524.0 million, consisting of $400.0 million of 2018 Notes, $101.8 million outstanding under the revolving credit facility, and $22.2 million in capital leases and notes. Total liquidity at June 30, 2015 was $63.8 million, including $34.6 million cash and $29.2 million of net availability under the Company's credit facility.

DIVISION SUMMARY

Three Months Ended June 30, 2015

Rocky Mountain


Northeast


Southern


Corporate


Total

Revenue


$           47,601


$  27,411


$ 17,415


$          -


$92,427

Operating income (loss)


1,371


295


(2,468)


(6,767)


(7,569)

   Operating Margin %


2.9%


1.1%


(14.2%)


NA


(8.2%)

Adjusted EBITDA


10,764


4,667


1,939


(5,087)


12,283

   Adjusted EBITDA Margin %


22.6%


17.0%


11.1%


NA


13.3%























Three Months Ended June 30, 2014

Rocky Mountain


Northeast


Southern


Corporate


Total

Revenue


$            77,479


$  22,484


$ 26,899


$          -


$126,862

Operating income (loss)


9,958


(4,264)


(6,875)


(10,739)


(11,920)

   Operating Margin %


12.9%


(19.0%)


(25.6%)


NA


(9.4%)

Adjusted EBITDA


22,997


2,000


2,367


(4,475)


22,889

   Adjusted EBITDA Margin %


29.7%


8.9%


8.8%


NA


18.0%























Six Months Ended June 30, 2015


Rocky Mountain


Northeast


Southern


Corporate


Total

Revenue


$            117,011


$  54,724


$ 39,804


$          -


$211,539

Operating income (loss)


11,563


197


(5,482)


(13,599)


(7,321)

   Operating Margin %


9.9%


0.4%


(13.8%)


NA


(3.5%)

Adjusted EBITDA


29,118


8,446


4,243


(10,818)


30,989

   Adjusted EBITDA Margin %


24.9%


15.4%


10.7%


NA


14.6%























Six Months Ended June 30, 2014


Rocky Mountain


Northeast


Southern


Corporate


Total

Revenue


$            159,385


$  41,659


$ 53,832


$          -


$254,876

Operating income (loss)


18,753


(7,311)


(9,109)


(19,324)


(16,991)

   Operating Margin %


11.8%


(17.5%)


(16.9%)


NA


(6.7%)

Adjusted EBITDA


44,728


3,513


3,908


(10,361)


41,788

   Adjusted EBITDA Margin %


28.1%


8.4%


7.3%


NA


16.4%

Rocky Mountain Division (Bakken)

In the Rocky Mountain Division, second-quarter revenue was $47.6 million, a decrease of 38.6% when compared with the second quarter of 2014. The decrease was related to an accelerated decline in drilling and completion activities, which significantly reduced second-quarter demand for water logistics, solids management and equipment rentals. Additionally, the full-quarter impact of pricing concessions drove lower revenue in the second quarter. On a year-to-date basis, Rocky Mountain Division revenue was $117.0 million, a decrease of 26.6%, when compared with YTD revenue of $159.4 million for the same period in 2014.

Second-quarter adjusted EBITDA for the Rocky Mountain Division was $10.8 million, a 53.2% decrease compared with adjusted EBITDA of $23.0 million in the second quarter of 2014. Second-quarter adjusted EBITDA margin was 22.6%, compared with an adjusted EBITDA margin of 29.7% in the second quarter of 2014. On a YTD basis, adjusted EBITDA for the Rocky Mountain Division was $29.1 million with a margin of 24.9%, compared with adjusted EBITDA of $44.7 million and a margin of 28.1% in 2014. Margin declines were primarily due to the substantial reduction in revenue from drilling and completion activities, offset in part by the impact of cost-management initiatives. 

Northeast Division (Marcellus, Utica)

In the Northeast Division, second-quarter revenue was $27.4 million, an increase of 21.9% compared with revenue of $22.5 million in the second quarter of 2014. The year-over-year increase was driven by higher overall water logistics and salt water disposal activities, primarily related to newer customers in the Utica and South Marcellus regions. On a YTD basis, Northeast Division revenue was $54.7 million, an increase of 31.4%, when compared with YTD revenue of $41.7 million in the same period of 2014.

Second-quarter adjusted EBITDA for the Northeast Division was $4.7 million, a 133.4% increase compared with adjusted EBITDA of $2.0 million in the second quarter of 2014. Second-quarter adjusted EBITDA margin was 17.0%, compared with adjusted EBITDA margin of 8.9% in the second quarter of 2014. On a YTD basis, adjusted EBITDA for the Northeast Division was $8.4 million, resulting in a margin of 15.4%, compared with $3.5 million and a margin of 8.4% in 2014. Margin improvements were primarily due to a higher overall revenue base combined with the impact of cost-management initiatives. 

Southern Division (Haynesville, Eagle Ford, Mississippian, Permian)

In the Southern Division, second-quarter revenue was $17.4 million, a 35.3% decrease compared with revenue of $26.9 million in the second quarter of 2014. The difference was primarily related to the overall decline in drilling and completion activities throughout the region, which drove reduced demand for water logistics services. Haynesville Pipeline revenue was up slightly on a sequential basis when compared with the first quarter of 2015; however, this was offset by sequential decreases in disposal revenue in both the Haynesville and the Eagle Ford regions. On a year-to-date basis, Southern Division revenue was $39.8 million, a decrease of 26.1% when compared with YTD revenue of $53.8 million in the same period of 2014.

Second-quarter adjusted EBITDA for the Southern Division was $1.9 million, an 18.1% year-over-year decrease compared with adjusted EBITDA of $2.4 million in the second quarter of 2014. Adjusted EBITDA margin in the Southern Division increased 230 basis points to 11.1% when compared with an adjusted EBITDA margin of 8.8% in the second quarter of 2014. On a YTD basis, adjusted EBITDA was $4.2 million with a margin of 10.7%, compared with $3.9 million and a margin of 7.3% for the corresponding period in 2014. Margin improvements were primarily due to the impact of cost-savings initiatives.  

Conference Call & Webcast

The Company will host a conference call and webcast to discuss second quarter 2015 results at 12:00 p.m. ET, 9:00 a.m. PT on Monday, August 10, 2015. To participate, please dial +1-877-407-0784 (US) or +1-201-689-8560 (International) and reference conference ID 13613594. The call will be webcast live, and a slide presentation will accompany the call. To access the webcast, go to http://public.viavid.com/index.php?id=115157.

An audio replay of the call will be available approximately one hour following the conclusion of the call. The audio replay can be accessed telephonically through August 17, 2015 by dialing +1-877-870-5176 (US) or +1-858-384-5517 (International) and entering access code 13613594. A replay of the webcast and accompanying slides will be available by accessing the "Investors" section of the Company's web site at www.nuverra.com.

About Nuverra

Nuverra Environmental Solutions is among the largest companies in the United States dedicated to providing comprehensive and full-cycle environmental solutions to customers in the energy market. Nuverra focuses on the delivery, collection, treatment, recycling, and disposal of restricted solids, water, wastewater, 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. Find additional information about Nuverra on the Company's website, http://www.nuverra.com, and in documents filed with the U.S. Securities and Exchange Commission (SEC) at http://www.sec.gov.

Forward-Looking Statements

The information contained herein includes certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements may include 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 acquisitions, divestitures, financings, business growth and expansion opportunities, availability of capital, ability to access capital markets, cost-savings initiatives, expected outcome of litigation and other statements that are not historical facts.  Actual results may differ materially from results expressed or implied by these forward-looking statements. All forward-looking statements involve risks and uncertainties, including, 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; 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; current and projected future uncertainties in commodities markets, including low oil and/or natural gas prices; changes in customer drilling and completion activities and capital expenditure plans; shifts in production in shale areas where we operate and/or shale areas where we currently do not have operations; control of costs and expenses, including uncertainty regarding the ability to successfully implement cost-savings initiatives; and the competitive and regulatory environment. Additional risks and uncertainties are disclosed from time to time in the Company's filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as well as Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Nuverra Environmental Solutions, Inc.
Liz Merritt, VP-Investor Relations & Communications
480-878-7452
ir@nuverra.com

- Tables to Follow –

NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (In thousands, except per share amounts)












Three Months Ended


Six Months Ended



June 30,


June 30,



2015


2014


2015


2014










Revenue:









Non-rental revenue


$  85,530


$ 107,299


$ 192,540


$ 217,143

Rental revenue


6,897


19,563


18,999


37,733

   Total revenue


92,427


126,862


211,539


254,876

Costs and expenses:









   Direct operating expenses


71,574


94,955


159,573


190,334

   General and administrative expenses


9,697


22,457


22,397


39,252

   Depreciation and amortization


18,296


21,370


35,778


42,281

   Other, net


429


-


1,112


-

     Total costs and expenses


99,996


138,782


218,860


271,867

Operating loss


(7,569)


(11,920)


(7,321)


(16,991)

Interest expense, net


(12,452)


(12,969)


(25,040)


(25,019)

Other income, net


400


472


721


52

Loss on extinguishment of debt


(1,011)


-


(1,011)


(3,177)

   Loss from continuing operations before income taxes


(20,632)


(24,417)


(32,651)


(45,135)

Income tax (expense) benefit


(15)


(305)


9


8,499

   Loss from continuing operations


(20,647)


(24,722)


(32,642)


(36,636)

(Loss) income from discontinued operations, net of income taxes


(2,089)


1,453


(1,168)


1,912

   Net loss attributable to common stockholders


$(22,736)


$ (23,269)


$ (33,810)


$ (34,724)










Net loss per common share attributable to common stockholders:


















   Basic and diluted loss from continuing operations


$    (0.75)


$    (0.97)


$    (1.18)


$    (1.45)

   Basic and diluted (loss) income from discontinued operations


(0.08)


0.06


(0.04)


0.08

   Net loss per basic and diluted share


$    (0.83)


$    (0.91)


$    (1.22)


$    (1.37)










Weighted average shares outstanding used in computing net loss per basic and diluted common share


27,679


25,524


27,546


25,273

 


NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands)




June 30,


December 31,


2015


2014

Assets

(Unaudited)


(Note 1)

Cash and cash equivalents

$     34,634


$          13,367

Restricted cash

4,250


114

Accounts receivable, net 

61,302


108,813

Inventories

3,252


4,413

Prepaid expenses and other receivables

8,892


4,147

Deferred income taxes

2,686


3,179

Other current assets

165


173

Current assets held for sale

1,972


20,466

     Total current assets

117,153


154,672

Property, plant and equipment, net 

449,829


475,982

Equity investments

3,786


3,814

Intangibles, net

18,375


19,757

Goodwill

104,721


104,721

Other assets

14,328


17,688

Long-term assets held for sale

-


94,938

Total assets

$   708,192


$        871,572

Liabilities and Equity




Accounts payable

$     12,856


$          18,859

Accrued liabilities

33,717


43,395

Current portion of contingent consideration

8,783


9,274

Current portion of long-term debt

7,321


4,863

Financing obligation to acquire non-controlling interest

-


11,000

Current liabilities of discontinued operations

-


8,802

   Total current liabilities

62,677


96,193

Deferred income taxes

2,956


3,448

Long-term portion of debt

516,183


592,455

Long-term portion of contingent consideration

-


550

Other long-term liabilities

3,812


3,874

Long-term liabilities of discontinued operations

-


22,105

Total liabilities

585,628


718,625

Commitments and contingencies




Common stock

30


29

Additional paid-in capital

1,369,098


1,365,537

Treasury stock

(19,786)


(19,651)

Accumulated deficit

(1,226,778)


(1,192,968)

Total equity of Nuverra Environmental Solutions, Inc.

122,564


152,947

Total liabilities and equity

$   708,192


$        871,572





Note 1: The condensed consolidated balance sheet at December 31, 2014 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, 2014.












NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)






Six Months Ended June 30,



2015


2014

Cash flows from operating activities:





Net loss


$(33,810)


$(34,724)

   Adjustments to reconcile net loss to net cash provided by (used in) operating activities:





     Income from discontinued operations, net of income taxes


(906)


(1,912)

     Loss on the sale of TFI


2,074


-

     Depreciation and amortization of intangible assets


35,778


42,281

     Amortization of deferred financing costs and debt discounts, net


2,438


1,718

     Stock-based compensation


1,516


1,408

     Gain on disposal of property, plant and equipment


(1,312)


(2,248)

     Bad debt expense


(208)


1,014

     Loss on extinguishment of debt


1,011


3,177

     Deferred income taxes


1


(6,965)

     Other, net


316


1,147

     Changes in operating assets and liabilities:





   Accounts receivable


47,719


(10,857)

   Prepaid expenses and other receivables


(5,273)


6,024

   Accounts payable and accrued liabilities


(8,113)


(3,429)

   Other assets and liabilities, net


1,105


(515)

   Net cash provided by (used in) operating activities from continuing operations


42,336


(3,881)

   Net cash (used in) provided by operating activities from discontinued operations


(708)


2,880

   Net cash provided by (used in) operating activities


41,628


(1,001)

Cash flows from investing activities:





Proceeds from the sale of TFI


78,897


-

Proceeds from the sale of property, plant and equipment


3,448


3,810

Purchases of property, plant and equipment


(10,807)


(23,943)

Change in restricted cash


(4,250)


-

Net cash provided by (used in) investing activities from continuing operations


67,288


(20,133)

Net cash used in investing activities from discontinued operations


(181)


(2,262)

Net cash provided by (used in) investing activities


67,107


(22,395)

Cash flows from financing activities:





Proceeds from revolving credit facility


-


50,725

Payments on revolving credit facility


(81,647)


(27,700)

Payments for deferred financing costs


-


(734)

Payments on vehicle financing and other financing activities


(7,765)


(3,713)

Net cash (used in) provided by financing activities of continuing operations


(89,412)


18,578

Net cash used in financing activities of discontinued operations


(105)


-

Net cash (used in) provided by financing activities


(89,517)


18,578

Net increase (decrease) in cash and cash equivalents


19,218


(4,818)

Cash and cash equivalents - beginning of period


15,416


9,212

Cash and cash equivalents - end of period


34,634


4,394

Less: cash and cash equivalents of discontinued operations - end of period


-


1,047

Cash and cash equivalents of continuing operations - end of period


$ 34,634


$ 3,347

 









NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

UNAUDITED NON-GAAP RECONCILIATIONS

 (In thousands)









This press release contains non-GAAP financial measures as defined by the rules and regulations of the United States Securities and Exchange Commission. A non-GAAP financial measure is a numerical measure of a company's historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations or balance sheets of the Company; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. Reconciliations of these non-GAAP financial measures to their comparable GAAP financial measures are included in the attached financial tables.

These non-GAAP financial measures are provided because management of the Company uses these financial measures in maintaining and evaluating the Company's ongoing financial results and trends. Management uses this non-GAAP information as an indicator of business results, and evaluates overall performance with respect to such indicators. Management believes that excluding items such as acquisition expenses, amortization of intangible assets, stock-based compensation, asset impairments, restructuring charges, expenses related to litigation and resolution of lawsuits, and other charges, which may or may not be non-recurring, among other items that are inconsistent in amount and frequency (as with acquisition expenses), or determined pursuant to complex formulas that incorporate factors, such as market volatility, that are beyond our control (as with stock-based compensation), for purposes of calculating these non-GAAP financial measures facilitates a more meaningful evaluation of the Company's current operating performance and comparisons to the past and future operating performance. The Company believes that providing non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted net income (loss), 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. 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.

















Reconciliation of Loss from Continuing Operations to EBITDA, Adjusted EBITDA from Continuing Operations and Total Adjusted EBITDA:














Three Months Ended June 30,


Six Months Ended June 30,


2015


2014


2015


2014

Loss from continuing operations

$ (20,647)


$ (24,722)


$ (32,642)


$ (36,636)

Depreciation of property, plant and equipment

17,588


16,974


34,359


33,581

Amortization of intangible assets

708


4,396


1,419


8,700

Interest expense, net

12,452


12,969


25,040


25,019

Income tax expense (benefit)

15


305


(9)


(8,499)

EBITDA

10,116


9,922


28,167


22,165









Adjustments:








Transaction-related costs, including earnout adjustments, net

177


-


(132)


513

Stock-based compensation

727


1,115


1,516


1,408

Legal and environmental costs, net

397


12,782


404


14,638

Restructuring, exit and other costs

513


63


1,335


63

Loss on extinguishment of debt

1,011


-


1,011


3,177

Integration, severance and rebranding costs

-


-


-


2,072

Gain on disposal of assets

(658)


(993)


(1,312)


(2,248)

Adjusted EBITDA from continuing operations

12,283


22,889


30,989


41,788

Adjusted EBITDA from discontinued operations

7


3,016


1,197


6,114

Total Adjusted EBITDA

$ 12,290


$ 25,905


$ 32,186


$ 47,902

















Reconciliation of (Loss) Income from Discontinued Operations to EBITDA from Discontinued Operations and Adjusted EBITDA from Discontinued Operations:










Three Months Ended June 30,


 Six Months Ended June 30, 


2015


2014


2015


2014

(Loss) income from discontinued operations

$   (2,089)


$    1,453


$   (1,168)


$    1,912

Income tax (benefit) expense

-


(31)


265


1,665

EBITDA from discontinued operations

(2,089)


1,422


(903)


3,577

Adjustments:








Transaction-related costs

22


907


26


1,931

Legal and environmental costs

-


733


-


733

Loss (gain) on disposal of assets

2,074


(46)


2,074


(127)

Adjusted EBITDA from discontinued operations

$          7


$   3,016


$   1,197


$   6,114

 












NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

UNAUDITED NON-GAAP RECONCILIATIONS (continued)

 (In thousands)












Reconciliation of QTD Segment Performance to Adjusted EBITDA













Rocky Mountain


Northeast


Southern


Corporate


Total

Three Months Ended June 30, 2015











Revenue


$              47,601


$   27,411


$  17,415


$          -


$  92,427

Direct operating expenses


36,107


21,996


13,471


-


71,574

General and administrative expenses


1,322


1,021


1,219


6,135


9,697

Depreciation and amortization


8,801


4,060


5,195


240


18,296

Operating (loss) income


1,371


295


(2,468)


(6,767)


(7,569)

   Operating margin %


2.9%


1.1%


(14.2%)


NA


(8.2%)

Income (loss) from continuing operations before income taxes


1,805


(200)


(2,628)


(19,609)


(20,632)












Income (loss) from continuing operations


1,805


(206)


(2,632)


(19,614)


(20,647)

Depreciation and amortization


8,801


4,060


5,195


240


18,296

Interest expense, net


144


436


41


11,831


12,452

Income tax expense


-


6


4


5


15

EBITDA


$              10,750


$     4,296


$   2,608


$    (7,538)


$  10,116












Adjustments, net


14


371


(669)


2,451


2,167

Adjusted EBITDA from continuing operations


$              10,764


$     4,667


$   1,939


$    (5,087)


$  12,283

   Adjusted EBITDA margin %


22.6%


17.0%


11.1%


NA


13.3%













































Three Months Ended June 30, 2014


Rocky Mountain


Northeast


Southern


Corporate


Total

Revenue


$              77,479


$   22,484


$  26,899


$          -


$ 126,862

Direct operating expenses


53,252


18,433


23,270


-


94,955

General and administrative expenses


1,504


4,360


6,018


10,575


22,457

Depreciation and amortization


12,765


3,955


4,486


164


21,370

Operating (loss) income


9,958


(4,264)


(6,875)


(10,739)


(11,920)

   Operating margin %


12.9%


(19.0%)


(25.6%)


NA


(9.4%)

Income (loss) from continuing operations before income taxes


9,904


(2,656)


(8,739)


(22,926)


(24,417)












Income (loss) from continuing operations


9,904


(2,656)


(8,739)


(23,231)


(24,722)

Depreciation and amortization


12,765


3,955


4,486


164


21,370

Interest expense, net


185


430


167


12,187


12,969

Income tax expense


-


-


-


305


305

EBITDA


$              22,854


$     1,729


$  (4,086)


$  (10,575)


$    9,922












Adjustments, net


143


271


6,453


6,100


12,967

Adjusted EBITDA from continuing operations


$              22,997


$     2,000


$   2,367


$    (4,475)


$  22,889

   Adjusted EBITDA margin %


29.7%


8.9%


8.8%


NA


18.0%

 












NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

UNAUDITED NON-GAAP RECONCILIATIONS (continued)

 (In thousands)












Reconciliation of YTD Segment Performance to Adjusted EBITDA
























Rocky Mountain


Northeast


Southern


Corporate


Total

Six Months Ended June 30, 2015











Revenue


$             117,011


$   54,724


$  39,804


$          -


$ 211,539

Direct operating expenses


84,532


43,492


31,549


-


159,573

General and administrative expenses


3,378


2,925


3,297


12,797


22,397

Depreciation and amortization


17,538


7,987


9,843


410


35,778

Operating income (loss)


11,563


197


(5,482)


(13,599)


(7,321)

   Operating margin %


9.9%


0.4%


(13.8%)


NA


(3.5%)

Income (loss) from continuing operations before income taxes


11,902


(187)


(5,563)


(38,803)


(32,651)












Income (loss) from continuing operations


11,902


(193)


(5,567)


(38,784)


(32,642)

Depreciation and amortization


17,538


7,987


9,843


410


35,778

Interest expense, net


253


500


94


24,193


25,040

Income tax expense (benefit)


-


6


4


(19)


(9)

EBITDA


$              29,693


$     8,300


$   4,374


$  (14,200)


$  28,167












Adjustments, net


(575)


146


(131)


3,382


2,822

Adjusted EBITDA from continuing operations


$              29,118


$     8,446


$   4,243


$  (10,818)


$  30,989

   Adjusted EBITDA margin %


24.9%


15.4%


10.7%


NA


14.6%













































Six Months Ended June 30, 2014


Rocky Mountain


Northeast


Southern


Corporate


Total

Revenue


$             159,385


$   41,659


$  53,832


$          -


$ 254,876

Direct operating expenses


110,599


34,858


44,877


-


190,334

General and administrative expenses


4,599


6,284


9,371


18,998


39,252

Depreciation and amortization


25,434


7,828


8,692


327


42,281

Operating income (loss)


18,753


(7,311)


(9,109)


(19,324)


(16,991)

   Operating margin %


11.8%


(17.5%)


(16.9%)


NA


(6.7%)

Income (loss) from continuing operations before income taxes


18,587


(5,890)


(11,408)


(46,424)


(45,135)












Income (loss) from continuing operations


18,587


(5,890)


(11,408)


(37,925)


(36,636)

Depreciation and amortization


25,434


7,828


8,692


327


42,281

Interest expense, net


321


503


272


23,923


25,019

Income tax benefit


-


-


-


(8,499)


(8,499)

EBITDA


$              44,342


$     2,441


$  (2,444)


$  (22,174)


$  22,165












Adjustments, net


386


1,072


6,352


11,813


19,623

Adjusted EBITDA from continuing operations


$              44,728


$     3,513


$   3,908


$  (10,361)


$  41,788

   Adjusted EBITDA margin %


28.1%


8.4%


7.3%


NA


16.4%

 








NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

UNAUDITED NON-GAAP RECONCILIATIONS (continued)

 (In thousands)













Reconciliation of Special Items to Adjusted Net Loss to EBITDA from Continuing Operations



Three Months Ended June 30, 2015


As Reported


Special Items


As Adjusted

Revenue

$        92,427


$               -


$       92,427

Direct operating expenses

71,574


658

 [A] 

72,232

General and administrative expenses

9,697


(1,208)

 [B] 

8,489

Operating loss

(7,569)


979

 [C] 

(6,590)

Loss from continuing operations

(20,647)


2,169

 [D] 

(18,478)







Basic and diluted loss from continuing operations

$          (0.75)




$         (0.67)







Loss from continuing operations

$       (20,647)




$      (18,478)

Depreciation and amortization

18,296




18,296

Interest expense, net

12,452




12,452

Income tax expense

15




13

EBITDA and Adjusted EBITDA from continuing operations

$        10,116




$       12,283


Description of 2015 Special Items:

[A]

Special items include a gain on sale related to the disposal of certain transportation related assets.

 [B] 

Primarily attributable to stock-based compensation, non-routine litigation expenses and certain refinancing costs associated with our ABL Facility.

 [C] 

Primarily includes the aforementioned adjustments, and a charge of approximately $0.4 million associated with Company's restructuring initiative and other exit related costs from certain shale basins.

 [D] 

Primarily includes the aforementioned adjustments, along with a charge of $1.0 million in connection with a write-off of a portion of the unamortized deferred financing costs associated with our ABL Facility and a charge related to a prior acquisition earnout reserve of $0.2 million. Additionally, the Company's effective tax rate for the three months ended June 30, 2015 was zero percent and has been applied to the special items accordingly.






 



Three Months Ended June 30, 2014


As Reported


Special Items


As Adjusted

Revenue

$      126,862


$               -


$     126,862

Direct operating expenses

94,955


68

 [E] 

95,023

General and administrative expenses

22,457


(13,037)

 [F] 

9,420

Operating (loss) income

(11,920)


12,968


1,048

Loss from continuing operations

(24,722)


13,124

 [G] 

(11,598)







Basic and diluted loss from continuing operations

$          (0.97)




$         (0.45)







Loss from continuing operations

$       (24,722)




$      (11,598)

Depreciation and amortization

21,370




21,370

Interest expense, net

12,969




12,969

Income tax expense

305




148

EBITDA and Adjusted EBITDA from continuing operations

$          9,922




$       22,889

Description of 2014 Special Items:

[E]

Special items include a gain on sale related to the disposal of certain transportation related assets, offset by certain environmental costs.

[F]

Primarily attributable to legal costs incurred as a result of settlement litigation associated with our Texas Cases, and Shareholder litigation.

[G]

Primarily includes the aforementioned adjustments. Additionally, the Company's effective tax rate for the three months ended June 30, 2014 was 1.2% and has been applied to the special items accordingly.











 



NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 



UNAUDITED NON-GAAP RECONCILIATIONS (continued)



 (In thousands)





















Reconciliation of Special Items to Adjusted Net Loss to EBITDA from Continuing Operations







Six Months Ended June 30, 2015





As Reported


Special Items


As Adjusted




Revenue

$      211,539


$               -


$     211,539




Direct operating expenses

159,573


1,312

 [A] 

160,885




General and administrative expenses

22,397


(2,143)

 [B] 

20,254




Operating loss

(7,321)


1,943

 [C] 

(5,378)




Loss from continuing operations

(32,642)


2,822

 [D] 

(29,820)













Basic and diluted loss from continuing operations

$          (1.18)




$         (1.08)













Loss from continuing operations

$       (32,642)




$      (29,820)




Depreciation and amortization

35,778




35,778




Interest expense, net

25,040




25,040




Income tax benefit

(9)




(9)




EBITDA and Adjusted EBITDA from continuing operations

$        28,167




$       30,989




 


Description of 2015 Special Items:









[A]

Special items include a gain on sale related to the disposal of certain transportation related assets.

[B]

Primarily attributable to stock-based compensation, non-routine litigation expenses and certain refinancing costs associated with our ABL Facility.

[C]

Primarily includes the aforementioned adjustments, and a charge of approximately $1.1 million associated with Company's restructuring initiative and other exit related costs from certain shale basins.









[D]

Primarily includes the aforementioned adjustments, along with a charge of $1.0 million in connection with a write-off of a portion of the unamortized deferred financing costs associated with our ABL Facility and a net reduction related to a prior acquisition earnout reserve of $0.1 million. Additionally, the Company's effective tax rate for the six months ended June 30, 2015 was zero percent and has been applied to the special items accordingly.















Six Months Ended June 30, 2014






As Reported


Special Items


As Adjusted





Revenue

$ 254,876


$          -


$ 254,876





Direct operating expenses

190,334


1,325

[E]

191,659





General and administrative expenses

39,252


(17,356)

[F]

21,896





Operating loss

(16,991)


16,031


(960)





Loss from continuing operations

(36,636)


15,934

[G]

(20,702)















Basic and diluted loss from continuing operations

$ (1.45)




$ (0.82)















Loss from continuing operations

$ (36,636)




$ (20,702)





Depreciation and amortization

42,281




42,281





Interest expense, net

25,019




25,019





Income tax benefit

(8,499)




(4,810)





EBITDA and Adjusted EBITDA from continuing operations

$ 22,165




$ 41,788














Description of 2014 Special Items:









[E]

Special items include a gain on sale related to the disposal of certain transportation related assets.

[F]

Primarily attributable to costs incurred as a result of our accounting and administrative integration efforts, stock-based compensation, and certain legal expenses associated with our Texas Cases and Shareholder litigation.

[G]

Primarily includes the aforementioned adjustments, along with a charge of $3.2 million in connection with a write-off of a portion of the unamortized deferred financing costs associated with our Amended Revolving Credit Facility, and a charge of $0.4 million associated with a prior acquisition earnout reserve. Additionally, the Company's effective tax rate for the six months ended June 30, 2014 was -18.8% and has been applied to the special items accordingly.











 








NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

UNAUDITED NON-GAAP RECONCILIATIONS (continued)

 (In thousands)







Reconciliation of Free Cash Flow from Continuing Operations














Six Months Ended June 30,




2015


2014


Net cash provided by (used in) operating activities from continuing operations


$ 42,336


$  (3,881)


Less: net cash capital expenditures, [1]


(7,359)


(20,133)


Free Cash Flow


$ 34,977


$(24,014)


[1] Purchases of property, plant and equipment net of proceeds received






 

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SOURCE Nuverra Environmental Solutions, Inc.