NES Revisited – Harper Strokes Out

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jimmah

Someone with a modicum of class would probably let this week’s update from NES slide since there is nothing to gain from rejoicing in the pain of others.  I am not that someone.  There was too much shittiness in that update to let it go without chiming in.

Let’s dissect the 8K point by point:

Nuverra expects to report revenues for the second quarter of approximately $165.5 million and adjusted EBITDA2 in the range of $32.8 million to $33.6 million.

Well, that’s a straight kick in the gonads.  A 3.7% sequential revenue growth rate does not exactly make for a “high growth” stock.  Taking the midpoint of their bullshit “adjusted EBITDA” range provides an EBITDA margin of 20%.  This is the same company that claimed they could maintain 30 – 40% margins while rapidly growing revenues.

They were gracious enough to provide a reconciliation between normal EBITDA and their trumped up version of a non-GAAP measure.  Regular old EBITDA is projected to be a pissy $23.4 mln again using midpoint figures.  That’s a smoooooth 14% EBITDA margin.  Yours truly in The PPT projected their margins would come down to the 20 – 15% range.  Recognize.

The Company expects cash capital expenditures during the quarter to be approximately $8.2 million

Nice.  CAPEX through 2Q this year is slightly higher than last year despite the company carrying 2.6x the amount of assets now compared to last year.  Don’t give me that shit about growth CAPEX vs. maintenance CAPEX.  The company is in bad shape; pure and simple.

Activity levels in the Shale Solutions segment lagged the Company’s internal forecast, as customers increased activity at a slower pace than originally anticipated, pushing revenue into the second half of 2013 and 2014.

Translated:  The growth ain’t there kids.

Unusually harsh weather conditions in the Bakken Shale area, the Company’s largest region of operations, adversely impacted customer completion activity, as high levels of snow and rain hampered vehicle access to roads.

Diversification… get some.  Let me give you a free heads up; it’s going to be cold in North Dakota next winter, the winter after that, the one after that, etc.  It also tends to rain a little bit up there this time of year.

Operational issues in the Eagle Ford Shale area, a key 2013 growth area for the Company, caused business operations to decline sequentially. Nuverra has taken measures to remedy the situation by bringing in a new management team with significant industry experience and restructuring operations in the region.

This one RIGHT HERE is the red flag of all red flags.  We’re talking the Kremlin on May Day back in the 60’s kind of red flags.

May Day 1966, Moscow

When you compete in a highly competitive business, you get one shot and one shot only.  NES has already blown their chance.  They touted the additions of a couple of former HAL managers earlier this quarter making it sound like they poached the guys.  Wrong.  Neither one of those guys has worked for HAL in three years.  One guy left HAL around 2005.

They can talk about making the management changes until they’re blue in the face but it won’t mean a damn thing until the next 20 companies screw up.  If you lose a job due to lack of performance you’re relegated to the back of the queue.  That’s how this business works no matter what someone with a cool ass Public Relations degree will tell you.  BTW, nice couch, brah.

Stronger than anticipated customer demand in the Marcellus/Utica Shale area led to an increased utilization of subcontractors, resulting in lower overall margins.

So much for that management dream team, I guess.  Good management can properly you know… manage their growth.  These guys look clueless.

The Company also recently completed an acquisition in the Utica Shale area to expand operations and build on its existing presence in a basin that is very strategic to the Company’s growth plans.

Wonder if this was done prior to quarter end or after June 30?  If it was done during 2Q then the $165.5 mln in revenue is even more craptastic than originally thought.

In the Industrial Solutions segment, higher collection and rail logistics costs coupled with stagnant demand in asphalt markets compressed margins and resulted in lower than anticipated financial results.

This is the segment that is supposed to provide a buffer against the cyclical nature of the oil and gas portion of the business.  Looks like it’s not performing up to snuff either.  Big shock.

Let’s wrap this up by talking a little bit about the deal they recently inked with HAL.  This deal is being touted by all sorts of message board peeps as a game changer. It’s revolutionary in nature and will be the catalyst to send NES shares to da moon.  Three words… Bull.  Fucking.  Shit.

No financial terms were disclosed, and it was quite apparent from the press release that NES will be handling the trucking and storing of fluids.  That’s not where the money gets made in this kind of deal.  Whoever is processing the water, supplying the treatment chemicals and other services will make the bones.  Based on nothing more than how the press release was worded I have to believe HAL is the one doing all that.

Conclusion:  Avoid this stock.  I would not recommend a short position because thinly traded stocks that get pumped on Seekingalpha can burn your ass.  But this company is shaping up to be the quintessential value trap.  If you think it’s going to be a long term 10 bagger, you’re going to be sorely disappointed.

[youtube:http://www.youtube.com/watch?v=PqKq_kGEtkU 450 300]

39 Responses to “NES Revisited – Harper Strokes Out”

  1. Po, what do you know about Green Hunter Water?

  2. Well, I will stand here and say that I appreciate your opinion and observations concerning $NES, but I thoroughly disagree and am long, and will stay long, till my analysis changes. I wish you all the luck in the world, and apologize for as hominem attacks. There’s two sides to every trade.

  3. Buchecha,

    I find it interesting that you have examined my physicality in a three year old picture. Some would call that homosexual.

    Who the fuck are you anyways?

    I’m not embarrassing myself in the slightest. Now fuck off.

  4. ABSENTEE BABY DADDY

    OH SNAP!! Harps, didn’t you get fired from Merrill? You needs to update that LinkedIn page son!

  5. What’s funny, is that age and experience do not equate to wisdom. Now, go back to your shitty life, ugly wife, and retarded kids. You’re on the way out and I’m just starting. Better recognize, pimp.

  6. You pick fights with people half your age, on the Internet. That is funny to me. And, I just can’t get over how childish the name “po pimp” is, I mean seriously, you really think that’s cool.

  7. Special Olympics? You really know nothing about anything in this world we live in. Come to the big city and see what wonders we have produced. Only the ignorant mock what they do not know.

    • Hey dipshit, I’ve lived in eight countries on five continents. I know more about this world than you could ever hope to learn.

      I’ll take that over your dumbass Public Relations degree any day and twice on Sundays.

  8. Go build something, fag.

    • 700+ views and counting. Too bad 75% of them are just you constantly hitting refresh because you’re not embarrassed or anything.

  9. I am NOT embarrassed in the least, besides the fact that it hasn’t been updated in quite some time. Mind you, UF is #2 in the country for PR degrees. Sorry, I’m not blue collar like you, clown. I’m pissed because some asshole names “PO pimp” has a grudge against someone half his age.

    Best part about all of this, is that if you look at my accomplishments at my age vs what you did at yours, I guarantee I’m success is like nothing you have ever seen., mr pimp

  10. An upstanding gentleman, you are, Po pimp. Real classy. I guess the name says it all.

    • Missed this part, I guess:

      Someone with a modicum of class would probably let this week’s update from NES slide since there is nothing to gain from rejoicing in the pain of others. I am not that someone

  11. And, pray, tell me, Buchecha, how am I the embarrassing one? I’m not the child-molesting, redneck who actually spends time looking to out people on blog sites, and personally attack them.

    • Let’s see, Harper.
      1. You are inviting Mr. Pimp to NYC insinuating that you will do something to him.
      2. You are a scrawny kid that appears to have soft hands and never been in a true physical altercation. You do not have fighter ears or hands, which leads me to believe you are all talk.
      3. You took offense when someone called you a ‘whiny jew,’ yet you call Mr. Pimp a “fag.”
      4. You seem totally unaware of what an ass you’re making of yourself you’re making, which suggests you don’t have much life experience.

      Why don’t you go enjoy some cheese with your whine?

  12. I find it fascinating that you, as uneducated as you are, are so god damn retarded. You have somehow made me the spokesperson of a company I own shares in. Now, you go out of your way to attempt to embarrass me? By outing my anonymity! Who the fuck do you think you are? Probably a two-time GW Bush voter. Man, if I ever saw you in the street.

    • Harper, we’ve seen your pic. Just stop now before you cause yourself further embarrassment.

    • Why are you embarrassed by your LinkedIn profile? Is it the porn set couch or the Public Relations degree? Perhaps you are not proud of your time as a community organizer?

      Looks like the title of this post was “nail on head”.

  13. Mr big bad engineer, who writes like shit, getting upset? Po pimp hahah. The name is hilarity incarnate. You are a clown of the highest order.

  14. Only child molesters find out so much info anout somebody else online. Others seem to think so too, as they took down the link. Yet, what’s creepier, your blue-collared ass won’t even tell me how u figured out who I was.

  15. Seriously though, why did u think it was acceptable to out my anonymity here? And how did u do it?

  16. Yawn-inducing? You mean classy?

  17. Oh and by the way, how did u find me? Just so I can fix it and get back to being anonymous. You cn always come to NYC and tell me to my fa e

    • It wasn’t difficult. Now shut up before I have your electricity shut off.

    • Harper, you may want to stop now as it appears your mouth is writing checks that your ass can’t cash.

  18. Po,

    I understand many of the points you are making. Do you believe it is a flawed business model or simply the wrong management team to execute successfully?

  19. Po, great analysis. Your work is always appreciated.

  20. ALso, looks like no one reads your shit blog anyways pimpdaddy, its been up 3 days and no one told me that you mentioned me. Till I just happened upon the blog section. Seriously, you are the worst kind of person. How did you even find my linkedin? I am impressed. clown.

    • More than 600 views for this post and nearly 1,900 on the previous one. Want to compare those numbers to your yawn-inducing posts?

      Yeah, didn’t think so.

  21. So you went out and found my LinkedIn profile I havent used in a few years and put that on a blog forum? who are you dude? then you call yourself “Po Pimp” …I mean seriously, it doesnt get more low class than this.

  22. Dude, are you kidding?! How old are you? why are you putting up personal shit here? please remove it. I dont care what you say about my ANONYMOUS handle, but to go and find me on linkedin and put it up publicly, is absurd!

  23. You’re so cool, brah.

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