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Nuverra Announces Third-Quarter and Year-to-Date 2016 Results
PR Newswire
SCOTTSDALE, Ariz.

SCOTTSDALE, Ariz., Nov. 7, 2016 /PRNewswire/ -- Nuverra Environmental Solutions, Inc. (OTCQB: NESC) ("Nuverra" or the "Company") today announced financial and operating results for the third quarter and nine months ended September 30, 2016.

SUMMARY OF QUARTERLY RESULTS

  • Third quarter revenue was $35.4 million, an increase of approximately 4.3%, or $1.4 million, when compared with revenue of $34.0 million in the second quarter of 2016, and a 53.7% decrease, or $41.1 million, when compared with revenue of $76.5 million in the third quarter of 2015.
  • Total costs and expenses, adjusted for special items, were $47.5 million, or a 2.8% decrease when compared with $48.9 million in the second quarter of 2016; 45.3% reduction in total costs and expenses, adjusted for special items, when compared with the third quarter of 2015.
  • Loss from continuing operations for the third quarter was $38.4 million, or a loss of $0.30 per diluted share, compared with a loss from continuing operations of $40.6 million, or a loss of $0.60 per diluted share, in the second quarter of 2016.
  • Adjusted EBITDA from continuing operations for the third quarter was $3.4 million, an increase of $3.1 million compared with adjusted EBITDA from continuing operations of $0.3 million in the second quarter of 2016.
  • Total liquidity as of September 30, 2016 was $8.9 million.

THIRD QUARTER 2016 RESULTS

Third quarter revenue was $35.4 million, an increase of $1.4 million, or 4.3%, from $34.0 million in the second quarter of 2016. Revenue increased sequentially across all three operating divisions based upon a mix of pricing and activity improvement as rig counts began to rebound from second quarter lows.  In the third quarter of 2015, the Company reported revenue of $76.5 million.

The Company continued to reduce costs and expenses in the third quarter as a result of proactive cost-management initiatives in response to the prolonged depression in oil and natural gas prices and corresponding impact on our business operations. Total costs and expenses, adjusted for special items, were $47.5 million, a 2.8% decrease compared with total costs and expenses, adjusted for special items, of $48.9 million in the second quarter of 2016. The Company reported total costs and expenses, adjusted for special items, of $87.0 million in the third quarter of 2015.

On a year-over-year comparison with the third quarter of 2015, the $39.5 million reduction in total costs and expenses, adjusted for special items, included:

  • Approximately $18.8 million in lower payroll and related expenses, reflecting a 43.0% year-over-year reduction in headcount;
  • Approximately $3.5 million in lower fuel expense;
  • Approximately $3.9  million, or 44.7%, in lower general and administrative expenses;
  • Approximately $1.7 million in lower depreciation and amortization expenses; with,
  • The balance of $11.6 million related to reductions in all other direct operating expenses.

For the third quarter of 2016, the Company reported a net loss from continuing operations of $38.4 million, or a loss of $0.30 per diluted share. Special items in the third quarter totaled approximately $12.1 million and primarily included $7.8 million for asset impairment charges, partially offset by a $1.6 million gain on the change in fair value of the derivative warrant liability.  Additionally, special items included the loss on the sale of underutilized assets, non-recurring legal and professional fees, and stock-based compensation expense.  Excluding the impact of these special items, third quarter loss from continuing operations was $26.3 million, or a loss of $0.20 per diluted share. This compares with a loss from continuing operations, adjusted for special items, of $29.4 million, or a loss of $0.43 per diluted share in the second quarter of 2016. The Company reported a loss from continuing operations, adjusted for special items, of $22.5 million, or a loss of $0.81 per diluted share, in the third quarter of 2015.

Adjusted EBITDA from continuing operations for the third quarter was $3.4 million, an increase of $3.1 million compared with adjusted EBITDA of $0.3 million in the second quarter of 2016.  Third quarter adjusted EBITDA margin from continuing operations was 9.7%, compared with an adjusted EBITDA margin of 0.9% in the second quarter of 2016.  The Company reported adjusted EBITDA from continuing operations of $6.3 million and an adjusted EBITDA margin of 8.2% in the third quarter of 2015.

YEAR-TO-DATE RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 ("YTD")

YTD revenue was $116.4 million, a decrease of $171.7 million, or 59.6%, from $288.1 million for the same period in 2015.  The decrease was attributable to lower overall drilling and completion activities coupled with continued pricing pressures in all divisions.

YTD net loss from continuing operations was $106.3 million, or a loss of $1.41 per diluted share, compared with a loss of $160.8 million, or a loss of $5.82 per diluted share, for the same period in 2015. Excluding special items, YTD adjusted loss from continuing operations was $82.1 million, or a loss of $1.09 per diluted share, compared with adjusted loss from continuing operations of $52.3 million, or a loss of $1.89 per diluted share in 2015.  The $24.2 million in YTD special items primarily included $10.3 million in legal and professional fees associated with the Company's exchange offer and related debt restructuring activities, $10.5 million for asset impairment charges, partially offset by a $1.7 million gain on the sale of Underground Solutions, Inc., and a $2.6 million gain on the change in fair value of the derivative warrant liability.  Additionally, special items included the loss on the sale of underutilized assets, severance-related charges, stock-based compensation expense, and the write off of a portion of the unamortized deferred financing costs associated with an amendment to the asset-based revolving credit facility (the "ABL Facility").

YTD adjusted EBITDA from continuing operations was $5.3 million, a decrease of 85.8% when compared with the same period in 2015. Adjusted EBITDA margin for the 2016 YTD period was 4.6%, compared with 12.9% in the same period of 2015.

CASH FLOW AND LIQUIDITY

Net cash used in operating activities from continuing operations during nine months ended September 30, 2016 was $19.3 million, while asset sales net of capital expenditures from continuing operations provided proceeds of $7.3 million.  For the nine months ended September 30, 2016, free cash flow was negative at $12.0 million, compared with positive free cash flow of $51.4 million in the same period in 2015.

Total liquidity as of September 30, 2016, consisting almost entirely of available borrowings under the ABL Credit Facility, was $8.9 million.

As of September 30, 2016, total debt outstanding was $469.9 million, including $40.4 million of 2018 Notes, $346.0 million of 2021 Notes, $25.5 million under a term loan, $43.9 million under the ABL Facility, and $14.1 million in capital leases and notes payable. The Company made cumulative payments, net of proceeds received, during the nine months ended September 30, 2016 of $57.9 million to reduce total debt outstanding under the ABL Facility.

About Nuverra

Nuverra Environmental Solutions is among the largest companies in the United States dedicated to providing comprehensive, 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 provides 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 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, including, without limitation, those that involve risks and uncertainties, including statements regarding (i) the expected timing and benefits of any future restructuring transactions and alternatives to improve our long-term capital structure and (ii) the expected timing for completing the refinancing of our asset-based revolving credit facility.  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. Forward-looking statements may be identified 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. There can be no assurance that all or any portion of any future restructuring transactions will be consummated on the terms summarized herein or at all, and any such restructuring transactions may not permit us to meet scheduled debt service obligations, which would cause us to default on our debt obligations.  In the event we cannot meet our scheduled debt service obligations or otherwise default on our debt obligations, we may need to seek relief under the United States Bankruptcy Code. 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 Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's views as of the filing date. 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.

602-903-7802
ir@nuverra.com

- Tables to Follow -

 























NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (In thousands, except per share amounts)


(Unaudited)
















Three Months Ended


Nine Months Ended





September 30,


September 30,





2016


2015


2016


2015











Revenue:











Non-rental revenue



$             32,143


$             71,000


$           107,538


$           263,540


Rental revenue



3,298


5,528


8,856


24,527


Total revenue



35,441


76,528


116,394


288,067


Costs and expenses:











Direct operating expenses



32,122


62,482


101,022


222,055


General and administrative expenses



6,323


8,705


27,979


31,102


Depreciation and amortization



15,019


16,687


46,070


52,465


Impairment of long-lived assets



7,788


-


10,452


-


Impairment of goodwill



-


104,721


-


104,721


Other, net



-


2


-


1,114


Total costs and expenses



61,252


192,597


185,523


411,457


Operating loss



(25,811)


(116,069)


(69,129)


(123,390)


Interest expense, net



(14,656)


(12,097)


(40,674)


(37,137)


Other income, net



2,095


22


5,024


743


Loss on extinguishment of debt



-


-


(674)


(1,011)


Loss from continuing operations before income taxes



(38,372)


(128,144)


(105,453)


(160,795)


Income tax (expense) benefit



(24)


31


(852)


40


Loss from continuing operations



(38,396)


(128,113)


(106,305)


(160,755)


Gain (loss) from discontinued operations, net of income taxes



-


350


(1,235)


(818)


Net loss attributable to common shareholders



$           (38,396)


$         (127,763)


$         (107,540)


$         (161,573)













Net loss per common share attributable to common shareholders:











Basic and diluted loss from continuing operations



$              (0.30)


$              (4.61)


$              (1.41)


$              (5.82)


Basic and diluted income (loss) from discontinued operations



-


0.01


(0.02)


(0.03)


Net loss per basic and diluted common share



$              (0.30)


$              (4.60)


$              (1.43)


$              (5.85)













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



129,669


27,807


75,291


27,634












 

 











NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS

 (In thousands)

(Unaudited)



September 30,


December 31,



2016


2015


Assets



(Note 1)


Cash and cash equivalents

$                 587


$             39,309


Restricted cash

1,087


4,250


Accounts receivable, net 

22,188


42,188


Inventories

2,580


2,985


Prepaid expenses and other receivables

3,468


3,377


Other current assets

958


2,372


Assets held for sale

582


-


Total current assets

31,450


94,481


Property, plant and equipment, net 

340,797


406,188


Equity investments

573


3,750


Intangibles, net

14,905


16,867


Other assets

573


1,333


Total assets

$           388,298


$           522,619


Liabilities and Shareholders' Deficit





Accounts payable

$              4,206


$              6,907


Accrued liabilities

18,281


29,843


Current contingent consideration

-


8,628


Current portion of long-term debt

51,315


499,709


Derivative warrant liability

4,426


-


Total current liabilities

78,228


545,087


Deferred income taxes

340


270


Long-term debt

405,461


11,758


Long-term contingent consideration

8,500


-


Other long-term liabilities

3,738


3,775


Total liabilities

496,267


560,890


Commitments and contingencies





Shareholders' deficit:





Common stock

152


30


Additional paid-in capital

1,407,650


1,369,921


Treasury stock

(19,809)


(19,800)


Accumulated deficit

(1,495,962)


(1,388,422)


Total shareholders' deficit

(107,969)


(38,271)


Total liabilities and shareholders' deficit

$           388,298


$           522,619

















Note 1: The condensed consolidated balance sheet at December 31, 2015 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, 2015.






 











NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (In thousands)

(Unaudited)



Nine Months Ended



September 30,



2016


2015

Cash flows from operating activities:





Net loss


$         (107,540)


$         (161,573)

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





Income from discontinued operations, net of income taxes


-


(906)

Loss on the sale of TFI


1,235


1,724

Depreciation and amortization of intangible assets


46,070


52,465

Amortization of debt issuance costs, net


4,329


3,638

Accrued interest added to debt principal


20,240


-

Stock-based compensation


908


1,858

Impairment of long-lived assets


10,452


-

Impairment of goodwill


-


104,721

Gain on sale of UGSI


(1,747)


-

Loss (gain) on disposal of property, plant and equipment 


3,298


(1,198)

Bad debt expense


(516)


(695)

Change in fair value of derivative warrant liability


(2,574)


-

Loss on extinguishment of debt


674


1,011

Deferred income taxes


70


21

Other, net


5


364

Changes in operating assets and liabilities:





Accounts receivable


20,516


58,985

Prepaid expenses and other receivables


(227)


(1,294)

Accounts payable and accrued liabilities


(14,379)


(4,805)

Other assets and liabilities, net


(136)


1,342

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


(19,322)


55,658

Net cash used in operating activities from discontinued operations


-


(708)

Net cash (used in) provided by operating activities


(19,322)


54,950

Cash flows from investing activities:





Proceeds from the sale of TFI


-


78,897

Proceeds from the sale of property, plant and equipment


9,954


12,339

Purchases of property, plant and equipment


(2,613)


(16,564)

Proceeds from the sale of UGSI


5,032


-

Change in restricted cash


3,163


(4,250)

Net cash provided by investing activities from continuing operations


15,536


70,422

Net cash used in investing activities from discontinued operations


-


(181)

Net cash provided by investing activities


15,536


70,241

Cash flows from financing activities:





Proceeds from revolving credit facility 


118,533


-

Payments on revolving credit facility


(176,428)


(81,647)

Proceeds from term loan


24,000


-

Payments for deferred financing costs


(1,084)


-

Issuance of stock


5,000


-

Payments on vehicle financing and other financing activities


(4,957)


(9,468)

Net cash used in financing activities of continuing operations


(34,936)


(91,115)

Net cash used in financing activities of discontinued operations


-


(105)

Net cash used in financing activities


(34,936)


(91,220)

Net (decrease) increase in cash and cash equivalents


(38,722)


33,971

Cash and cash equivalents - beginning of period


39,309


15,416

Cash and cash equivalents - end of period


587


49,387

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


-


-

Cash and cash equivalents of continuing operations - end of period


$                 587


$             49,387

 













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 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), 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.












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
















Three Months Ended


Nine Months Ended





September 30,


September 30,





2016


2015


2016


2015




Loss from continuing operations

$           (38,396)


$         (128,113)


$         (106,305)


$         (160,755)




Depreciation and amortization

15,019


16,687


46,070


52,465




Interest expense, net

14,656


12,097


40,674


37,137




Income tax expense (benefit)

24


(31)


852


(40)




EBITDA

(8,697)


(99,360)


(18,709)


(71,193)















Adjustments:











Transaction-related costs, including earnout adjustments, net

-


(13)


(117)


(145)




Stock-based compensation

252


342


908


1,858




Change in fair value of derivative warrant liability

(1,551)


-


(2,574)


-




Legal and environmental costs, net

3,387


134


13,504


538




Impairment of long-lived assets

7,788


-


10,452


-




Impairment of goodwill

-


104,721


-


104,721




Restructuring, exit and other costs

(266)


326


(379)


1,661




Loss on extinguishment of debt

-


-


674


1,011




Gain on sale of UGSI

(53)


-


(1,747)


-




Loss (gain) on disposal of assets

2,566


114


3,293


(1,198)




Adjusted EBITDA from continuing operations

3,426


6,264


5,305


37,253




Adjusted EBITDA from discontinued operations

-


-


-


1,197




Total Adjusted EBITDA

$              3,426


$              6,264


$              5,305


$             38,450















Reconciliation of Loss from Discontinued Operations to EBITDA from Discontinued Operations and Adjusted EBITDA from Discontinued Operations:
















 Three Months Ended 


 Nine Months Ended 





September 30,


 September 30, 





2016


2015


2016


2015




Loss from discontinued operations

$                   -


$                 350


$             (1,235)


$               (818)




Income tax expense

-


-


-


265




EBITDA from discontinued operations

-


350


(1,235)


(553)




Adjustments:











Transaction-related costs

-


-


-


26




Loss on sale of TFI

-


(350)


1,235


1,724




Adjusted EBITDA from discontinued operations

$                   -


$                   -


$                   -


$              1,197














 













NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

NON-GAAP RECONCILIATIONS (continued)

 (In thousands)

(Unaudited)














Reconciliation of QTD Segment Performance to Adjusted EBITDA














Three Months Ended September 30, 2016


Rocky Mountain


Northeast


Southern


Corporate


Total


Revenue


$                 19,166


$                   7,877


$                   8,398


$                        -


$                 35,441


Direct operating expenses


13,890


9,311


8,921


-


32,122


General and administrative expenses


1,211


346


455


4,311


6,323


Depreciation and amortization


7,554


3,281


4,121


63


15,019


Operating loss


(3,489)


(10,733)


(7,215)


(4,374)


(25,811)


Operating margin %


(18.2%)


(136.3%)


(85.9%)


NA


(72.8%)


Loss from continuing operations before income taxes


(3,618)


(10,384)


(7,265)


(17,105)


(38,372)














Loss from continuing operations


(3,618)


(10,384)


(7,311)


(17,083)


(38,396)


Depreciation and amortization


7,554


3,281


4,121


63


15,019


Interest expense, net


150


118


53


14,335


14,656


Income tax expense (benefit)


-


-


46


(22)


24


EBITDA


$                   4,086


$                  (6,985)


$                  (3,091)


$                  (2,707)


$                  (8,697)














Adjustments, net


(206)


7,094


4,746


489


12,123


Adjusted EBITDA from continuing operations


$                   3,880


$                      109


$                   1,655


$                  (2,218)


$                   3,426


Adjusted EBITDA margin %


20.2%


1.4%


19.7%


NA


9.7%


























Three Months Ended September 30, 2015


Rocky Mountain


Northeast


Southern


Corporate


Total


Revenue


$                 41,325


$                 19,825


$                 15,378


$                        -


$                 76,528


Direct operating expenses


30,938


16,414


15,130


-


62,482


General and administrative expenses


1,823


791


703


5,388


8,705


Depreciation and amortization


8,553


4,041


3,985


108


16,687


Operating loss


(104,710)


(1,421)


(4,441)


(5,497)


(116,069)


Operating margin %


(253.4%)


(7.2%)


(28.9%)


NA


(151.7%)


Loss from continuing operations before income taxes


(104,811)


(1,569)


(4,474)


(17,290)


(128,144)














Loss from continuing operations


(104,811)


(1,563)


(4,470)


(17,269)


(128,113)


Depreciation and amortization


8,553


4,041


3,985


108


16,687


Interest expense, net


110


146


48


11,793


12,097


Income tax benefit


-


(6)


(4)


(21)


(31)


EBITDA


$                (96,148)


$                   2,618


$                    (441)


$                  (5,389)


$                (99,360)














Adjustments, net


104,590


(12)


1,181


(135)


105,624


Adjusted EBITDA from continuing operations


$                   8,442


$                   2,606


$                      740


$                  (5,524)


$                   6,264


Adjusted EBITDA margin %


20.4%


13.1%


4.8%


NA


8.2%













 

 













NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

NON-GAAP RECONCILIATIONS (continued)

 (In thousands)

(Unaudited)














Reconciliation of YTD Segment Performance to Adjusted EBITDA














Nine Months Ended September 30, 2016


Rocky Mountain


Northeast


Southern


Corporate


Total


Revenue


$                 63,023


$                 28,342


$                 25,029


$                        -


$                116,394


Direct operating expenses


49,680


29,005


22,337


-


101,022


General and administrative expenses


4,758


1,875


2,348


18,998


27,979


Depreciation and amortization


23,425


10,590


11,854


201


46,070


Operating loss


(14,840)


(21,153)


(13,937)


(19,199)


(69,129)


Operating margin %


(23.5%)


(74.6%)


(55.7%)


NA


(59.4%)


Loss from continuing operations before income taxes


(15,088)


(20,984)


(14,016)


(55,365)


(105,453)














Loss from continuing operations


(15,088)


(20,984)


(14,062)


(56,171)


(106,305)


Depreciation and amortization


23,425


10,590


11,854


201


46,070


Interest expense, net


354


368


139


39,813


40,674


Income tax expense


-


-


46


806


852


EBITDA


$                   8,691


$                (10,026)


$                  (2,023)


$                (15,351)


$                (18,709)














Adjustments, net


2,508


8,820


4,548


8,138


24,014


Adjusted EBITDA from continuing operations


$                 11,199


$                  (1,206)


$                   2,525


$                  (7,213)


$                   5,305


Adjusted EBITDA margin %


17.8%


(4.3%)


10.1%


NA


4.6%


























Nine Months Ended September 30, 2015


Rocky Mountain


Northeast


Southern


Corporate


Total


Revenue


$                158,336


$                 74,549


$                 55,182


$                        -


$                288,067


Direct operating expenses


115,470


59,906


46,679


-


222,055


General and administrative expenses


5,201


3,716


4,000


18,185


31,102


Depreciation and amortization


26,091


12,028


13,828


518


52,465


Operating loss


(93,147)


(1,224)


(9,923)


(19,096)


(123,390)


Operating margin %


(58.8%)


(1.6%)


(18.0%)


NA


(42.8%)


Loss from continuing operations before income taxes

(92,909)


(1,756)


(10,037)


(56,093)


(160,795)














Loss from continuing operations


(92,909)


(1,756)


(10,037)


(56,053)


(160,755)


Depreciation and amortization


26,091


12,028


13,828


518


52,465


Interest expense, net


363


646


142


35,986


37,137


Income tax benefit


-


-


-


(40)


(40)


EBITDA


$                (66,455)


$                 10,918


$                   3,933


$                (19,589)


$                (71,193)














Adjustments, net


104,015


134


1,050


3,247


108,446


Adjusted EBITDA from continuing operations


$                 37,560


$                 11,052


$                   4,983


$                (16,342)


$                 37,253


Adjusted EBITDA margin %


23.7%


14.8%


9.0%


NA


12.9%













 
















NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 



 NON-GAAP RECONCILIATIONS (continued)



 (In thousands)



(Unaudited)













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







Three Months Ended September 30, 2016





As Reported


Special Items


As Adjusted




Revenue

$             35,441


$                   -



$             35,441




Direct operating expenses

32,122


(4,394)

 [A] 


27,728




General and administrative expenses

6,323


(1,545)

 [B] 


4,778




Total costs and expenses

61,252


(13,727)

 [C] 


47,525




Operating loss

(25,811)


13,727

 [C] 


(12,084)




Loss from continuing operations

(38,396)


12,131

 [D] 


(26,265)














Basic and diluted loss from continuing operations

$               (0.30)





$               (0.20)














Loss from continuing operations

$           (38,396)





$           (26,265)




Depreciation and amortization

15,019





15,019




Interest expense, net

14,656





14,656




Income tax expense

24





16




EBITDA and Adjusted EBITDA from continuing operations

$             (8,697)





$              3,426



Description of 2016 Special Items:


 [A] 

Special items primarily includes the loss on sale of underutilized assets, offset by severance and environmental clean-up charges.


 [B] 

Primarily attributable to stock-based compensation, non-routine legal and professional fees offset by a settlement for the Rocky Mountain division.


 [C] 

Primarily includes the aforementioned adjustments along with long-lived asset impairment charges of $2.1 million for assets classified as assets-held-for-sale in the Southern division and $5.7 million for assets determined to be impaired in the Northeast division.


 [D] 

Primarily includes the aforementioned adjustments along with a gain of $1.6 million associated with the change in fair value of the derivative warrant liability.  Additionally, our effective tax rate for the three months ended September 30, 2016 was 0.06% and has been applied to the special items accordingly.







Three Months Ended September 30, 2015





As Reported


Special Items


As Adjusted




Revenue

$             76,528


$                   -



$             76,528




Direct operating expenses

62,482


(846)

 [E] 


61,636




General and administrative expenses

8,705


(68)

 [F] 


8,637




Total costs and expenses

192,597


(105,637)

 [G] 


86,960




Operating loss

(116,069)


105,637

 [G] 


(10,432)




Loss from continuing operations

(128,113)


105,624

 [H] 


(22,489)














Basic and diluted loss from continuing operations

$               (4.61)





$               (0.81)














Loss from continuing operations

$         (128,113)





$           (22,489)




Depreciation and amortization

16,687





16,687




Interest expense, net

12,097





12,097




Income tax benefit

(31)





(31)




EBITDA and Adjusted EBITDA from continuing operations

$           (99,360)





$              6,264



Description of 2015 Special Items:


 [E] 

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


 [F] 

Primarily attributable to stock-based compensation, non-routine litigation expenses, and a gain related to the sale of assets.


 [G] 

Primarily includes the aforementioned adjustments, and approximately $104.7 million associated with a goodwill impairment charge recorded for the Rocky Mountain division.


 [H] 

Primarily includes the aforementioned adjustments. Additionally, our effective tax rate for the three months ended September 30, 2015 was near zero percent 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 Loss from Continuing Operations and to EBITDA and Adjusted EBITDA from Continuing Operations







Nine Months Ended September 30, 2016





As Reported


Special Items


As Adjusted




Revenue

$           116,394


$                   -



$           116,394




Direct operating expenses

101,022


(5,633)

[A] 


95,389




General and administrative expenses

27,979


(11,704)

[B] 


16,275




Total costs and expenses

185,523


(27,789)

[C] 


157,734




Operating loss

(69,129)


27,789

[C] 


(41,340)




Loss from continuing operations

(106,305)


24,208

[D] 


(82,097)














Basic and diluted loss from continuing operations

$               (1.41)





$               (1.09)














Loss from continuing operations

$         (106,305)





$           (82,097)




Depreciation and amortization

46,070





46,070




Interest expense, net

40,674





40,674




Income tax expense

852





658




EBITDA and Adjusted EBITDA from continuing operations

$           (18,709)





$              5,305



Description of 2016 Special Items:


 [A] 

Special items primarily includes the loss on sale of underutilized assets, offset by severance and environmental clean-up charges.


 [B] 

Primarily attributable to stock-based compensation and non-routine legal and professional fees incurred in connection with the execution of management's plan to restructure our indebtedness.


 [C] 

Primarily includes the aforementioned adjustments along with long-lived asset impairment charges of $4.8 million for assets classified as assets-held-for-sale in the Northeast and Southern divisions and $5.7 million for assets determined to be impaired in the Northeast division.


 [D] 

Primarily includes the aforementioned adjustments along with a charge of $0.7 million in connection with the write-off of a portion of the unamortized deferred financing costs as a result of amendments to the ABL Facility, a gain of $2.6 million associated with the change in fair value of the derivative warrant liability, and a gain on the sale of Underground Solutions, Inc. of $1.7 million. Additionally, our effective tax rate for the nine months ended September 30, 2016 was 0.8% and has been applied to the special items accordingly.










Nine Months Ended September 30, 2015





As Reported


Special Items


As Adjusted




Revenue

$           288,067


$                   -



$           288,067




Direct operating expenses

222,055


469

 [E] 


222,524




General and administrative expenses

31,102


(2,214)

 [F] 


28,888




Total costs and expenses

411,457


(107,580)

 [G] 


303,877




Operating loss

(123,390)


107,580

 [G] 


(15,810)




Loss from continuing operations

(160,755)


108,446

 [H] 


(52,309)














Basic and diluted loss from continuing operations

$               (5.82)





$               (1.89)














Loss from continuing operations

$         (160,755)





$           (52,309)




Depreciation and amortization

52,465





52,465




Interest expense, net

37,137





37,137




Income tax benefit

(40)





(40)




EBITDA and Adjusted EBITDA from continuing operations

$           (71,193)





$             37,253



Description of 2015 Special Items:


 [E] 

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


 [F] 

Primarily attributable to stock-based compensation, non-routine litigation expenses, certain refinancing costs associated with our ABL Facility and a gain related to the sale of assets.


 [G] 

Primarily includes the aforementioned adjustments, along with a charge of approximately $1.1 million associated our restructuring initiative and other exit related costs from certain shale basins, and approximately $104.7 million associated with a goodwill impairment charge recorded for the Rocky Mountain division.


 [H] 

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


















NUVERRA ENVIRONMENTAL SOLUTIONS, INC. AND SUBSIDIARIES 

 NON-GAAP RECONCILIATIONS (continued)

 (In thousands)

(Unaudited)









Reconciliation of Free Cash Flow from Continuing Operations











Nine Months Ended





September 30,





2016


2015



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


$           (19,322)


$             55,658



Less: net cash capital expenditures [1]


7,341


(4,225)



Free Cash Flow


$           (11,981)


$             51,433










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


 

 

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SOURCE Nuverra Environmental Solutions, Inc.