CALGARY, ALBERTA — (Marketwired) — 11/05/13 — Newalta Corporation (“Newalta”) (TSX: NAL) today reported results for the three and nine months ended September 30, 2013.
Management Commentary
“Results in the quarter were strong, driven by returns from our growth capital investments and contributions from all three divisions,” said Al Cadotte, President and CEO of Newalta. “We continue to focus on delivering creative solutions for our customers and the recent collaboration with DuPont Canada is one example of how we–re moving forward with these initiatives.
“We continue to make excellent progress in the execution of our business plan. The 2013 capital program is fully committed with investments prioritized towards areas that provide the highest returns, more stable cash flows and lowest risk. Our growth investments this year will drive strong performance and attractive returns in 2014 and beyond.”
Consolidated Overview
Third quarter revenue was up 12% to $212.1 million and Adjusted EBITDA increased 20% to $51.2 million compared to Q3 2012. Improved results were primarily driven by contributions from growth investments in New Markets and higher event-based business at our Stoney Creek Landfill (“SCL”), further enhanced by a positive impact from commodity prices. Net earnings in the quarter decreased to $13.2 million compared to $15.2 million in the prior year. Excluding higher stock-based compensation expense, net finance charges related to a non-cash loss on embedded derivatives and income tax expense, net earnings would have increased 32% to $20.4 million compared to Q3 2012.
Year to date, revenue increased 10% to $579.6 million compared to prior year. Adjusted EBITDA was $117.3 million, 8% higher than prior year, driven by contributions from growth investments in New Markets and Oilfield.
Operational Overview
Revenue from New Markets in the quarter and year-to-date increased 11% and 21%, respectively, to $68.1 million and $165.0 million compared to prior year. Gross profit in the quarter and year-to-date increased 12% and 13%, respectively, to $25.1 million and $57.5 million compared to 2012. Strong performance in the quarter and year-to-date was primarily driven by returns from growth capital invested, including our two contracts to process mature fine tailings (“MFT”).
Revenue from Oilfield in the quarter and year-to-date was $49.0 million and $137.1 million, respectively, up slightly from prior year. Gross profit in the quarter and year-to-date increased 19% and 13%, respectively, to $19.9 million and $52.9 million compared to prior year. Positive results were driven by contributions from growth capital investments and improved commodity prices.
Revenue from Industrial in the quarter and year-to-date increased 17% and 9%, respectively, to $95.1 million and $277.4 million compared to prior year. Gross profit in the quarter increased 46% to $14.2 million compared to prior year. Year-to-date gross profit was $32.1 million, flat to prior year.
Other Highlights
Newalta–s Board of Directors declared a third quarter dividend of $0.11 per share ($0.44 per share annualized) paid October 15, 2013 to shareholders of record on September 30, 2013.
Revenue from contracts (fee for service solutions with terms longer than one year and no direct commodity price exposure) generated 13% of consolidated revenue trailing twelve months (“TTM”) Q3 2013, compared to 8% in TTM Q3 2012.
Capital expenditures for the three and nine months ended September 30, 2013 were $43.4 million and $98.9 million, respectively, focused primarily on growth capital projects in New Markets and Oilfield.
Our Total Debt to Adjusted EBITDA ratio improved to 2.52 in Q3 2013, from 2.74 in Q2 2013. We anticipate ending the year at or about 2.50.
On October 17, 2013, we announced a development agreement with DuPont Canada to test an innovative water processing technology in the Alberta oil and gas industry. The water processing technology removes solids from water and facilitates a higher level of water re-use for customers at their sites. The collaboration between the companies will combine DuPont–s innovative scientific and technical expertise with Newalta–s operating capabilities and customer relationships.
Outlook
Adjusted EBITDA in the second half of 2013 is expected to be approximately 20% higher than last year, based on commodity prices and drilling activity remaining at Q3 levels. Growth capital investments made over the past 18 months continue to deliver strong returns. SCL volumes are anticipated to be at the annual permitted capacity by the end of the year, or approximately 132,000 MT in Q4. Ville Ste-Catherine (“VSC”) volumes in the fourth quarter are expected to be in line with our historical quarterly average. Performance in New Markets and Oilfield for the second half of 2013 remains in line with management–s expectations.
Our 2013 capital budget of $190 million is fully committed. We continue to focus on growing our portfolio of longer term contracts, strengthening our foundation of stable cash flow, and maximizing returns from our existing assets. We have good visibility on our pipeline of organic growth capital projects.
Quarterly Conference Call
Management will hold a conference call on Wednesday, November 6, 2013 at 11:00 a.m. (ET) to discuss Newalta–s performance for the third quarter ended September 30, 2013. To participate in the teleconference, please call 416-981-9000, or 1-800-926-9174. To access the simultaneous webcast, please visit . For those unable to listen to the live call, a taped broadcast will be available at and, until midnight on Wednesday, November 13, 2013 by dialing 1-800-558-5253 and using pass code 21675657 followed by the pound sign.
The Unaudited Condensed Consolidated Financial Statements and Management–s Discussion & Analysis, which contain additional notes and disclosures, are available on our website at under Investor Relations/Financial Reports.
About Newalta
Newalta is North America–s leading provider of innovative, engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from industrial residues. We serve customers onsite directly at their operations and through a network of 85 locations in Canada and the U.S. Our proven processes, portfolio of more than 250 operating permits and excellent record of safety make us the first choice provider of sustainability enhancing services to oil, natural gas, petrochemical, refining, lead, manufacturing and mining markets. With a skilled team of more than 2,000 people, two decade track record of profitable expansion and commitment to commercializing new solutions, Newalta is positioned for sustained future growth and improvement. Newalta trades on the TSX as NAL. For more information, visit .
FORWARD-LOOKING STATEMENTS
Certain statements contained in this document constitute “forward-looking statements”. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, and similar expressions, as they relate to Newalta Corporation and the subsidiaries of Newalta Corporation, or their management, are intended to identify forward-looking statements. In particular, forward-looking statements included or incorporated by reference in this document include statements with respect to:
Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation:
By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur. Many other factors could also cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements and readers are cautioned that the foregoing list of factors is not exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Furthermore, the forward-looking statements contained in this document are made as of the date of this document and are expressly qualified by this cautionary statement. Unless otherwise required by law, we do not intend, or assume any obligation, to update these forward-looking statements.
The information contained on our website does not form part of this press release.
RECONCILIATION OF NON-GAAP MEASURES
This Press Release contains references to certain financial measures, including some that do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS” or “GAAP”) and may not be comparable to similar measures presented by other corporations or entities. These financial measures are identified and defined below:
“EBITDA”, “EBITDA per share”, “Adjusted EBITDA”, and “Adjusted EBITDA per share” are measures of our operating profitability. EBITDA provides an indication of the results generated by our principal business activities prior to how these activities are financed, assets are amortized or how the results are taxed in various jurisdictions. In addition, Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our common shares. As such, Adjusted EBITDA provides improved continuity with respect to the comparison of our operating results over a period of time. EBITDA and Adjusted EBITDA are derived from the condensed consolidated statements of operations and comprehensive income. EBITDA per share and Adjusted EBITDA per share are derived by dividing EBITDA and Adjusted EBITDA by the basic weighted average number of shares.
They are calculated as follows:
“Divisional EBITDA” provides an indication of the results generated by the division–s principal business activities prior to how the assets are amortized, and before allocation of Selling, general and administrative costs. Divisional EBITDA is the sum of gross profit and amortization for the respective division. Divisional EBITDA is derived from EBITDA as follows:
“Adjusted net earnings” and “Adjusted net earnings per share” are measures of our profitability. Adjusted net earnings provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation recovery or expense and the gain or loss on embedded derivatives. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our common shares. The gain on the embedded derivative is a result of the change in the trading price of the debentures and the volatility of the applicable bond market. As such, Adjusted net earnings provides improved continuity with respect to the comparison of our results over a period of time. Adjusted net earnings per share is derived by dividing Adjusted net earnings by the basic weighted average number of shares.
“Book value per share” is used to assist management and investors in evaluating the book value compared to the market value.
“Funds from operations” is used to assist management and investors in analyzing cash flow and leverage. Funds from operations as presented is not intended to represent operating funds from operations or operating profits for the period, nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. Funds from operations is derived from the consolidated statements of cash flows and is calculated as follows:
References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Divisional EBITDA, Adjusted net earnings, Adjusted net earnings per share, Funds from operations, and Funds from operations per share throughout this document have the meanings set out above. Adjusted SG&A is defined as SG&A adjusted for stock-based compensation and amortization.
Contacts:
Newalta Corporation
Anne M. Plasterer
Executive Director, Investor Relations
(403) 806-7019
Newalta Corporation
Stephanie MacVicar
Director, Investor Relations
(403) 806-7391