Delaware | 001-33816 | 26-0287117 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
¨ | Emerging growth company |
¨ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
Exhibit Number | Description | ||
99.1 | Press Release, dated May 8, 2017 |
NUVERRA ENVIRONMENTAL SOLUTIONS, INC. | ||||||
Date: May 8, 2017 | By: | /s/ Joseph M. Crabb | ||||
Name: | Joseph M. Crabb | |||||
Title: | Executive Vice President and Chief Legal Officer |
Exhibit Number | Description | ||
99.1 | Press Release, dated May 8, 2017 |
• | First quarter revenue was $ 39.2 million, an increase of approximately 9.6%, or $3.4 million, when compared with revenue of $35.8 million in the fourth quarter of 2016. |
• | Total costs and expenses, adjusted for special items, were $53.0 million, or a 10.6% increase when compared with $48.0 million in the fourth quarter of 2016. |
• | Loss from continuing operations for the first quarter was $36.0 million, or a loss of $0.24 per diluted share, compared with a loss from continuing operations of $61.3 million, or a loss of $0.45 per diluted share, in the fourth quarter of 2016. |
• | Adjusted EBITDA from continuing operations for the first quarter was $(0.8) million, a decrease of $3.3 million compared with adjusted EBITDA from continuing operations of $2.5 million in the fourth quarter of 2016. |
• | A $5.0 million decrease in direct operating expenses, including a decrease in payroll and payroll related expenses from a 22.9% year-over-year reduction in headcount; |
• | A $3.0 million decrease in depreciation and amortization expenses due to reductions in capital spending and the sale of underutilized or non-core assets as a result of lower activities by our customers; and |
• | A $0.3 million decrease in general and administrative expenses. |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Revenue: | |||||||
Non-rental revenue | $ | 35,418 | $ | 44,026 | |||
Rental revenue | 3,805 | 2,949 | |||||
Total revenue | 39,223 | 46,975 | |||||
Costs and expenses: | |||||||
Direct operating expenses | 34,289 | 38,617 | |||||
General and administrative expenses | 12,359 | 7,452 | |||||
Depreciation and amortization | 12,871 | 15,845 | |||||
Total costs and expenses | 59,519 | 61,914 | |||||
Operating loss | (20,296 | ) | (14,939 | ) | |||
Interest expense, net | (14,208 | ) | (12,045 | ) | |||
Other (expense) income, net | (1,458 | ) | 158 | ||||
Loss on extinguishment of debt | — | (390 | ) | ||||
Loss from continuing operations before income taxes | (35,962 | ) | (27,216 | ) | |||
Income tax expense | — | (55 | ) | ||||
Loss from continuing operations | (35,962 | ) | (27,271 | ) | |||
Income from discontinued operations, net of income taxes | — | 55 | |||||
Net loss attributable to common shareholders | $ | (35,962 | ) | $ | (27,216 | ) | |
Net loss per common share attributable to common shareholders: | |||||||
Basic and diluted loss from continuing operations | $ | (0.24 | ) | $ | (0.98 | ) | |
Basic and diluted income from discontinued operations | — | — | |||||
Net loss per basic and diluted common share | $ | (0.24 | ) | $ | (0.98 | ) | |
Weighted average shares outstanding used in computing net loss per basic and diluted common share | 150,934 | 27,907 |
March 31, | December 31, | ||||||
2017 | 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 191 | $ | 994 | |||
Restricted cash | 1,341 | 1,420 | |||||
Accounts receivable, net | 23,479 | 23,795 | |||||
Inventories | 4,120 | 2,464 | |||||
Prepaid expenses and other receivables | 5,449 | 3,516 | |||||
Other current assets | 167 | 107 | |||||
Assets held for sale | 1,688 | 1,182 | |||||
Total current assets | 36,435 | 33,478 | |||||
Property, plant and equipment, net | 279,070 | 294,179 | |||||
Equity investments | 67 | 73 | |||||
Intangibles, net | 13,788 | 14,310 | |||||
Other assets | 440 | 564 | |||||
Total assets | $ | 329,800 | $ | 342,604 | |||
Liabilities and Shareholders' Deficit | |||||||
Accounts payable | $ | 6,286 | $ | 4,047 | |||
Accrued liabilities | 22,861 | 18,787 | |||||
Current contingent consideration | — | — | |||||
Current portion of long-term debt | 483,175 | 465,835 | |||||
Derivative warrant liability | 5,916 | 4,298 | |||||
Total current liabilities | 518,238 | 492,967 | |||||
Deferred income taxes | 495 | 495 | |||||
Long-term debt | 3,618 | 5,956 | |||||
Long-term contingent consideration | 8,500 | 8,500 | |||||
Other long-term liabilities | 3,670 | 3,752 | |||||
Total liabilities | 534,521 | 511,670 | |||||
Commitments and contingencies | |||||||
Shareholders' deficit: | |||||||
Common stock | 152 | 152 | |||||
Additional paid-in capital | 1,408,176 | 1,407,867 | |||||
Treasury stock | (19,809 | ) | (19,807 | ) | |||
Accumulated deficit | (1,593,240 | ) | (1,557,278 | ) | |||
Total shareholders' deficit | (204,721 | ) | (169,066 | ) | |||
Total liabilities and shareholders' deficit | $ | 329,800 | $ | 342,604 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (35,962 | ) | $ | (27,216 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Gain on the sale of TFI | — | (55 | ) | ||||
Depreciation and amortization of intangible assets | 12,871 | 15,845 | |||||
Amortization of debt issuance costs, net | 1,756 | 1,157 | |||||
Accrued interest added to debt principal | 6,340 | — | |||||
Stock-based compensation | 309 | 368 | |||||
Loss (gain) on disposal of property, plant and equipment | 49 | (1,057 | ) | ||||
Bad debt expense | 778 | 217 | |||||
Change in fair value of derivative warrant liability | 1,618 | — | |||||
Loss on extinguishment of debt | — | 390 | |||||
Deferred income taxes | — | 25 | |||||
Other, net | 56 | (88 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (462 | ) | 11,114 | ||||
Prepaid expenses and other receivables | (433 | ) | (634 | ) | |||
Accounts payable and accrued liabilities | 5,872 | 4,924 | |||||
Other assets and liabilities, net | (78 | ) | (2,425 | ) | |||
Net cash (used in) provided by operating activities | (7,286 | ) | 2,565 | ||||
Cash flows from investing activities: | |||||||
Proceeds from the sale of property, plant and equipment | 371 | 1,449 | |||||
Purchases of property, plant and equipment | (1,029 | ) | (1,421 | ) | |||
Change in restricted cash | 79 | (200 | ) | ||||
Net cash used in investing activities | (579 | ) | (172 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 48,536 | 12,409 | |||||
Payments on revolving credit facility | (40,006 | ) | (51,968 | ) | |||
Payments for debt issuance costs | — | (426 | ) | ||||
Payments on vehicle financing and other financing activities | (1,468 | ) | (1,687 | ) | |||
Net cash provided by (used in) financing activities | 7,062 | (41,672 | ) | ||||
Net decrease in cash and cash equivalents | (803 | ) | (39,279 | ) | |||
Cash and cash equivalents - beginning of period | 994 | 39,309 | |||||
Cash and cash equivalents - end of period | $ | 191 | $ | 30 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Loss from continuing operations | $ | (35,962 | ) | $ | (27,271 | ) | |
Depreciation and amortization | 12,871 | 15,845 | |||||
Interest expense, net | 14,208 | 12,045 | |||||
Income tax expense | — | 55 | |||||
EBITDA | (8,883 | ) | 674 | ||||
Adjustments: | |||||||
Transaction-related costs, including earnout adjustments, net | — | (119 | ) | ||||
Stock-based compensation | 309 | 368 | |||||
Change in fair value of derivative warrant liability | 1,618 | — | |||||
Capital reorganization costs | 5,702 | — | |||||
Legal and environmental costs, net | 419 | 1,475 | |||||
Restructuring, exit and other costs | — | (172 | ) | ||||
Loss on extinguishment of debt | — | 390 | |||||
Loss (gain) on disposal of assets | 49 | (1,057 | ) | ||||
Adjusted EBITDA from continuing operations | (786 | ) | 1,559 | ||||
Adjusted EBITDA from discontinued operations | — | — | |||||
Total Adjusted EBITDA | $ | (786 | ) | $ | 1,559 |
Three Months Ended | |||||||
March 31, | |||||||
2017 | 2016 | ||||||
Income from discontinued operations | $ | — | $ | 55 | |||
Income tax expense | — | — | |||||
EBITDA from discontinued operations | — | 55 | |||||
Adjustments: | |||||||
Transaction-related costs | — | — | |||||
Gain on sale of TFI | — | (55 | ) | ||||
Adjusted EBITDA from discontinued operations | $ | — | $ | — |
Three months ended March 31, 2017 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
Revenue | $ | 24,285 | $ | 7,757 | $ | 7,181 | $ | — | $ | 39,223 | ||||||||||
Direct operating expenses | 21,232 | 7,957 | 5,100 | — | 34,289 | |||||||||||||||
General and administrative expenses | 1,947 | 769 | 1,031 | 8,612 | 12,359 | |||||||||||||||
Depreciation and amortization | 6,785 | 2,513 | 3,519 | 54 | 12,871 | |||||||||||||||
Operating loss | (5,679 | ) | (3,482 | ) | (2,469 | ) | (8,666 | ) | (20,296 | ) | ||||||||||
Operating margin % | (23.4 | )% | (44.9 | )% | (34.4 | )% | NA | (51.7 | )% | |||||||||||
Loss from continuing operations before income taxes | (5,701 | ) | (3,602 | ) | (2,527 | ) | (24,132 | ) | (35,962 | ) | ||||||||||
Loss from continuing operations | (5,701 | ) | (3,602 | ) | (2,527 | ) | (24,132 | ) | (35,962 | ) | ||||||||||
Depreciation and amortization | 6,785 | 2,513 | 3,519 | 54 | 12,871 | |||||||||||||||
Interest expense, net | 82 | 120 | 58 | 13,948 | 14,208 | |||||||||||||||
Income tax expense | — | — | — | — | — | |||||||||||||||
EBITDA | $ | 1,166 | $ | (969 | ) | $ | 1,050 | $ | (10,130 | ) | $ | (8,883 | ) | |||||||
Adjustments, net | 190 | 48 | 222 | 7,637 | 8,097 | |||||||||||||||
Adjusted EBITDA from continuing operations | $ | 1,356 | $ | (921 | ) | $ | 1,272 | $ | (2,493 | ) | $ | (786 | ) | |||||||
Adjusted EBITDA margin % | 5.6 | % | (11.9 | )% | 17.7 | % | NA | (2.0 | )% |
Three months ended March 31, 2016 | Rocky Mountain | Northeast | Southern | Corporate | Total | |||||||||||||||
Revenue | $ | 24,905 | $ | 12,777 | $ | 9,293 | $ | — | $ | 46,975 | ||||||||||
Direct operating expenses | 19,558 | 11,568 | 7,491 | — | 38,617 | |||||||||||||||
General and administrative expenses | 1,852 | 1,190 | 920 | 3,490 | 7,452 | |||||||||||||||
Depreciation and amortization | 8,079 | 3,883 | 3,814 | 69 | 15,845 | |||||||||||||||
Operating loss | (4,584 | ) | (3,864 | ) | (2,932 | ) | (3,559 | ) | (14,939 | ) | ||||||||||
Operating margin % | (18.4 | )% | (30.2 | )% | (31.6 | )% | NA | (31.8 | )% | |||||||||||
Loss from continuing operations before income taxes | (4,652 | ) | (3,931 | ) | (2,926 | ) | (15,707 | ) | (27,216 | ) | ||||||||||
Loss from continuing operations | (4,652 | ) | (3,931 | ) | (2,926 | ) | (15,762 | ) | (27,271 | ) | ||||||||||
Depreciation and amortization | 8,079 | 3,883 | 3,814 | 69 | 15,845 | |||||||||||||||
Interest expense, net | 98 | 141 | 48 | 11,758 | 12,045 | |||||||||||||||
Income tax expense | — | — | — | 55 | 55 | |||||||||||||||
EBITDA | $ | 3,525 | $ | 93 | $ | 936 | $ | (3,880 | ) | $ | 674 | |||||||||
Adjustments, net | 186 | (284 | ) | (348 | ) | 1,331 | 885 | |||||||||||||
Adjusted EBITDA from continuing operations | $ | 3,711 | $ | (191 | ) | $ | 588 | $ | (2,549 | ) | $ | 1,559 | ||||||||
Adjusted EBITDA margin % | 14.9 | % | (1.5 | )% | 6.3 | % | NA | 3.3 | % |
Three months ended March 31, 2017 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 39,223 | $ | — | $ | 39,223 | ||||||
Direct operating expenses | 34,289 | (49 | ) | [A] | 34,240 | |||||||
General and administrative expenses | 12,359 | (6,430 | ) | [B] | 5,929 | |||||||
Total costs and expenses | 59,519 | (6,479 | ) | [C] | 53,040 | |||||||
Operating loss | (20,296 | ) | 6,479 | [C] | (13,817 | ) | ||||||
Loss from continuing operations | (35,962 | ) | 8,097 | [D] | (27,865 | ) | ||||||
Basic and diluted loss from continuing operations | $ | (0.24 | ) | $ | (0.18 | ) | ||||||
Loss from continuing operations | $ | (35,962 | ) | $ | (27,865 | ) | ||||||
Depreciation and amortization | 12,871 | 12,871 | ||||||||||
Interest expense, net | 14,208 | 14,208 | ||||||||||
Income tax expense | — | — | ||||||||||
EBITDA and Adjusted EBITDA from continuing operations | $ | (8,883 | ) | $ | (786 | ) |
Description of 2017 Special Items: | ||||
[A] | Special items primarily includes the loss on sale of underutilized assets. | |||
[B] | Primarily attributable to stock-based compensation, non-routine litigation expenses, non-routine professional fees and $5.7 million for capital re-organization costs. | |||
[C] | Primarily includes the aforementioned adjustments. | |||
[D] | Primarily includes the aforementioned adjustments along with a loss 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 March 31, 2017 was zero percent and has been applied to the special items accordingly. |
Three months ended March 31, 2016 | ||||||||||||
As Reported | Special Items | As Adjusted | ||||||||||
Revenue | $ | 46,975 | $ | — | $ | 46,975 | ||||||
Direct operating expenses | 38,617 | 638 | [E] | 39,255 | ||||||||
General and administrative expenses | 7,452 | (1,261 | ) | [F] | 6,191 | |||||||
Total costs and expenses | 61,914 | (623 | ) | [G] | 61,291 | |||||||
Operating loss | (14,939 | ) | 623 | [G] | (14,316 | ) | ||||||
Loss from continuing operations | (27,271 | ) | 887 | [H] | (26,384 | ) | ||||||
Basic and diluted loss from continuing operations | $ | (0.98 | ) | $ | (0.95 | ) | ||||||
Loss from continuing operations | $ | (27,271 | ) | $ | (26,384 | ) | ||||||
Depreciation and amortization | 15,845 | 15,845 | ||||||||||
Interest expense, net | 12,045 | 12,045 | ||||||||||
Income tax expense | 55 | 53 | ||||||||||
EBITDA and Adjusted EBITDA from continuing operations | $ | 674 | $ | 1,559 |
Description of 2016 Special Items: | ||||
[E] | Special items primarily includes gain on sale for the disposal of certain transportation related assets, offset by severance and environmental clean-up charges. | |||
[F] | Primarily attributable to stock-based compensation and non-routine litigation expenses associated with the Company's 2016 debt restructuring. | |||
[G] | Primarily includes the aforementioned adjustments. | |||
[H] | Primarily includes the aforementioned adjustments along with a charge of $0.4 million in connection with a write-off of a portion of the unamortized deferred financing costs associated with our amended ABL Credit Facility; and a reduction in the fair value of contingent consideration of $0.1 million in the three months ended March 31, 2016. Additionally, our effective tax rate for the three months ended March 31, 2016 was near zero percent and has been applied to the special items accordingly. |
Three Months Ended | ||||||||
March 31, | ||||||||
2017 | 2016 | |||||||
Net cash (used in) provided by operating activities | $ | (7,286 | ) | $ | 2,565 | |||
Less: net cash capital expenditures [1] | (658 | ) | 28 | |||||
Free Cash Flow | $ | (7,944 | ) | $ | 2,593 |
[1] | Purchases of property, plant and equipment, net of proceeds received from sales of property, plant and equipment |
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