News Releases

CALGARY, ALBERTA - May 10, 2016 /CNW/ - Newalta Corporation ("Newalta") (TSX:NAL) today reported results for the three months ended March 31, 2016.

FINANCIAL HIGHLIGHTS(1)

		Three months ended
		March 31,
($000s except per share data)
(unaudited)		2016	2015	% change
Continuing Operations(2)
Revenue		48,665	97,579	(50)
Divisional EBITDA(3)		9,477	26,824	(65)
	% of Revenue	19%	27%	(30)
General & Administrative		9,444	13,930	(32)
Net loss from Continuing Operations(3)		(41,242)	(23,264)	77
	- per share ($) basic and diluted	(0.73)	(0.41)	78
Adjusted net loss(3)		(12,735)	(4,882)	161
	- per share ($) basic adjusted(4)	(0.23)	(0.09)	156
Adjusted EBITDA(3)		33	12,894	(100)
	- per share(3)	-	0.23	(100)
Cash used in Continuing Operations		(7,971)	(15,232)	(48)
	- per share ($)	(0.14)	(0.27)	(48)
Funds (used in) from Operations(3)		(8,291)	3,486	n/m
	- per share ($)(3)	(0.15)	0.06	n/m
Maintenance capital expenditures(3)		970	2,332	(58)
Growth capital expenditures(3)		1,698	32,394	(95)
Dividends declared		-	7,025	(100)
	- per share ($)(3)	-	0.125	(100)
Dividends paid		3,515	5,724	(39)
Weighted average Shares outstanding		56,237	56,179	-
Shares outstanding, March 31,(4)		56,237	56,210	-
Combined Operations(2)
Revenue		48,665	139,687	(65)
Net loss		(41,306)	(27,741)	(49)
	- per share ($) basic and diluted	(0.73)	(0.49)	(49)
Cash used in Operating Activities		(7,971)	(36,501)	(78)
	- per share ($)	(0.14)	(0.65)	(78)

(1)	Newalta's unaudited Condensed Consolidated Financial Statements are attached. References to Generally Accepted Accounting Policies (GAAP) are synonymous with IFRS and references to Condensed Consolidated Financial Statements and notes are synonymous with Financial Statements. All financial figures are unaudited.
(2)	In Q1 2015, we completed the sale of our Industrial Division to Revolution. As a result, we have defined our Industrial Division as "Discontinued Operations", the remaining operations as "Continuing Operations" and the total Discontinued Operations and Continuing Operations as "Combined Operations". In accordance with the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, income and expenses and cash flow provided and used associated with the business that was sold have been classified as Discontinued Operations in our Financial Statements for the periods presented.
(3)	These financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP financial measures are identified and defined throughout this document.
(4)	Newalta has 88,148,148 Shares outstanding as at May 10, 2016.

MANAGEMENT COMMENTARY

"First quarter results were in line with our expectations, which anticipated continued impacts from the decline in oil prices and activity levels," said John Barkhouse, President and Chief Executive Officer. "As customers minimized their activities on a further drop in oil prices in the first weeks of 2016, we experienced a 50% decrease in revenue in the first quarter versus prior year. In response, we took additional steps to permanently reduce costs and create greater financial flexibility."

During the first quarter, Newalta initiated cost rationalization actions to drive $12 million in incremental annualized savings - a program that has driven in excess of $50 million in annualized savings compared to 2014 levels - suspended its quarterly dividend and worked with its lenders to improve financial flexibility. Early in the second quarter, Newalta successfully completed an equity financing to raise $54.2 million in gross proceeds which were primarily used to reduce the amount drawn on our Credit Facility.

"These steps enhance Newalta's ability to withstand the current industry downturn, but equally important are the actions taken to solidify our customer relationships as a safe, reliable and cost-effective operator," said Mr. Barkhouse. "We've seen pockets of improved facility utilization and our contract business has continued to provide steady cash flow, accounting for 30% of our trailing-twelve month revenue."

In early May, a massive wildfire in Fort McMurray and surrounding areas of Alberta caused Newalta and many producers to reduce or suspend operations in the region in order for employees to safely evacuate.

"Our immediate priority is to support our people and their families as they cope with this disaster," said Mr. Barkhouse. "We're incredibly fortunate that all of our employees are safe and that our Fort McMurray facility and equipment located at various SAGD and mining locations remain intact. I am extremely proud of how Newalta responded under these trying circumstances. We will continue to do everything we can to help the community and to prepare for a safe return to normal operations."

The timing of the resumption of operations by our customers will be the key determinant of the financial impact on our business. There is currently limited visibility as to when and to what extent normal operations will resume. Based on a staged Oil Sands operational recovery through May and June, our preliminary estimate of the non-recurring impact to Adjusted EBITDA is $5 million.

"Looking ahead, our key priorities remain on continuing efforts to minimize our costs, preserve cash to protect the balance sheet and drive revenue growth opportunities through leveraging our network of facilities, operating experience and modular assets," said Mr. Barkhouse. "I believe the organization is prepared for the challenges of fundamental industry change and we are well positioned with a business model that has the capacity to realize operating leverage on a sustained increase in customer activity."

FIRST QUARTER RESULTS

Continuing Operations reflect the ongoing pure play environmental energy services business of Newalta and exclude the Industrial Division which was sold in the first quarter of 2015.

Continuing Operations

• Q1 revenue and Adjusted EBITDA decreased 50% and 100%, respectively, to $48.7 million and nil compared to prior year, in line with guidance.
• Performance in the first quarter of 2016 continued to be impacted by significantly reduced drilling and completion activity and declining product waste volumes in the areas we operate. Factors at play throughout the latter half of 2015 continued into the first quarter of 2016, with producers shutting in wells, minimizing maintenance activities, and deferring projects and capital spending.
• Production-driven waste volumes decreased by over 40% at our Canadian Oilfield Facilities and remained flat at our Heavy Oil Facilities compared to prior year.
• Reduced production waste volumes drove $10.9 million of the $12.9 million decline in Adjusted EBITDA. The balance of the decline was primarily a result of lower drilling activity, largely offset by cost savings realized in the first quarter.
• Net loss from Continuing Operations for the quarter was $41.2 million compared to $23.3 million in the prior year, driven primarily by lower Adjusted EBITDA.

Heavy Oil

• Heavy Oil revenue and Divisional EBITDA decreased by 40% and 37% respectively, to $22.9 million and $7.3 million compared to prior year. The decrease was primarily driven by Onsite due to reduced demand for in situ project work and the Syncrude MFT contract, which remained in hibernation throughout the first quarter.
• Effective April 1, 2016, we extended a Heavy Oil contract to operate through to December 31, 2017.

Oilfield

• Oilfield revenue and Divisional EBITDA decreased by 56% and 86% respectively, to $25.8 million and $2.2 million compared to prior year. Performance was driven by lower contributions from both the Oilfield Facilities and Drilling Services business units primarily due to reduced production and drilling activity.
• In Q1, as a part of our focus on offering enhanced customer value, we leveraged our modular assets and mobilization expertise to provide an optimized solution on one of Anadarko Petroleum Corporation's sites in the DJ Basin, where we were able to move from start of commissioning to operations within 20 days.

Capital Expenditures

• Capital expenditures for the three months ended March 31, 2016 were $2.7 million, focused on strategic markets. In light of the current economic environment, our midstream joint venture partner exercised their right to put their interest in one of our modular processing facilities back to Newalta. We anticipate acquiring their 50% interest in the facility at an approximate cost of $6 million in Q3 2016.

G&A and Restructuring

• Q1 G&A decreased 32% to $9.4 million. The year-over-year improvement reflects the impact of cost rationalization initiatives undertaken in 2015 and the first quarter of 2016.
• We incurred $20.6 million in restructuring and other related costs during the first quarter, comprised of non-cash onerous lease costs ($15.0 million) and employee terminations and other costs ($5.6 million).

ACTIONS TAKEN TO PROTECT PROFITABILITY AND OUR BALANCE SHEET

• In February 2016, we initiated cost rationalization actions which will drive an incremental $12 million in annualized savings ($10 million in 2016) by eliminating approximately 70 positions across G&A and operations and further consolidating office space. These actions, combined with our 2015 initiatives, have driven in excess of $50 million in annualized savings over 2014 levels.
• Effective March 1, 2016 we amended the terms of our Credit Facility to extend the waiver of our Total Debt to EBITDA covenant to Q1 2018, and revised the Senior Debt to EBITDA and Interest Coverage covenant thresholds to provide improved flexibility in the current economic environment.
• We suspended our quarterly dividend following the dividend paid to shareholders on January 15, 2016.
• Our contract model has performed well during this downturn, continuing to provide steady, predictable cash flow. These contracts generally are not tied directly to commodity price changes or drilling activity and provide a solid foundation for our business, particularly in depressed markets. On a trailing-twelve month (TTM) basis, contracts represented 30% of our revenue.

DISCONTINUED OPERATIONS

In Q1 2016, net loss from Discontinued Operations was $0.1 million compared to net loss of $4.5 million in the prior year. Q1 2016 results reflect a pre-tax loss of $0.1 million compared to a loss of $3.2 million in the prior year.

RECENT DEVELOPMENTS

Equity Issuance

On April 20, 2016, we closed on our bought deal and private placement equity financings. The public and private offerings of common shares raised total gross proceeds of $54.2 million (net proceeds of approximately $51.6 million). A total of 31.9 million common shares were issued at $1.70 per share, with 18.0 million sold on a bought deal basis to the public and 13.9 million sold by way of private placement to certain institutional investors, certain officers and all directors of Newalta. The net proceeds were used to reduce the amount drawn on our Credit Facility. These actions enhance our ability to withstand the prolonged market downturn, protect against further market deterioration and better position the company upon market recovery.

Heavy Oil Contract Extension

Effective April 1, 2016, we amended our contract with a Heavy Oil customer to extend operations on the customer's site. The amended contract expires December 31, 2017, and provides for revised pricing for services. While the contract amendments are expected to result in an increase to cash flow over the remaining term of the contract, due to lease accounting implications of contracts of this nature, an extension of the term of the contract will result in a portion of Adjusted EBITDA (approximately $3 million) being recorded for this contract in 2017, as opposed to 2016. As a part of our March bank credit facility amendment process, these potential contract amendments were reviewed with the lending syndicate, and an add back adjustment to the definition of EBITDA for the purpose of covenant calculations was obtained, such that we do not expect to see any material impact to our covenant performance as a result.

The following section contains forward-looking information as it outlines our Outlook for 2016. Our Outlook is based on several key assumptions including growth capital contributions, commodity prices and activity levels of the industries we serve. Changes to these assumptions could cause our actual results to differ materially. Please refer to our Forward-Looking Information later in this document.

OUTLOOK

Our performance in 2016 has been significantly impacted by the drop in oil prices and activity levels in the oil and gas industry. In the first weeks of 2016, oil prices dropped below WTI $30/bbl and drove incremental behavioural and market shifts. We anticipate that continued market weakness will result in a year-over-year reduction in production volumes and additional pricing pressure, with these factors being partially offset by additional savings from our rationalization initiatives.

In early May 2016, a massive wildfire in Fort McMurray and surrounding areas caused Newalta and many producers to reduce or suspend operations in the region in order for employees to safely evacuate. Our people and their families are safe. While our Fort McMurray facility and equipment located at various SAGD and mining locations remain intact, our financial performance will be impacted by reduced operations. The key factor in determining the impact on our performance will be the timing in which customers bring their production back online and resume normal operations. There is currently limited visibility as to when and to what extent normal operations will resume. Based on a staged Oil Sands operational recovery through May and June, our preliminary estimate of the non-recurring impact to Adjusted EBITDA is $5 million.

Prior to the impact of the Fort McMurray wildfire, we maintained our 2016 floor guidance for Adjusted EBITDA of $25 million despite the downward adjustment for the contract extension, with performance in the second half expected to be substantially stronger than the first half. This was based on expected improvement in commodity prices, increased production volumes flowing into our facilities, targeted improvement in performance within our drill site business, and the impact of management's ongoing focus on cost management. Notwithstanding the impact of the wildfire, our business model will continue to be underpinned by the strength and stability of our Heavy Oil contract business. We have reduced the upper end of our guidance for the year to reflect the impact of the contract extension and our limited visibility to the ongoing and generally weak drilling and production environment.

Factoring in the preliminary estimate for the wildfire, our revised full year Adjusted EBITDA guidance range is now $20 million to $30 million.

The following table outlines the factors we expect to impact performance in the second quarter and full year.

Factor		Actual		Assumption		Expected impact on Adjusted EBITDA compared to prior year period(1)
		Q1 2016(1)		Q2 and Full Year 2016		Q2 2016		2016
West Texas Intermediate (US$/bbl)		$33.23		Q2 2016: $40 - $45 2016: $35 - $45
Canadian Light Sweet (CDN$/bbl)(2)		$41.48		Q2 2016: $50 - $55 2016: $45 - $55		$1M - $2M decrease		$2M - $4M decrease
Western Canadian Select (CDN$/bbl)(2)		$26.32		Q2 2016: $30 - $40 2016: $25 - $35		$1M - $2M decrease		$2M - $4M decrease
Drilling activity(2) decline		~45%		Q2 2016(3): 40% - 50% 2016(3): 30% - 40%		$4M - $5M decrease		$13M - $15M decrease
Step Change(4)		($11.7M)				$10M - $11M decrease		$23M - $28M decrease
Savings from cost rationalization		$7M		$10M 2015 carry forward $10M 2016		$4M - $5M increase		~ $20M increase
Fort McMurray wildfire(5)						~$5M decrease		~$5M decrease
Adjusted EBITDA Guidance						($4M) - ($1M)		$20M - $30M

(1)	M refers to millions.
(2)	Impact derived from annual sensitivities based on 2016 forecast performance and volumes outlined in the "Sensitivities" section on page 45 of our 2015 Annual Report. The actual impact from crude oil prices may vary with fluctuations in volumes.
(3)	Estimates for drilling activity decline as disclosed in our 2015 Annual Report have been amended to reflect expectations for the remainder of 2016. The revision does not have an impact on expected EBITDA range.
(4)	This factor is expected to have an impact on our performance through the year, and cannot be quantified on any linear sensitivity.
(5)	Preliminary estimate assuming a staged Oil Sands operational recovery through May and June. There is currently limited visibility as to when and to what extent operations within the Fort McMurray region will resume to normal activity levels and our Outlook for Q2 and 2016 could be materially different.

Crude Oil Prices

• Lower crude oil prices directly impact the value of the products we recover from waste. We anticipate oil prices to remain low for 2016.

Drilling Activity

• We anticipate 2016 drilling activity to decline further from 2015 levels in the areas where we operate.

Step Change (production waste volumes, shifts in waste mix, customer pricing reductions, offset by returns from growth capital and operational efficiencies)

• The majority of step change is driven by the declines in production waste volumes available in the market and oil content in the waste received.
• We expect heightened pricing pressure and lower production volumes to continue through 2016 with partial recovery in the second half.
• We are working with our customers to bundle opportunities, partner through contractual relationships, collaborating with our suppliers and reducing our operating cost structure to mitigate the impact of pricing pressure.
• The severe decline in crude oil prices and activity has reduced contributions from growth capital.

Savings from Cost Rationalization

• In 2016 we anticipate realizing $20 million in savings over 2015, $10 million realized as the full year impact of
  actions taken in 2015 and $10 million related to our 2016 actions.
• 2016 actions included the elimination of positions, office space consolidation and employee salary rollbacks.
• We anticipate quarterly G&A to fall below $9 million as we exit the first half of 2016.

Fort McMurray Wildfire

• There is currently limited visibility as to when and to what extent operations within the Fort McMurray region will resume to normal activity levels.
• Our preliminary estimate reflects the assumption of a staged Oil Sands recovery through May and June.

Restructuring and Other Related Costs

Excluding onerous lease charges, we expect to incur approximately $6 million in restructuring charges, of which we anticipate $3 million will be paid out in 2016.

Capital Expenditures

Our guidance for capital expenditures remains unchanged at approximately $15 million, with maintenance capital comprising approximately one-third of the total spend.

Free Cash Flow Generation, Net Debt and Leverage

We have proactively structured our business model for a "lower for longer" environment. Our equity financing, rationalization initiatives, amended Credit Facility, reduced capital spend and suspension of dividends provide the liquidity and flexibility to operate in a sustained downturn.

In 2016, we will continue to manage cash flow to ensure our financing obligations are met and spending is minimized wherever possible. Tied to our EBITDA guidance and its underlying assumptions, we anticipate being cash flow negative in the year after the impact of working capital changes and cash costs for severance, onerous lease payments, financing costs, tax and capital expenditures.

Beyond 2016, subject to partial recovery in oil price and activity levels, we will target positive Free Cash Flow generation after all cash financing, tax and capital expenditures.

The waiver of our Total Debt to EBITDA covenant ratio, as well as the revised Senior Debt to EBITDA and Interest Coverage covenant thresholds under our Credit Facility provide us with additional flexibility to manage our balance sheet successfully during this downturn. Managing debt leverage and use of cash and capital are our highest priorities. We will remain within our debt covenants throughout the balance of the year.

Customer Solutions

In addition to aggressively managing the internal business levers, we have continued to focus business development and sales on the pursuits of targeted customer opportunities. This approach leverages our extensive facility network, operating experience and modular assets to provide customers with a step change in cost-efficiency and liability management.

Leverage on Recovery

Inherent in our business model is the capacity to leverage significant upside with recovery in oil pricing and activity levels. In a sustained $60 WTI environment with associated activity levels (using 2015 operating results as a base), we would expect Adjusted EBITDA to be in the range of $100 to $140 million. For further details, please refer to page 24 of our 2015 Annual Report.

Quarterly Conference Call

Management will hold a conference call on May 11, 2016 at 11:00 a.m. (ET) to discuss Newalta's performance for the quarter. To participate in the teleconference, please call 416-340-8010 or toll free 866-226-1798. To access the simultaneous webcast, please visit www.newalta.com. For those unable to listen to the live call, a taped broadcast will be available at www.newalta.com and, until midnight on Wednesday, May 18, 2016 by dialing 800-408-3053 and using the pass code 6501608.

About Newalta

Newalta is a leading provider of innovative engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from oil and gas exploration and production waste streams. We simplify the critical challenges of sustainable environmental practices through the use of advanced processing capabilities deployed through a differentiated business model. We serve customers onsite directly at their operations and through a network of locations throughout North America. Our proven processes and excellent record of safety make us the first-choice provider of sustainability-enhancing services for oil and gas customers. With a highly skilled team of people, a two-decade track record of innovation and a commitment to commercializing new solutions, Newalta is positioned for sustained future growth and improvement. We are Sustainability Simplified™. Newalta trades on the TSX as NAL. For more information, visitwww.newalta.com.

The press release contains certain statements that constitute forward-looking information. Please refer to the section below, "Forward-Looking Information", for further discussion of assumptions and risks relating to this forward looking information.

The Condensed Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on SEDAR atwww.sedar.com or our website at www.newalta.com under Investor Relations/Financial Reports.

SELECT FINANCIAL INFORMATION

		Three months ended
		March 31,
($000s except per share data)
(unaudited)		2016	2015	% change
Heavy Oil
Revenue		22,899	38,403	(40)
Divisional EBITDA(1)		7,301	11,626	(37)
- % of revenue		32%	30%	7
Revenue by Business Unit
	Facilities	36%	24%	50
	Onsite	64%	76%	(16)
Assets Employed(2)		272,931	275,809	(1)
Oilfield
Revenue		25,766	59,176	(56)
Divisional EBITDA(1)		2,176	15,198	(86)
- % of revenue		8%	26%	(69)
Revenue by Business Unit
	Facilities	75%	71%	6
	Drilling Services	25%	29%	(14)
Assets Employed(2)		457,478	534,278	(14)
Capital Expenditures
Maintenance capital expenditures		970	2,332	(58)
	Heavy Oil	785	1,554	(49)
	Oilfield	68	316	(78)
Growth capital expenditures(3)		1,698	32,394	(95)
	Heavy Oil	286	11,020	(97)
	Oilfield	1,058	18,778	(94)

(1)	Divisional EBITDA does not have any standardized meaning prescribed by GAAP.
(2)	Assets employed is provided to assist management and investors in determining the effectiveness of the use of the assets at a divisional level. Assets employed is the sum of capital assets, intangible assets and goodwill allocated to each division. Assets employed as defined does not include capital assets held by corporate. Corporate assets include information technology and leasehold improvements.
(3)	For comparative purposes, Heavy Oil and Oilfield Growth capital for the three months ended March 31, 2015, has been restated to reflect a reclassification between divisions. Heavy Oil has been reduced by $3.2 million and Oilfield increased by $3.2 million.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited - Expressed in thousands of Canadian dollars)

		March 31, 2016	December 31, 2015
Assets
Current assets
	Cash	3,752	663
	Accounts and other receivables	42,816	49,508
	Inventories	4,204	4,202
	Prepaid expenses and other assets	5,362	4,009
		56,134	58,382
Non-current assets
	Property, plant and equipment	753,926	774,692
	Other long-term assets	3,613	4,958
	Deferred tax asset	9,776	1,557
	Goodwill	19,894	19,894
TOTAL ASSETS		843,343	859,483
Liabilities
Current liabilities
	Accounts payable and accrued liabilities	75,068	80,031
	Dividends payable	-	3,515
		75,068	83,546
Non-current liabilities
	Senior secured debt	79,290	57,141
	Senior unsecured debentures	271,751	271,568
	Other liabilities	285	1,228
	Provisions	125,837	105,899
TOTAL LIABILITIES		552,231	519,382
Shareholders' Equity
Shareholders' capital		426,061	426,061
Contributed surplus		12,906	12,454
Accumulated deficit		(172,901)	(131,595)
Accumulated other comprehensive income		25,046	33,181
TOTAL EQUITY		291,112	340,101
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		843,343	859,483

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE LOSS

(Unaudited - Expressed in thousands of Canadian dollars except per share data)

		For the three months ended March 31,
		2016	2015
Revenue		48,665	97,579
	Operating expenses	39,188	70,755
	General and administrative	9,444	13,930
	Depreciation and amortization	12,753	14,421
	Stock-based compensation	1,613	(1,962)
	Restructuring and other related costs	20,613	18,380
	Impairment	4,719	4,876
	Finance charges	8,405	10,280
	Embedded derivative loss (gain)	1,562	(2,912)
Total expenses		98,297	127,768
Loss before income taxes		(49,632)	(30,189)
Income tax		(8,390)	(6,925)
Net loss from continuing operations		(41,242)	(23,264)
Net loss from discontinued operations		(64)	(4,477)
Net loss for the period		(41,306)	(27,741)
Other comprehensive (loss) income:
Items that may be reclassified subsequently to condensed consolidated statements of operations
	Exchange difference on translating foreign operations	(8,135)	9,741
Other comprehensive (loss) income		(8,135)	9,741
Total comprehensive loss		(49,441)	(18,000)
Loss per share:
	Basic and diluted from continuing operations	(0.73)	(0.41)
	Basic and diluted from discontinued operations	-	(0.08)
Loss per share for the period		(0.73)	(0.49)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited - Expressed in thousands of Canadian dollars)

	Shareholders' capital	Contributed surplus	Retained earnings (accumulated deficit)	Accumulated other comprehensive income (loss)	Total
Balance, December 31, 2014	422,991	10,916	76,061	12,938	522,906
Changes in equity for the three months ended March 31, 2015
Expense related to vesting of options	-	912	-	-	912
Exercise of options	1,363	(1,131)	-	-	232
Issuance of shares	1,279	-	-	-	1,279
Dividends declared	-	-	(7,025)	-	(7,025)
Other comprehensive income	-	-	-	9,741	9,741
Net loss for the period	-	-	(27,741)	-	(27,741)
Balance, March 31, 2015	425,633	10,697	41,295	22,679	500,304
Changes in equity for the nine months ended December 31, 2015
Expense related to vesting of options	-	2,058	-	-	2,058
Exercise of options	428	(301)	-	-	127
Dividends declared	-	-	(17,575)	-	(17,575)
Other comprehensive income	-	-	-	10,502	10,502
Net loss for the period	-	-	(155,315)	-	(155,315)
Balance, December 31, 2015	426,061	12,454	(131,595)	33,181	340,101
Changes in equity for the three months ended March 31, 2016
Expense related to vesting of options	-	452	-	-	452
Other comprehensive loss	-	-	-	(8,135)	(8,135)
Net loss for the period	-	-	(41,306)	-	(41,306)
Balance, March 31, 2016	426,061	12,906	(172,901)	25,046	291,112

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited - Expressed in thousands of Canadian dollars)

		For the three months ended March 31,
		2016	2015
Cash provided by (used for):
Operating Activities
Net loss from continuing operations		(41,242)	(23,264)
Adjustments for:
	Depreciation and amortization	12,753	14,421
	Impairment	4,719	4,876
	Onerous leases	15,036	9,859
	Onerous leases paid	(1,353)	-
	Income tax	(8,390)	(6,925)
	Income tax paid	(18)	(56)
	Stock-based compensation	1,613	(2,926)
	Finance charges	8,405	10,280
	Finance charges paid	(1,382)	(815)
	Embedded derivative loss (gain)	1,562	(2,912)
	Other	6	948
Funds (used in) from Operations		(8,291)	3,486
Change in non-cash working capital		339	(18,319)
Decommissioning costs incurred		(19)	(399)
Cash used in continuing operations		(7,971)	(15,232)
Cash used in discontinued operations		-	(21,269)
Cash used in Operating Activities		(7,971)	(36,501)
Investing Activities
	Additions to property, plant and equipment	(8,524)	(57,881)
	Proceeds on sale of discontinued operations	-	295,347
	Proceeds on sale of property, plant and equipment	368	269
	Other	(286)	(715)
Cash (used in) from continuing operations		(8,442)	237,020
Cash used in discontinued operations		-	(4,041)
Cash (used in) from Investing Activities		(8,442)	232,979
Financing Activities
	Issuance of shares	-	232
	Increase (decrease) in senior secured debt	22,149	(183,104)
	Dividends paid	(3,515)	(5,724)
Cash from (used in) continuing operations		18,634	(188,596)
Cash from (used in) Financing Activities		18,634	(188,596)
Effect of foreign exchange on cash		868	(2,479)
Change in cash		3,089	5,403
Cash, beginning of period		663	4,129
Cash, end of period		3,752	9,532

FORWARD-LOOKING INFORMATION

Certain statements contained in this document constitute "forward-looking information" as defined under applicable securities laws. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "potential", "strategy", "target" and similar expressions, as they relate to Newalta Corporation and the subsidiaries of Newalta Corporation, or their management, are intended to identify forward-looking information. In particular, forward-looking information included or incorporated by reference in this document includes information with respect to:

• future operating and financial results;
• business prospects and strategy including related timelines;
• capital expenditure programs and other expenditures;
• realization of anticipated benefits from the sale of the Industrial Division including the ability to reinvest the net proceeds of disposition in a timely and efficient manner;
• realization of anticipated benefits of growth capital investments, acquisitions, divestitures and our innovation and process development initiatives;
• realization of anticipated benefits from the implementation of cost rationalization initiatives including the anticipated value and sustainability of the cash savings from such initiatives;
• anticipated industry activity levels;
• anticipated commodity prices;
• expected demand for our services;
• expected expansion opportunities for our business;
• the amount of dividends declared or payable in the future;
• our projected cost structure; and
• expectations and implications of changes in legislation.

Expected future financial and operating performance and related assumptions are set out under "Outlook".

Such information reflects our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation:

• strength of the oil and gas industry, including drilling activity;
• general market conditions;
• fluctuations in commodity prices for oil and the price we receive for our recovered oil;
• fluctuations in interest rates and exchange rates;
• financial covenants in our debt agreements that may restrict our ability to engage in transactions or to obtain additional financing;
• success of our growth, acquisition and innovation and process development strategies including integration of businesses and processes into our operations and potential liabilities from acquisitions;
• our ability to secure future capital to support and develop our business, including the issuance of additional common shares;
• the highly regulated nature of the environmental services and waste management business in which we operate;
• dependence on our senior management team and other operations management personnel with waste industry experience;
• the competitive environment of our industry in Canada and the U.S.;
• possible volatility of the price of, and the market for, our common shares, and potential dilution for shareholders in the event of a sale of additional shares;
• potential operational and safety risks and hazards, obtaining insurance for such risks and hazards on reasonable financial terms and potential failure of meeting customer safety standards;
• the seasonal nature of our operations;
• risk of pending and future legal proceedings;
• risk to our reputation;
• our ability to attract, retain and integrate skilled employees;
• open access for new industry entrants and the general unprotected nature of technology used in the waste industry;
• costs associated with operating our landfills; and
• such other risks or factors described from time to time in reports we file with securities regulatory authorities.

By its nature, forward-looking information involves 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 information 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 information 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 information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Furthermore, the forward-looking information contained in this document is made as of the date of this document and, in each case, is expressly qualified by this cautionary statement. Unless otherwise required by law, we do not intend, or assume any obligation, to update any such forward-looking information.

RECONCILIATION OF NON-GAAP MEASURES

The following MD&A contains references to certain financial measures, including some that do not have any standardized meaning prescribed by IFRS 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 impaired, 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 and restructuring and other related costs. Adjusted EBITDA provides improved continuity with respect to the comparison of our operating results over a period of time. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our common shares (Shares), while restructuring and other related costs are outside of our normal course of business. Restructuring and other related costs are charges primarily attributable to cost rationalization initiatives. EBITDA and Adjusted EBITDA are derived from the 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.

EBITDA and Adjusted EBITDA from Continuing Operations are calculated as follows:

		Three months ended
		March 31,
($000s except per share data)		2016	2015
Net loss from Continuing Operations		(41,242)	(23,264)
Add back:
	Income tax recovery	(8,390)	(6,925)
	Embedded derivative loss (gain)	1,562	(2,912)
	Finance charges	8,405	10,280
	Impairment	4,719	4,876
	Depreciation and amortization(1)	12,753	14,421
EBITDA		(22,193)	(3,524)
Add back:
	Stock-based compensation(2)	1,613	(1,962)
	Restructuring and other related costs	20,613	18,380
Adjusted EBITDA		33	12,894
Weighted average number of Shares		56,237	56,179
EBITDA per share ($)		(0.39)	(0.06)
Adjusted EBITDA per share ($)		-	0.23

(1)	Includes non-cash gains or losses on asset disposal and other non-cash charges.
(2)	Non-cash stock-based compensation was $1,613 in Q1 2016 (Q1 2015: ($2,926)).

"Divisional EBITDA" provides an indication of the results generated by the division's principal business activities prior to how activities are financed, assets are amortized or impaired and before allocation of general and administrative (G&A) costs, restructuring and other related costs or stock-based compensation. Divisional EBITDA is derived from Net (loss) earnings before income tax from Continuing Operations as follows:

		Three months ended
		March 31,
($000s except per share data)		2016	2015
Net loss before Income tax from Continuing Operations		(49,632)	(30,189)
Add back:
	Embedded derivative loss (gain)	1,562	(2,912)
	Finance charges	8,405	10,280
	Restructuring and other related costs	20,613	18,380
	Impairment	4,719	4,876
	Stock-based compensation	1,613	(1,962)
	Depreciation and amortization	12,753	14,421
	G&A	9,444	13,930
Divisional EBITDA(1)		9,477	26,824
	Heavy Oil	7,301	11,626
	Oilfield	2,176	15,198
Deduct:
	G&A	9,444	13,930
Adjusted EBITDA		33	12,894
	Stock-based compensation	1,613	(1,962)
	Restructuring and other related costs	20,613	18,380
EBITDA		(22,193)	(3,524)

(1)	Divisional EBITDA does not have any standardized meaning prescribed by GAAP.

"Adjusted net earnings" and "Adjusted net earnings per share" are measures of our profitability from Continuing Operations. Adjusted net earnings from Continuing Operations (Adjusted net earnings) provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation, the gain or loss on embedded derivatives, impairment and restructuring and other related charges. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our Shares. The loss 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. Impairment and restructuring and other related costs are related to initiatives outside of our normal course of business. 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.

		Three months ended
		March 31,
($000s except per share data)		2016	2015
Net loss from Continuing Operations		(41,242)	(23,264)
Add back:
	Embedded derivative loss (gain)	1,562	(2,912)
	Restructuring and other related costs	20,613	18,380
	Impairment	4,719	4,876
	Stock-based compensation	1,613	(1,962)
Adjusted net loss		(12,735)	(4,882)
Weighted average number of Shares		56,237	56,179
Adjusted net loss per share ($)		(0.23)	(0.09)

"Tangible book value per share" is used to assist management and investors in evaluating the book value compared to the market value.

($000s except per share data)		March 31, 2016	December 31, 2015
Total Shareholders' Equity		291,112	340,101
Less:
	Goodwill	19,894	19,894
	Permits and other intangible assets	387	408
Tangible book value		270,831	319,799
Weighted average number of Shares		56,237	56,221
Tangible book value per share ($)		4.82	5.69

"Net Debt" is defined as sum of amount drawn on the Credit Facility, Letters of Credit and Senior Unsecured Debentures less Cash on hand.

"Funds from Operations" is used to assist management and investors in analyzing cash flow and leverage from Continuing Operations. 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 condensed consolidated statements of cash flows and is calculated as follows:

		Three months ended
		March 31,
($000s except per share data)		2016	2015
Cash used in Continuing Operations		(7,971)	(15,232)
Add back (deduct):
	Change in non-cash working capital	(339)	18,319
	Decommissioning costs incurred	19	399
Funds (used in) from Operations		(8,291)	3,486
Weighted average number of Shares		56,237	56,179
Funds (used in) from Operations per share ($)		(0.15)	0.06

"Free Cash Flow" is defined as Funds from Operations less dividends paid, capital expenditures and decommissioning costs incurred.

References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Divisional EBITDA, Adjusted net earnings, Adjusted net earnings per share, Net Debt, Funds from Operations, Funds from Operations per share, and Free Cash Flow throughout this document have the meanings set out above.