Heckmann Earnings: Here’s Why Investors Don’t Like These Results

Heckmann Corporation (NYSE:HEK) had a loss and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 2.18%.

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Heckmann Corporation Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased to $-0.05 in the quarter versus EPS of $-0.03 in the year-earlier quarter.

Revenue: Rose 190.12% to $159.45 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Heckmann Corporation reported adjusted EPS loss of $0.05 per share. By that measure, the company missed the mean analyst estimate of $-0.01. It missed the average revenue estimate of $166.88 million.

Quoting Management: 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.

Key Stats (on next page)…

Revenue increased 40.84% from $113.21 million in the previous quarter. EPS increased to $-0.05 in the quarter versus EPS of $-0.04 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.06 to a profit $0.02. For the current year, the average estimate has moved down from a profit of $0.22 to a profit of $0.1 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)