Net debt now appears to be under 400 and the industry is at a turning point. Rig count beginning to increase and most E&P capex budgets for '14 are significant after basically nothing in '13. All of this is good for business and revenue growth, maybe not in the next quarter, but looking out further than that. Can prob get back to 200m in ebitda in the next few years (was 200m proforma in '12) with an ebitda multiple of 6-7 (historically its been 9, so I am discounting that becuase of slower growth). Also, the industry is still fragmented and ripe for consolidation, and it is still a good takeover candidate imo - especailyl with a lower stock price and high cost of capital
1) hard to short (makes them higher)
2) Implied vol isnt way out of the range of historical
3) around earnings they go up
Nothing to read into here
Good point but a couple of things I would like to point out.
1) Although the covenants get more difficult going forward like in 1Q14, consensus for that quarter is up significantly ($31.4m).
2) You are not factoring in the sale of TFI
3) The company prob kept close track of opex in the quarter to avoid unneccesary spending to keep the business solvent before paying off the facility with the proceeds from TFI
The company is not in a great position, but if it successfully reduces this leverage, and can get back on track, the stock has a ton of upside.
Potential for banknig business may skew some opinions but it is far to say that they have no motive at all to have the right call
texas, while i agree with you that it is probably intentional to try to be seen more of an environmental services business for valuation purposes... I also don't believe it is appropriate to value it as a pure oil-service business. Perhaps using comparables like R360 (acquired by WCN) is the correct way to look at it. R360 was acquired for about 4x revenue and 7.5x ebitda, though it had significantly higher margins and less misteps. I am not saying nes should be valued at par with R360, but perhaps a slighty to moderate discount - but with nes trading at ~0.5x revenue and ~5.9x ebitda, certainly a lot of negative information is priced in. (I arrive at 5.9x based on street consensus and a TFI sale for ~125m).
Furthermore texas, if conditions do turn around for operations (ngas prices continue, weather drastically improves, competition slows, oil prices surge, north american drilling pricing power deminishes, etc) the company could beat numbers on the upside and with 30% of teh shares short, can create a pretty attractive run for longs. Let me remind everyone that although texas and bears have been correct thus far, that street expectations have come in considerably (4Q ebitda = $23m). The risk/reward at this price certainly doesnt seem terrible to me as a long.
Lastly, the potential for the firm to be bought out is still very likely in my opinion based on management teams, consolidation in the industry, and an overlevered balance sheet that a financial partner or strategic can recap and bring serious value to the company. I would not be surpirsed to see a buyer come in at