CALGARY, ALBERTA — (Marketwired) — 08/07/13 — Newalta Corporation (“Newalta”) (TSX: NAL) today reported results for the three and six months ended June 30, 2013.
FINANCIAL HIGHLIGHTS(1)
Management Commentary
“Strong contributions from our growth investments drove the year-over-year growth in Adjusted EBITDA,” said Al Cadotte, President and CEO of Newalta.
“For the second half of the year, Adjusted EBITDA is expected to be at least 20 percent higher than last year, driven by returns from our growth capital over the past 18 months. We anticipate commodity prices will remain at current levels for the remainder of the year.
“Our capital investment plans for 2013 remain on budget and we are well-positioned with a solid balance sheet and excellent organization to drive growth in 2014. We remain on track in the execution of our business plan.”
Consolidated Overview
Second quarter revenue was up 15% to $196.1 million. Adjusted EBITDA increased 27% to $38.4 million compared to Q2 2012. Improved results were primarily driven by contributions from growth investments in New Markets and Oilfield, further enhanced by a positive impact from commodity prices. Net earnings in the quarter decreased to $4.9 million compared to $18.6 million in the prior year. Excluding higher stock-based compensation expense and net finance charges related to a non-cash loss on embedded derivatives, net earnings would have increased 138% to $11.9 million compared to Q2 2012.
In the first half of 2013, revenue increased 9% to $367.5 million compared to prior year, while Adjusted EBITDA was $66.1 million, flat to 2012. Returns from growth capital investments in New Markets and Oilfield were partially offset by the impact of lower commodity prices.
Operational Overview
Revenue from New Markets in the quarter and year-to-date increased 45% and 30%, respectively, to $56.1 million and $97.0 million compared to prior year. Gross profit in the quarter and year-to-date increased 38% and 15%, respectively, to $19.3 million and $32.3 million compared to 2012. Strong performance in the quarter and year-to-date was primarily driven by returns from growth investments, including our two onsite contracts to process mature fine tailings (“MFT”).
Revenue from Oilfield in the quarter and year-to-date was $39.5 million and $88.1 million, respectively, essentially flat to prior year. Gross profit in the quarter and year-to-date increased 32% and 10%, respectively, compared to prior year. Improved results, primarily driven by contributions from growth capital, were partially offset by declines in drilling activity year-over-year.
Revenue from Industrial increased 7% and 5%, respectively, to $100.5 million and $182.4 million in Q2 2013 and year to date, compared to the prior year. Gross profit in the quarter and year-to-date declined $2.1 million and $5.7 million, respectively, to $12.3 million and $17.9 million compared to the prior year.
Other Highlights
Newalta–s Board of Directors declared a second quarter dividend of $0.11 per share ($0.44 per share annualized) paid July 15, 2013 to shareholders of record June 28, 2013. This higher dividend rate established earlier this year reflects our positive long-term outlook for the business.
Revenue from contracts generated 11% of consolidated revenue trailing twelve months (“TTM”) Q2 2013, compared to 6% in TTM Q2 2012.
Capital expenditures for the three and six months ended June 30, 2013 were $35.0 million and $55.5 million, respectively, focused primarily on growth capital projects in New Markets and Oilfield.
Our Total Debt to Adjusted EBITDA ratio improved to 2.74 in Q2 2013, from 2.94 in Q1 2013. We anticipate ending the year at or near 2.50.
Newalta amended and extended its credit facility effective July 12, 2013. Key changes to the agreement included: extending it by one year, to July 12, 2016, increasing the amount available from $225 million to $250 million and improved pricing.
Outlook
Adjusted EBITDA in the second half of 2013 is expected to be at least 20% higher than last year driven by continued strong returns on our growth investments. We anticipate commodity prices to remain at current levels for the balance of 2013, better than prior year. We expect Ville Ste-Catherine (“VSC”) volumes to be in line with our historical quarterly average and SCL to be at the annual permitted capacity by the end of the year.
We continue to focus on growing our portfolio of longer term contracts, strengthening our foundation of stable cash flow, and maximizing cash flow from our existing assets. We have good visibility on our pipeline of organic growth capital projects, extending well into 2014. We are well-positioned to deliver our 2013 capital budget of $190 million. Capital spending will be allocated to projects and long-term contracts which provide the highest returns and more stable cash flows among other factors.
Quarterly Conference Call
Management will hold a conference call on Thursday, August 8, 2013 at 11:00 a.m. (ET) to discuss Newalta–s performance for the second quarter ended June 30, 2013. To participate in the teleconference, please call 416-981-9000 or toll free 800-734-8507. 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 Thursday, August 15, 2013 by dialing 800-558-5253 and using pass code 21668198 followed by the pound sign.
The unaudited interim Condensed Consolidated Financial Statements and MD&A, 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 .
SELECTED FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets
(Unaudited – Expressed in thousands of Canadian Dollars)
Condensed Consolidated Statements of Operations
(Unaudited – Expressed in thousands of Canadian Dollars)
(Except per share data)
Condensed Consolidated Statements of Comprehensive Income
(Unaudited – Expressed in thousands of Canadian Dollars)
Condensed Consolidated Statement of Changes in Equity
(Unaudited – Expressed in thousands of Canadian Dollars)
Condensed Consolidated Statements of Cash Flows
(Unaudited – Expressed in thousands of Canadian Dollars)
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. 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