Heckmann Corporation (NYSE: HEK) today announced
financial results for the first quarter ended March 31, 2013.1
Revenues for the first quarter of 2013 nearly tripled to $159.5
million, compared with revenues of $55.0 million for the first
quarter of 2012. Net loss was $(12.6) million in the first quarter
of 2013, compared with net loss of $(3.9) million in the first
quarter of 2012. Adjusted EBITDA2 more than tripled to $32.1
million for the first quarter of 2013, compared with adjusted
EBITDA of $10.3 million for the first quarter of 2012.
Comments on the First Quarter
Mark D. Johnsrud, Chief Executive Officer of Heckmann
Corporation, said, “We are very encouraged by the first quarter and
are tracking well against our plan for the year. Our revenue grew
by over 40% sequentially and nearly tripled last year’s first
quarter revenues. Notwithstanding normal first quarter seasonal
effects, the quarter was also affected by unusually harsh weather
that resulted in 13 days of work being impacted in the Bakken Shale
area, with additional days lost in Pennsylvania.
“Our growth came from both the addition of our operations in the
Bakken, as well as solid organic growth, primarily in the Marcellus
and Eagle Ford Shale areas, as we began to see an increase in
activities in these areas. Operations in the Bakken and Marcellus
Shale areas began picking up in April. We are seeing many E&P
operators beginning to seasonally increase activity with more
pricing stability. We expect this activity trend to progress
through the second half of the year, as we execute our plan of
actively ramping up operations, including hiring additional drivers
to meet customer demand.”
Jay C. Parkinson, Executive Vice President and Chief Financial
Officer of Heckmann, commented, “As mentioned above, the first
quarter was impacted by inclement weather. We planned for this
seasonality and continued to grow the business. Adjusted EBITDA was
$32.1 million for the quarter, which was in-line with our
expectations. We continue to leverage our national network to
expand best-practices and improve our margin and return profile
across the entire business. We are growing our business by driving
efficiency. During the quarter, our net cash capital expenditures
were $14.7 million and we remain focused on the efficient
deployment of capital. We believe our ample liquidity will enable
us to capitalize on acquisition opportunities as we continue to
expand our treatment and recycling capabilities to broaden our
full-cycle environmental solutions offering.”
As of March 31, 2013, cash and cash equivalents were $18.2
million, and total debt was $567.0 million, which included $400.03
million of senior unsecured notes, approximately $147.0 million
drawn under the Company’s amended credit facility and approximately
$20.9 million of capital leases.
Operational Update
Shale Solutions
Formerly referred to as the Fluids Management Division: Includes
legacy Heckmann Water Resources (“HWR”) and Power Fuels.
The Company’s Shale Solutions segment provides comprehensive
environmental solutions including the delivery, collection,
treatment, recycling and disposal of restricted environmental
products for unconventional oil and gas development. The Company’s
Shale Solutions segment currently generates revenues from
operations in nine shale areas consisting of the Bakken, Utica,
Eagle Ford, Tuscaloosa Marine, Mississippian Lime and Permian Shale
basins, which are predominantly oil-rich areas, and the Marcellus,
Haynesville and Barnett Shale basins, which are predominantly
gas-rich areas.
For the first quarter of 2013, total revenues from the Shale
Solutions operating segment were $130.6 million of which
approximately $92.8 million was derived from predominantly oil-rich
areas and $37.8 million was derived from predominantly gas-rich
areas. This compared to $55.0 million in total revenues from the
Shale Solutions segment for the first quarter of 2012. The increase
in revenues was primarily attributable to revenues from Power Fuels
following the November 30, 2012 merger, as well as organic growth
in other predominantly oil-shale basins, notably the Eagle Ford and
Mississippian Lime Shale areas.
Industrial Solutions
Formerly referred to as the Recycling Division: Includes legacy
TFI.
The Company’s Industrial Solutions provides environmental and
waste recycling solutions through the collection and recycling of
waste products including Used Motor Oil (UMO), which the Company
processes and sells as Reprocessed Fuel Oil (RFO), oily water,
spent antifreeze, used oil filters and parts washers and provision
for complementary environmental services for a diverse commercial
industrial customer base.
For the first quarter of 2013, the Company’s Industrial
Solutions revenues were $28.8 million, which compares to $27.5
million in the first quarter of 2012, as reported on Current Report
on Form 8-KA on February 11, 2013.
During the first quarter, which is traditionally the slowest
quarter for the business, revenue and collection volumes were
in-line with budget and grew from the first quarter of 2012.
Operations were negatively affected by continued weak demand from
asphalt markets. The resulting increase in sales to re-refining
markets increased the Company’s logistics expense, which negatively
impacted financial results.
2013 Outlook & Financial Guidance
“We are on track to meet our financial and operational
objectives for 2013 and are seeing early signs of solid momentum.
We expect to see the greatest benefit of this increased activity in
the second half of the year,” said Mr. Johnsrud. “As we continue to
integrate our national platform, we are focused on increasing our
operating margins. In addition to leveraging our relationships
across basins and instituting best practice operations that yield
cost savings, we are deepening our customer relationships by
providing a solutions-based approach to our existing customers,
with multiple product offerings. We have also bolstered our team
with the addition of two new regional managers in Texas, each with
over 20 years of industry expertise, as well as a business
development manager in the Eagle Ford Shale area. With a full suite
of environmental service offerings in collection, storage,
delivery, processing, recycling and treatment, we provide our
customers with a critical single source logistics expertise. We
believe we can leverage these strong capabilities beyond our
current proficiencies at the production level to address the same
needs at the drilling and completion phases of the E&P
process.”
Heckmann reiterated its 2013 guidance of revenues between $750
and $825 million and adjusted EBITDA between $200 and $220 million.
The Company expects capital expenditures in 2013 to be between $90
and $110 million. The Company forecasts both revenues and adjusted
EBITDA to be back-half weighted, as 2013 activity ramps up from the
2012 slowdown and inclement weather impacted activity in the first
several months of 2013.
Integration Update
The Company continues to integrate its various legacy
businesses, including the implementation of best practices designed
to drive margin and return profiles. Management believes that
significant opportunities exist to expand its solutions-based
approach across multiple legacy HWR basins to expand margins. The
Company also continues to expand its management team with key hires
during the quarter including a Corporate Vice President of Human
Resources and a Corporate Director of Risk Management. As mentioned
above, Heckmann added two regional managers in Texas, as well as a
business development manager in the Eagle Ford Shale area. In
addition, the Company is bolstering its accounting and finance
organization to align the organizational structure to meet the
needs of the growing business.
Company Name Change & Rebranding
As previously announced, the Company plans to change its
corporate name and unite its Power Fuels, Heckmann Water Resources
and TFI business units under a single brand: Nuverra Environmental
Solutions. The Company is positioned as a comprehensive
environmental solutions provider across its national Shale and
Industrial Solutions business segments, and believes that the
rebranding will enhance efforts to communicate its value
proposition.
The Company’s stockholders will vote on the proposed name change
at its Annual Meeting scheduled for May 16, 2013. Following
approval, the Company will begin trading under its new name and
stock ticker symbol “NES” at the market open on May 20, 2013.
To commemorate the name change and new Nuverra brand, the
Company will ring the closing bell at the New York Stock Exchange
(NYSE) on May 29, 2013. For more information about Nuverra, visit
http://www.nuverra.com.
Conference Call and Webcast
The Company will host a conference call today at 4:30 p.m. ET
(1:30 p.m. PT) to provide commentary on its financial results,
business outlook and growth strategies. To participate on the
conference call, please dial 1-877-941-4774 or 1-480-629-9760 and
reference conference ID 4615814. An audio replay of the conference
call will be available approximately one hour after the conclusion
of the call through Wednesday, May 22, 2013. The audio replay can
be accessed by dialing 1-800-406-7325 or 1-303-590-3030 and
entering access code 4615814.
The call will be webcast live and the replay will be available
for 12 months. Both will be available in the “For Investors”
section of the Heckmann Corporation web site at
www.heckmanncorp.com.
About Heckmann Corporation
Heckmann Corporation is an environmental solutions company. The
Company is one of the largest companies in the United States
dedicated to providing comprehensive and full-cycle environmental
solutions to our customers in energy and industrial end-markets.
The Company focuses on the delivery, collection, treatment,
recycling, and disposal of restricted solids, water, waste water,
used motor oil, spent antifreeze, waste fluids and hydrocarbons.
Heckmann continues to expand its suite of environmentally compliant
and sustainable solutions to a collection of customers that demand
stricter environmental compliance and accountability from their
service providers.
Interested parties can access additional information about
Heckmann on the Company's web site at http://www.heckmanncorp.com,
and in documents filed with the United States Securities and
Exchange Commission, on the SEC's web site at
http://www.sec.gov.
About Non-GAAP Financial Measures
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 performance, and evaluates overall management
with respect to such indicators. Management believes that excluding
items such as acquisition expenses, amortization of intangible
assets and stock-based compensation, 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 in
its financial and operational decision-making. These non-GAAP
measures should be considered in addition to, but not as a
substitute for, measures of financial performance prepared in
accordance with GAAP.
Forward-Looking Statements
This press release may contain "forward-looking statements"
within the meaning of the safe harbor provisions of the United
States Private Securities Litigation Reform Act of 1995. Words such
as "expect," "estimate," "project," "budget," "forecast,"
"anticipate," "intend," "plan," "may," "will," "could," "should,"
"believes," "predicts," "potential," "continue," and similar
expressions are intended to identify such forward-looking
statements. Forward-looking statements in the press release
include, without limitation forecasts of growth, revenues, adjusted
EBITDA and pipeline expansion, and other matters that involve known
and unknown risks, uncertainties and other factors that may cause
results, levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release.
Such risk factors include, among others: difficulties encountered
in acquiring and integrating businesses, including Thermo Fluids
Inc. and Badlands Power Fuels, LLC; whether certain markets grow as
anticipated; and the competitive and regulatory environment.
Additional risks and uncertainties are set forth in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
2012, the Current Report on Form 8-K filed on April 10, 2012, the
Current Report on Form 8-K/A filed on February 11, 2013, as well as
the Company's other reports filed with the United States Securities
and Exchange Commission, including the Company’s Proxy Statement
filed on October 9, 2012, and are available at http://www.sec.gov/
as well as the Company's web site at http://heckmanncorp.com/. You
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this presentation.
All forward-looking statements are qualified in their entirety by
this cautionary statement. The Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.
1 On November 30, 2012, Heckmann completed the merger with
Badlands Power Fuels, LLC (“Power Fuels”) and on April 10, 2012,
Heckmann completed the acquisition of TFI Holdings, Inc. and Thermo
Fluids Inc. (collectively “TFI”). Financial results for the 2013
period reflect the consolidated business.
2 A reconciliation of net income to Adjusted EBITDA is included
in the tables below.
3 Excludes unamortized discount of $0.9 million, net.
HECKMANN CORPORATION AND SUBSIDIARIES Condensed
Consolidated Statements of Operations (in thousands, except per
share data) (unaudited)
Three Months
Ended March 31, 2013 2012
Revenues: Non-rental revenue $ 138,132 $ 53,013 Rental
revenue 21,323 1,946 Total revenues 159,455 54,959
Cost of goods sold (137,902 ) (47,973 ) Gross profit 21,553 6,986
Operating expenses: Selling, general and administrative 16,675
6,992 Amortization of intangible assets 8,725 1,262
Total operating expenses 25,400 8,254 Loss from
operations (3,847 ) (1,268 ) Interest expense, net (13,415 ) (2,146
) Loss from equity investment (42 ) - Other expense, net (993 ) (29
) Loss before income taxes (18,297 ) (3,443 ) Income tax benefit
(expense) 5,665 (420 ) Net loss $ (12,632 ) $ (3,863 )
Weighted average shares outstanding used in computing net
loss per common share: Basic and diluted 238,408 125,159
Net loss per common share: Basic and diluted $ (0.05
) $ (0.03 )
HECKMANN CORPORATION AND
SUBSIDIARIES Condensed Consolidated Balance Sheets (in
thousands) (unaudited)
March 31,
December 31, 2013 2012
Assets Cash and cash equivalents $ 18,176 $ 16,211
Restricted cash 4,699 3,536 Accounts receivable, net 124,584
117,528 Inventory 6,136 5,710 Prepaid expenses and other
receivables 8,692 8,587 Deferred tax assets, net 12,050 12,495
Other current assets 1,439 1,824 Total current assets
175,776 165,891 Property, plant and equipment, net 597,528
604,870 Equity investments 8,237 8,279 Intangible assets, net
267,873 284,698 Goodwill 563,432 555,091 Other long-term assets
24,459 25,510 Total assets $ 1,637,305 $
1,644,339
Liabilities and Stockholders’
Deficit Accounts payable $ 30,298 $ 29,538 Accrued expenses
32,463 33,409 Accrued payroll and benefits 9,671 7,865 Accrued
interest 18,787 8,991 Current portion of contingent consideration
1,597 1,968 Current portion of long-term debt 5,050 4,699
Total current liabilities 97,866 86,470 Deferred tax
liabilities, net 121,483 128,992 Long-term debt 561,973 561,427
Long-term portion of contingent consideration 8,899 8,863 Other
long-term obligation 9,273 9,021 Other long-term liabilities 1,920
1,805 Total liabilities 801,414 796,578 Common
stock 265 265 Additional paid-in capital 1,318,943 1,318,181
Purchased warrants (6,844 ) (6,844 ) Treasury stock (19,503 )
(19,503 ) Accumulated deficit (456,970 ) (444,338 ) Total
liabilities and stockholders’ deficit $ 1,637,305 $
1,644,339
HECKMANN CORPORATION AND
SUBSIDIARIES Adjusted EBITDA GAAP Reconciliations (in
thousands)
Three Months Ended March
31, 2013 2012 Net loss $ (12,632 )
$ (3,863 ) Depreciation expense 22,722 7,985 Amortization of
intangible assets 8,725 1,262 Interest expense, net 13,415 2,146
Income tax (benefit) expense (5,665 ) 420 EBITDA $ 26,565
$ 7,950 Adjustments: Stock-based compensation
790 716 Shareholder derivative action settlement 2,397 - TFI
transaction costs 992 - Environmental reserve 664
-
Integration costs 678 - Transaction costs - 500 Start-up &
training costs - 1,100 Adjusted EBITDA $ 32,086
$ 10,266
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