Heckmann Corporation (NYSE: HEK) today announced
financial results for the fourth quarter and year ended December
31, 2012.1
“2012 was a year of transformation and growth for our Company,”
said Richard J. Heckmann Executive Chairman of Heckmann
Corporation. “Our merger with Power Fuels has considerably
broadened the scope of our business. We increased our revenues by
124% to $352.0 million and our Adjusted EBITDA by 116% to $61.6
million compared to 2011, based on both our M&A activity as
well as growth from our legacy businesses. We now have a national
Company that is well positioned to build on the significant
investment we have made in our logistics network to meet our
customers’ demand for comprehensive environmental solutions,
including in solid waste.”
The consolidated financial results for 2012 include financial
contribution of the month of December for Badlands Power Fuels, LLC
(“Power Fuels”)2 and nine months of Thermo Fluids Inc. (TFI)3. A
presentation reviewing these results is available on the Company’s
website at www.heckmanncorp.com. The Company will file its annual
report on Form 10-K by March 18, 2013 as required.
2012 vs. 2011 Comparison
Q4 '12 vs. Q4 '11 Comparison 2012
2011 % Growth Q4 '12
Q4 '11 % Growth
Revenue $ 352.0 $ 156.8 124.4 %
$ 113.2 $ 51.7 119.1 %
Net
Income (4) $ 2.5 ($0.1 ) -- $ 5.0 ($2.5 ) --
Adj.
EBITDA (5) $ 61.6 $ 28.5 115.7 % $
14.7
$ 4.1 255.0 %
- As of December 31, 2012, cash and cash
equivalents were $16.2 million, and total debt was $566.1 million,
which included $400.0 million of senior unsecured notes,
approximately $147.0 million drawn under the Company’s amended
credit facility and approximately $20.0 million of capital
leases.
- Total liquidity, consisting of the
undrawn portion of the Company’s credit facility and cash on hand,
was $193.2 million as of December 31, 2012.
- Capital expenditures during the fourth
quarter, net of cash received for asset sales, were $9.9
million.
- Results were impacted by a number of
one-time and non-recurring items, relating in part to the Power
Fuels merger, integration and associated financings.
Comments on the Fourth Quarter & Full Year 2012
Results
Mr. Heckmann continued, “As expected, the industry related to
our shale business slowed in the second half of 2012, particularly
during the fourth quarter. Activity declines exceeded normal
seasonal factors, which we believe was a function of drilling
efficiencies pulling our customers’ capital expenditures forward in
the year. Working closely with our customers, we planned for this
pullback and reduced our capital expenditures, which totaled $11.8
million for the second half of the year, and in turn were able to
grow our cash position in both the third and fourth quarters.”
“Despite anticipated challenges in the second half of the year,
the Power Fuels business outperformed our expectations,” said Mark
D. Johnsrud, Chief Executive Officer and Vice Chairman of Heckmann
Corporation. “The proxy statement filed on October 9, 2012 included
projections for second half 2012 revenues of $180.1 million and
EBITDA of $57.8 million. Unaudited financial results for the second
half of 2012 for the Power Fuels business were revenues of $173.2
million and EBITDA of $62.3 million.”
Jay C. Parkinson, Executive Vice President and Chief Financial
Officer of Heckmann, commented, “The quarter was impacted by a
number of non-recurring and one-time items. During a transitional
quarter and despite general activity slowdowns and one month of
contribution from Power Fuels, our fourth quarter results reflected
Adjusted EBITDA in excess of our capital expenditures, and we
continued to grow our cash position during the quarter. We have hit
an inflection point on capital expenditures – we have invested to
build our network, and are now at the point where we can begin to
leverage that investment, so our capital expenditures should be
much lower going forward. Our liquidity position is strong with
over $16.2 million in cash on hand and over $177.0 million
available under our revolver.”
Fluids Management Division (includes Heckmann Water Resources
(“HWR”) & December financial results for Power Fuels)
During the fourth quarter, revenues for the Fluids Management
Division grew to $83.7 million, which includes December’s financial
results from the Power Fuels merger.
In the Bakken Shale area, overall activity levels were down in
the fourth quarter, although at levels not as significant as
management originally estimated. Despite the slowdown in activity,
overall pricing and utilization levels in the fourth quarter were
better than management’s expectations. As production increases,
operators continue to look for efficiencies. To meet customer
requirements, the Company is expanding its operations and hiring
additional personnel.
In the Haynesville Shale area, to offset continued weakness in
natural gas pricing, the Company reduced costs and is focused on
increasing margin by adding fluid delivery work to complement fluid
collection and disposal. Pipeline volumes in the fourth quarter
were down approximately 8% sequentially, primarily as a result of
curtailed production due to the price of natural gas.
In the Marcellus and Utica Shale areas, revenue expectations
were exceeded due to activity with two large customers. The Company
continues to expand operations in the Marcellus and Utica Shale
areas, and continues to hire drivers and plans to add an additional
fluid disposal facility in the area to satisfy 2013 demand.
In the Eagle Ford Shale area, delivery and collection activity
increased sequentially, as the Company began work for a large
customer. Results were impacted by incremental costs incurred to
hire and train new drivers in anticipation of 2013 growth.
Recycling Division (includes Thermo Fluids business)
Revenues for the fourth quarter decreased approximately 1.2%
relative to the same period in 2011. Reprocessed Fuel Oil (“RFO”)
volumes for 2012 decreased approximately 3.4% relative to 2011,
primarily due to issues relating to the continuing tightening in
the availability of rail cars and logistics in the transportation
of RFO to re-refinery outlets. The general economic slowdown in the
fourth quarter along with normal seasonal slowness, including a
reduction in demand from asphalt markets, resulted in weakness in
margins.
2013 Outlook & Financial Guidance
“We believe the challenges of 2012 are subsiding - capital
budgets are being reset and we see increased momentum from high oil
prices,” stated Mr. Johnsrud. “The efficiency gains we saw in 2012
reduced the drilling and completion costs of a well for our
customers. This is a positive for Heckmann as it makes drilling
more economic for our customers, and in turn drives demand for our
environmental solutions. A full suite of environmental solutions is
increasingly important and we believe we can capture additional
market share relative to regional competitors, as well as companies
that offer environmental solutions as only a part of their other
services.”
Mr. Johnsrud continued, “As we look into 2013, our outlook is
driven by the following factors:
- We operate in a market that has a
strong growth profile. As shale assets are consolidated by major
oil and gas companies with strict environmental standards, our
positioning as a national environmental solutions provider will
continue to be an advantage to us relative to regional and
non-environmental companies.
- We believe there are significant
operational improvements we can achieve in our business,
particularly in legacy Heckmann Water Resources. We are focused on
integrating our business and applying best practices across our
national platform.
- We have a strong financial profile. We
are generating Adjusted EBITDA that exceeds our capital
expenditures, and have liquidity of over $190 million, which we
believe will continue to grow in 2013.
- We have attractive opportunities to
deploy capital at returns that we believe exceed our marginal cost
of capital. We have in the past quarter significantly improved our
capital allocation discipline, but believe the year will provide us
with opportunities to invest at returns that we believe are
accretive to our shareholders.”
Heckmann expects 2013 revenues to be between $750 and $825
million and Adjusted EBITDA to be 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.
“We are optimistic about 2013 and leveraging our platform,” Mr.
Johnsrud said. “Our strategy is to provide full cycle environmental
solutions to our customers, which includes delivery, collection,
treatment, recycling and disposal solutions for restricted
environmental products. We have collectively worked and invested
significantly to build a company with a national presence,
including particularly strong logistics capabilities around
delivery, collection and disposal. Our next step will be leveraging
these investments by expanding environmental solutions around
treatment and recycling, as well as solid waste disposal. This
strategy, which is driven by our customers’ needs, will provide us
with a comprehensive, end-to-end environmental solution, which is a
differentiating value proposition.”
Company Name Change & Rebranding
The Company also announced plans to change its corporate name
and unite Heckmann Water Resources, Power Fuels and TFI business
units under a single brand: Nuverra Environmental Solutions. The
Company is positioned as a comprehensive environmental solutions
provider, 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 currently scheduled May 8th Annual Meeting, and following
approval, the Company will begin trading under its new name and
stock ticker symbol “NES” on or about May 13th.
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 operational performance
and outlook. To participate on the conference call, please dial
1-877-941-2068 or 1-480-629-9712 and reference conference ID
4600749. An audio replay of the conference call will be available
approximately one hour after the conclusion of the call through
Monday, March 25, 2013. The audio replay can be accessed by dialing
800-406-7325 or 303-590-3030 and entering access code 4600749.
A presentation reviewing the quarter’s results has been posted
to the Company’s web site at www.heckmanncorp.com.
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, balance sheets, or statements of
cash flows 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, 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 September 30, 2011, Heckmann completed the divestiture of
China Water & Drinks, Inc., which formed the Company’s bottled
water business segment. The Company reclassified its bottled water
segment as discontinued operations in 2011 and its comparable
period results reflect this change.
2 On November 30, 2012, Heckmann completed the merger with
Badlands Power Fuels, LLC (“Power Fuels”). As a result of the
merger, Heckmann repaid all of Power Fuels’ outstanding debt
obligations of approximately $150 million and paid approximately
$130 million in cash and issued 95 million shares of the Company’s
common stock to the owner of Power Fuels. The shares are subject to
a two-year lockup agreement and a two-year standstill agreement and
are not available for any type of borrow or exchange.
3 On April 10, 2012, Heckmann completed the acquisition of TFI
Holdings, Inc. and Thermo Fluids Inc. (collectively “TFI”) for
approximately $227.5 million in cash and $17.5 million in
restricted shares of Heckmann common stock.
4 The Company’s 2012 and Q4 financial results include a $38.5
million and $19.6 million tax benefit, respectively, from the
reversal of a valuation allowance on certain deferred tax assets
based on an expectation that the Company will have future taxable
income.
5 A reconciliation of net income to Adjusted EBITDA is included
in the tables below.
HECKMANN CORPORATION AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS (In thousands, except share data) (Only December
31, 2011 figures are audited)
December 31, 2012
2011 Assets Cash and cash equivalents $
16,211 $ 80,194 Restricted cash 3,536 - Marketable securities -
5,169 Accounts receivable, net of the allowance for doubtful
accounts of $5,967 and $2,636 at December 31, 2012 and December 31,
2011, respectively 117,528 47,985 Inventories 5,710 760 Prepaid
expenses and other receivables 8,587 4,519 Deferred income taxes
12,495 - Other current assets
1,824
1,044 Total Current Assets 165,891
139,671 Property, plant and equipment, net 604,870 270,054
Equity investments 8,279 7,682 Intangibles, net 284,698 29,489
Goodwill 555,091 90,008 Other long-term assets
25,510 2,777 Total
Assets
$ 1,644,339 $
539,681 Liabilities and Equity
Accounts payable $ 29,538 $ 19,992 Accrued expenses 41,274 11,102
Accrued interest 8,991 591 Current portion of contingent
consideration 1,968 5,730 Current portion of long-term debt
4,699 11,914 Total
Current Liabilities 86,470 49,329 Deferred income taxes
128,992 6,880 Long-term debt 561,427 132,156 Long-term contingent
consideration 8,863 7,867 Other long-term obligation 9,021 - Other
long-term liabilities
1,805
1,639 Total Liabilities
796,578 197,871
Commitments and contingencies Preferred stock, $0.001
par value, (1,000,000 shares authorized, no shares issued and
outstanding at December 31, 2012 and December 31, 2011) - - Common
stock, $0.001 par value, (500,000,000 shares authorized,
266,118,447 shares issued and 251,809,884, outstanding at December
31, 2012 and 139,163,067 shares issued and 124,854,504 outstanding
at December 31, 2011) 265 139 Additional paid-in-capital 1,318,181
814,875 Purchased warrants (6,844 ) (6,844 ) Treasury stock (19,503
) (19,503 ) Accumulated deficit (444,338 ) (446,865 ) Accumulated
other comprehensive income
-
8
Total Equity of Heckmann Corporation
847,761 341,810
Total Liabilities and Equity
$
1,644,339 $ 539,681
HECKMANN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except
share and per share data) (Only twelve months ended December 31,
2010 and December 31, 2011 are audited)
Three Months Twelve Months
Ended December 31, Ended December
31, 2012 2011
2010 2012
2011 Non-Rental Revenue $ 336,542 $
144,291 $ 15,208 $ 105,977 $ 47,852 Rental Revenue 15,441 12,546 -
7,228 3,819 Cost of sales
(305,656
) (123,509 )
(11,337 ) (105,340
) (44,843 ) Gross
profit
46,327 33,328
3,871 7,865
6,828 Operating expenses: General
and administrative expenses 48,031 32,783 10,314 20,401 11,572
Amortization of intangible assets 16,583 3,868 1,240 5,170 2,100
Impairment of long-lived assets 3,658 - - 3,658 - Impairment of
intangible assets 2,372 - - 2,372 - Pipeline start-up and
commissioning
-
2,089 11,830
- 2,089 Total
operating expenses
70,644
38,740 23,384
31,601 15,761 Loss
from operations (24,317 ) (5,412 ) (19,513 ) (23,736 ) (8,933 )
Interest (expense) income, net (26,617 ) (4,243 ) 2,087 (10,687 )
(1,673 ) Loss on extinguishment of debt (2,638 ) - - - - Income
(loss) from equity investment 12 (462 ) (689 ) 12 - Other (expense)
income, net
(2,518 )
6,232 4,411
47 3,356 Loss from
continuing operations before income taxes (56,078 ) (3,885 )
(13,704 ) (34,364 ) (7,250 ) Income tax benefit
58,605 3,777
3,404 39,356
4,770 Income (loss) from continuing operations
2,527 (108 ) (10,300 ) 4,992 (2,480 ) Loss from discontinued
operations, net of income taxes
-
(22,898 ) (4,393
) - -
Net income (loss) attributable to common stockholders
$ 2,527 $
(23,006 ) $
(14,693 ) $
4,992 $ (2,480
) Weighted average shares outstanding used in
computing net income (loss) per common share: Basic 149,940,096
114,574,730 108,819,384 181,253,051 118,447,292 Diluted 158,445,042
114,574,730 108,819,384 197,860,135 118,447,292 Net income
(loss) per common share attributable to common stockholders: Basic:
Income (loss) from continuing operations $ 0.02
$
*
$ (0.09 ) $ 0.03 $ (0.02 ) Loss from discontinued operations
- (0.20 )
(0.05 ) -
- Net income (loss) per basic
share
$ 0.02 $
(0.20 ) $ (0.14
) $ 0.03
$ (0.02 ) Diluted:
Income (loss) from continuing operations $ 0.02
$
*
$ (0.09 ) $ 0.03 $ (0.02 ) Loss from discontinued operations
- (0.20 )
(0.05 ) -
- Net income (loss) per diluted
share
$ 0.02 $
(0.20 ) $ (0.14
) $ 0.03
$ (0.02 ) * Less than
$0.01 per share.
HECKMANN CORPORATION AND
SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
FROM CONTINUING OPERATIONS (In millions) (Unaudited)
Three Months
Twelve Months Ended December 31, Ended December
31, 2012 2011
2010 2012
2011 Net income (loss) from continuing
operations $ 2.5 $ (0.1 ) $ (10.3 ) $ 5.0 $ (2.5 ) Depreciation
42.0 21.4 3.4 14.3 6.4 Amortization 16.6 3.9 1.2 5.2 2.1 Interest
expense, net 26.6 4.2 (2.1 ) 10.7 1.7 Income tax expense/(benefit)
(58.6 ) (3.8 ) (3.4 )
(39.4 ) (4.8 ) EBITDA $ 29.1 $ 25.6
$ (11.2 ) $ (4.2 ) $ 2.9 Transaction
& integration 9.0 2.6 2.1 5.8 0.3 A/R reserve accrual 4.4 - -
4.4 - Environmental accrual 1.7 - - 1.4 - Loss on disposal of
assets/asset impairment 7.8 - - 6.0 - Stock-based compensation 3.6
2.1 0.9 1.2 0.9 Other 6.0 (1.8 )
9.9 0.1 - Adjusted
EBITDA from continuing operations $ 61.6 $ 28.5
$ 1.7 $
14.7
$ 4.1
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