RE:Heckman Corp HEK
The market did not like these numbers as the stock has dropped from a high of $7.05 on December 20, 2012 to a recent 52-week low of $4.33 today. With some recent downgrades and the uncertainty around the announced TFI acquisition there is a real possibility the stock could trade even lower. However a deeper look at the business gives me confidence that the long-term picture for Heckmann Corp. is still on track. The Heckmann team, the same one that built US Filter into a multibillion dollar company, knows how to build a business and this takes more than a year or two. The street however does not have patience and the stock has been taken to the woodshed.
The positives:
- In the last 12 months Heckmann Corp. has increased revenue tenfold.
- Recognized the customer shift from dry gas production to oil and nat gas liquids by shifting assets out of the Haynesville and into the Eagleford, Marcellus, and Utica shales.
- In the fourth quarter of 2011, the company's produced water pipeline averaged throughput of 40,000 barrels per day, compared with 30,000 barrels per day in the third quarter of 2011.
- In a little more than a year the company has acquired and put into service the following assets; 25 salt water disposal wells with a permitted capacity of approximately 400,000 barrels per day, a fleet of approximately 600 trucks, 450 trailers and 1100 frac tanks, taken delivery of 90 LNG-powered trucks and expects to take delivery of a total of 200 LNG vehicles, owns approximately 200 miles of portable poly and aluminum pipe and associated pumps.
- As of December 31, 2011, Heckmann's domestic headcount increased to approximately 1,200 employees from less than 30 employees as of September 30, 2010.
- The company completed the acquisition of eight smaller companies as it continued "rolling up" smaller undercapitalized competitors.
In my view this is a real business that has shown tremendous growth in the last year. The management said on the call that there was cost and time involved consolidating and integrating the acquisitions. As an example, some of the acquired companies were using simplistic accounting systems like Quickbooks to do their accounting
seekingalpha.com
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