Environmental-services company and frack-water treatment specialist Heckmann Corporation (NYSE:HEK) is scheduled to report financial results for its 2012 fourth quarter and full year on March 11. As the first report since closing its merger with Power Fuels on Nov. 30, this is an important report for the company, and investors need to pay the closest attention to three specific areas.
1. Integration with Power Fuels
The merger with Power Fuels is a transformative deal in more ways than one. One of the biggest changes is that Heckmann founder Richard Heckmann handed over the CEO reins and a significant stake in the company to Power Fuels CEO and owner Mark Johnsrud. Having built Power Fuels from the ground up, he would appear to be the right man for the job. However, the new Heckmann Corporation (NYSE:HEK) is a much bigger operation to manage, so it will be important to see whether the integration has caused any indigestion.
The other new face here is CFO Jay Parkinson, who’d been the company’s investment banker at Jefferies. The good thing is that he knows the company’s story better than most. The question is whether he can tell that story in a way that investors will both understand and embrace.
2. The numbers
Heckmann Corporation (NYSE:HEK)’s financials are muddied by its acquisition growth model. The company needs to work a bit harder to show clean financials that investors can clearly understand. On average, analysts are expecting the company to lose $0.07 a share in 2012, with consensus of a $0.04 loss in the fourth quarter. However, what’s more important is the true picture of the company’s financial health.
That could prove tricky, as analysts have become increasingly more bearish on the company, given what happened with drilling in the country last quarter. For example, oilfield service providers such as Halliburton Company (NYSE:HAL) called 2012 “challenging” and noted a significant drop in rig activity, especially toward the end of the year. Baker Hughes Incorporated (NYSE:BHI) echoed these sentiments, noting on its conference call that the it “experienced a reduction in activity as rig counts declined sharply toward the end of the quarter” because customers “[shut] down early for the holiday period.” The question is, how much did that effect Heckmann’s business in the quarter?