Heckmann Corporation (HEK): A Deeper Look At The Numbers

Oil and gas environmental service provider, Heckmann Corporation (NYSE:HEK) , reported first-quarter earnings on May 8. The company missed slightly on both the top and bottom lines which sent shares dipping in after-hours trading. However, all was not lost on the quarter so let’s dig in and see what happened.

A deeper look at the numbers
Going into the report analysts were expecting a loss of a penny a share on revenue of $166.9 million. For the quarter, Heckmann Corporation (NYSE:HEK) produced revenue of $159.5 million and had a loss of $0.05 a share. However, revenue for the quarter nearly tripled year over year and the company delivered adjusted EBITDA of $32.1 million.

The biggest culprit contributing to the miss was unusually harsh weather. Heckmann Corporation (NYSE:HEK) pointed out that weather affected 13 days of work in its Bakken operations with additional days being lost to weather in the Marcellus. Heckmann was far from the only company to have a weather-related miss in the quarter. While the company planned for weather to be a factor, it turned out to be worse than expected.

Outlook intact
Despite the slight miss in the quarter, Heckmann Corporation (NYSE:HEK) reiterated its full-year guidance. The company still sees revenue of $750 million-$825 million with adjusted EBITDA in the $200 million-$220 million range. It’s seeing notable organic growth in its Eagle Ford and Mississippian Lime operations and tremendous cross-selling opportunities within its business segments, which gives it confidence that it can hit those targets.

Heckmann also expects E&P companies to steadily ramp up activity later this year while pricing for its services is stabilizing. It’s a sentiment that’s echoed by oil-field service peer Halliburton Company (NYSE:HAL) . On the company’s last earnings conference call CEO David Lesar said that, “North American headwinds from last year are largely behind us, and we are optimistic about activity levels and continued margin improvement for the remainder of the year.” That outlook is shared by most of the oil-field services industry and Heckmann Corporation (NYSE:HEK) pointed out on its conference call that it has several customers that have already begun to ramp up activity levels.

Growth prospects
Heckmann is managing its growth carefully; its working to leverage its existing asset base. That’s keeping a lid on its capex, though the company does plan to spend between $90 million and $110 million in capex this year. Further, its being very disciplined in its pursuit of acquisitions with a focus on deals that would allow the company to expand its treatment, recycling, and disposal network. It sees this as being consistent with the strategy of leveraging its transportation network and providing an end-to-end solution to its customers. The company also sees the opportunity to consolidate its industry and it is in very active discussions on four small acquisition opportunities which it believes it will close in the current quarter.