When environmental solutions provider Heckmann (HEK +0.00%) reported earnings this week it capped a great ending to the company's transformational year. Not only did Heckmann report a surprise profit but the company's report surprised investors by unveiling a name change. If approved by shareholders at the company's annual meeting in May, the company will be known as Nuverra Energy Solutions and its new ticker symbol will be NES.
While some investors might ignore this change, thinking its nothing more than noise, branding is an important next step in the company's evolution. Instead of investors wondering what the heck Heckmann actually does, its new brand will be built upon the foundation that the company is the forerunner for a new era of environmental solutions. In order to take the company to that next level, as well as to fully integrate its recent mergers, a name change was a must.
Now, as for the actual name chosen and the reasoning behind it, no one can say it better than the one whose name it's replacing. Founder Dick Heckmann noted on the company's conference call: "Every customer we talk to wants an integrated, nationally based, full service solutions provider." The best way to communicate that to its customers was to eliminate the nearly dozen different company names it currently uses and unify the company around one core brand. That core brand, Nuverra Energy Solutions, contains references to "new," "green," "earth," and "time," and reflects the broader focus of the company's now-unified operating units. However, the real reason for the selection of this name according to Heckmann is that "all the obvious names are taken and trademarked, and the URLs are unavailable." You have to love that kind of honesty and candor coming from management!
The question for investors is whether the new name will matter? I think in this case it will matter more than most investors realize. You see, the biggest battle surrounding energy policy in the U.S. is around the environmental issues. In order for fracking to have a cleaner image, exploration and production companies need to have a partner that will adhere to stricter environmental compliance and be accountable. Moreover, these companies are demanding a comprehensive solutions provider. This is what the new brand Nuverra plans to deliver.
Brand image has become increasingly important in the energy industry. One well-known recent example is found in NextEra Energy (NEE 1.46%). Formerly known on the corporate level as Florida Power & Light, as the company has devoted more of its capital to build out its wind business, so a rebranding capturing this next era of energy generation made sense. The company, which just commissioned its 10,000th MW of wind power, is now the company to own for investors desiring to invest in a clean generation utility.
The other thing investors need to keep in mind are the companies that Heckmann will increasingly be competing against for business. Clean Harbors (CLH 0.64%) for example offers its own own oil and gas services which "provide exploration, surface rentals, solids control, and environmental services to the energy sector serving oil and gas exploration, production, and power generation." While the two don't compete directly in all the same areas, the model that Clean Harbors offers is one that Heckmann should look to replicate. Also worth noting, Clean Harbors is planning to build its energy-related business to capture opportunities to expand in the sector. With a great environmentally conscious brand, Clean Harbors can use that image to help it win business. By following this model, Heckmann's brand will help it to capitalize on similar opportunities.
With its transformation complete, Nuverra Energy Solutions is in a great position to win in the years ahead. It's brand has the potential to be a driving force in responsibly developing our shale resources thanks in part to the company's suite of solutions to keep our environment unharmed.
