CALGARY, ALBERTA - Aug. 7, 2013 /CNW/ - Newalta Corporation ("Newalta") (TSX:NAL) today reported results for the three and six months ended June 30, 2013.
FINANCIAL HIGHLIGHTS1
| Three months ended June 30, |
Six months ended June 30, |
|||||
| ($000s except per share data) (unaudited) |
2013 | 2012 | % Increase (Decrease) | 2013 | 2012 | % Increase (Decrease) |
| Revenue | 196,138 | 171,130 | 15 | 367,485 | 337,628 | 9 |
| Gross profit | 45,377 | 38,836 | 17 | 83,212 | 81,714 | 2 |
| - % of revenue | 23% | 23% | - | 23% | 24% | (4) |
| Net earnings | 4,944 | 18,626 | (73) | 19,103 | 23,445 | (19) |
| - per share ($) - basic | 0.09 | 0.38 | (76) | 0.35 | 0.48 | (27) |
| - per share ($) - diluted | 0.09 | 0.38 | (76) | 0.35 | 0.48 | (27) |
| Adjusted net earnings(2) | 11,894 | 4,994 | 138 | 17,646 | 17,246 | 2 |
| - per share ($) - basic(2) | 0.22 | 0.10 | 120 | 0.32 | 0.35 | (9) |
| Adjusted EBITDA(2) | 38,350 | 30,248 | 27 | 66,070 | 66,320 | - |
| - per share ($)(2) | 0.70 | 0.62 | 13 | 1.21 | 1.36 | (11) |
| Cash from operations | 29,487 | 1,679 | 1656 | 10,434 | 37,919 | (72) |
| - per share ($) | 0.54 | 0.03 | 1700 | 0.19 | 0.78 | (76) |
| Funds from operations(2) | 27,644 | 19,211 | 44 | 51,343 | 52,556 | (2) |
| - per share ($)(2) | 0.50 | 0.39 | 28 | 0.94 | 1.08 | (13) |
| Maintenance capital expenditures(2) | 5,178 | 7,580 | (32) | 8,849 | 11,192 | (21) |
| Growth capital expenditures(2) | 29,793 | 42,843 | (30) | 46,663 | 71,417 | (35) |
| Dividends declared | 6,051 | 4,730 | 28 | 11,525 | 8,623 | 34 |
| - per share ($)(2) | 0.11 | 0.10 | 10 | 0.21 | 0.18 | 17 |
| Dividends paid | 3,708 | 3,753 | (1) | 8,019 | 7,642 | 5 |
| Book value per share, June 30, | 12.12 | 11.45 | 6 | 12.12 | 11.45 | 6 |
| Weighted average shares outstanding | 54,928 | 48,682 | 13 | 54,721 | 48,650 | 12 |
| Shares outstanding, June 30,(3) | 55,006 | 48,698 | 13 | 55,006 | 48,698 | 13 |
| (1) | Newalta's Unaudited Condensed Consolidated Financial Statements are attached. References to Generally Accepted Accounting Principles ("GAAP") are synonymous with IFRS and references to Unaudited Condensed Consolidated Financial Statements are synonymous with Financial Statements. |
| (2) | 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 later in this document. |
| (3) | Newalta has 55,089,772 shares outstanding as at August 7, 2013. |
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 www.newalta.com. For those unable to listen to the live call, a taped broadcast will be available atwww.newalta.com 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 www.newalta.com 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 www.newalta.com.
SELECTED FINANCIAL INFORMATION
| Three months ended June 30, |
Six months ended June 30, |
|||||||
| ($000s, except where otherwise noted) (unaudited) | 2013 | 2012 | % Increase (Decrease) |
2013 | 2012 | % Increase (Decrease) |
||
| New Markets | ||||||||
| Revenue | 56,120 | 38,626 | 45 | 96,978 | 74,757 | 30 | ||
| Gross Profit | 19,314 | 13,950 | 49 | 32,332 | 28,150 | 15 | ||
| - % of revenue | 34% | 36% | (6) | 33% | 38% | (13) | ||
| Revenue by Business Unit | ||||||||
| Heavy Oil | 74% | 66% | 12 | 68% | 65% | 5 | ||
| U.S. | 26% | 34% | 24 | 32% | 35% | (9) | ||
| Divisional EBITDA(1) | 23,516 | 16,270 | 45 | 39,001 | 32,590 | 20 | ||
| Assets Employed(2) | 253,501 | 214,198 | 18 | |||||
| Assets Contributing(3) | 232,901 | 178,898 | 30 | |||||
| Oilfield | ||||||||
| Revenue | 39,501 | 38,951 | 1 | 88,133 | 89,403 | (1) | ||
| Gross Profit | 13,783 | 10,460 | 32 | 32,960 | 29,975 | 10 | ||
| - % of revenue | 35% | 27% | 30 | 37% | 34% | 9 | ||
| Divisional EBITDA(1) | 16,761 | 13,152 | 27 | 38,915 | 35,852 | 9 | ||
| Assets Employed(2) | 359,339 | 337,965 | 6 | |||||
| Assets Contributing(3) | 323,139 | 317,265 | 2 | |||||
| Industrial | ||||||||
| Revenue | 100,517 | 93,553 | 7 | 182,374 | 173,468 | 5 | ||
| Gross Profit | 12,280 | 14,426 | (15) | 17,920 | 23,589 | (24) | ||
| - % of revenue | 12% | 15% | (20) | 10% | 14% | (29) | ||
| Revenue by Business Unit | ||||||||
| Western Industrial | 23% | 25% | (8) | 23% | 26% | (12) | ||
| Eastern Industrial | 77% | 75% | 3 | 77% | 74% | 4 | ||
| VSC as a percent of Industrial Division | 33% | 32% | 3 | 36% | 33% | 9 | ||
| Divisional EBITDA(1) | 19,185 | 20,473 | (6) | 30,377 | 35,748 | (15) | ||
| Assets Employed(2) | 426,938 | 423,204 | 1 | |||||
| Assets Contributing(3) | 418,938 | 407,004 | 3 | |||||
| Capital Expenditures | ||||||||
| Maintenance capital expenditures | 5,178 | 7,580 | (32) | 8,849 | 11,192 | (21) | ||
| New Markets | 640 | 2,157 | (70) | 892 | 2,432 | (63) | ||
| Oilfield | 2,254 | 2,168 | 4 | 4,106 | 3,523 | 17 | ||
| Industrial | 1,426 | 2,087 | (32) | 2,265 | 3,168 | (29) | ||
| Growth capital expenditures | 29,793 | 42,843 | (30) | 46,663 | 71,417 | (35) | ||
| New Markets | 15,998 | 28,174 | (43) | 21,321 | 45,415 | (53) | ||
| Oilfield | 5,779 | 3,173 | 82 | 11,021 | 8,567 | 29 | ||
| Industrial | 3,268 | 4,777 | (32) | 6,105 | 7,709 | (21) | ||
| (1) | "Divisional EBITDA" is a measure of the division's profitability and 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. |
| (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. |
| (3) | "Assets contributing" is provided to assist management and investors to understand how our capital spending contributes to our growth. It excludes assets related to growth capital projects not yet operational. |
Condensed Consolidated Balance Sheets
(Unaudited - Expressed in thousands of Canadian Dollars)
| June 30, 2013 | December 31, 2012 | ||
| Assets | |||
| Current assets | |||
| Cash | - | 409 | |
| Accounts and other receivables | 173,401 | 150,347 | |
| Inventories | 44,086 | 43,123 | |
| Prepaid expenses and other | 16,195 | 10,627 | |
| 233,682 | 204,506 | ||
| Non-current assets | |||
| Property, plant and equipment | 947,085 | 929,580 | |
| Permits and other intangible assets (Note 4) | 58,881 | 58,614 | |
| Other long-term assets | 24,390 | 23,443 | |
| Goodwill | 103,983 | 102,615 | |
| TOTAL ASSETS | 1,368,021 | 1,318,758 | |
| Liabilities | |||
| Current liabilities | |||
| Bank indebtedness | 13,137 | - | |
| Accounts payable and accrued liabilities | 137,487 | 181,876 | |
| Deferred revenue | 19,102 | 6,494 | |
| Dividends payable (Note 9) | 6,051 | 5,426 | |
| 175,777 | 193,796 | ||
| Non-current liabilities | |||
| Senior secured debt (Note 5) | 129,500 | 76,500 | |
| Senior unsecured debentures (Note 6) | 246,653 | 246,334 | |
| Other liabilities (Note 7) | 1,735 | 4,228 | |
| Deferred tax liability | 79,933 | 77,519 | |
| Decommissioning liability | 67,734 | 78,941 | |
| TOTAL LIABILITIES | 701,332 | 677,318 | |
| Shareholders' Equity | |||
| Shareholders' capital | 404,885 | 394,048 | |
| Contributed surplus | 2,881 | 2,881 | |
| Retained earnings | 255,143 | 247,565 | |
| Accumulated other comprehensive income (loss) | 3,780 | (3,054) | |
| TOTAL SHAREHOLDERS' EQUITY | 666,689 | 641,440 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 1,368,021 | 1,318,758 | |
Condensed Consolidated Statements of Operations
(Unaudited - Expressed in thousands of Canadian Dollars)
(Except per share data)
| For the three months ended June 30, |
For the six months ended June 30, |
||||
| 2013 | 2012 | 2013 | 2012 | ||
| Revenue | 196,138 | 171,130 | 367,485 | 337,628 | |
| Cost of sales | 150,761 | 132,294 | 284,273 | 255,914 | |
| Gross profit | 45,377 | 38,836 | 83,212 | 81,714 | |
| Selling, general and administrative | 24,327 | 15,430 | 47,290 | 44,968 | |
| Research and development | 412 | 587 | 615 | 1,396 | |
| Earnings before finance charges and income taxes | 20,638 | 22,819 | 35,307 | 35,350 | |
| Finance charges | 7,010 | 6,507 | 13,603 | 13,265 | |
| Embedded derivative loss (gain) (Note 11) | 6,931 | (6,680) | (137) | (8,050) | |
| Net financing charges expense (recovery) | 13,941 | (173) | 13,466 | 5,215 | |
| Earnings before income taxes | 6,697 | 22,992 | 21,841 | 30,135 | |
| Income tax expense | 1,753 | 4,366 | 2,738 | 6,690 | |
| Net earnings | 4,944 | 18,626 | 19,103 | 23,445 | |
| Net earnings per share (Note 8) | 0.09 | 0.38 | 0.35 | 0.48 | |
| Diluted earnings per share (Note 8) | 0.09 | 0.38 | 0.35 | 0.48 | |
| Supplementary information: | |||||
| Amortization included within cost of sales | 14,085 | 11,059 | 25,081 | 22,476 | |
| Amortization included in selling, general and administrative | 3,608 | 3,322 | 7,002 | 6,643 | |
| Total amortization | 17,693 | 14,381 | 32,083 | 29,119 | |
Condensed Consolidated Statements of Comprehensive Income
(Unaudited - Expressed in thousands of Canadian Dollars)
| For the three months ended June 30, |
For the six months ended June 30, |
||||
| 2013 | 2012 | 2013 | 2012 | ||
| Net earnings | 4,944 | 18,626 | 19,103 | 23,445 | |
| Other comprehensive income (loss): | |||||
| Unrealized exchange gain (loss) on translating foreign operations | 4,505 | 1,255 | 6,866 | (443) | |
| Unrealized loss on available for sale financial assets (Note 11) | - | (63) | (32) | (127) | |
| Other comprehensive income (loss) | 4,505 | 1,192 | 6,834 | (570) | |
| Total comprehensive income | 9,449 | 19,818 | 25,937 | 22,875 | |
Condensed Consolidated Statement of Changes in Equity
(Unaudited - Expressed in thousands of Canadian Dollars)
| Shareholders' capital | Contributed surplus | Retained earnings | Accumulated other comprehensive income (loss) | Total | |
| Balance, December 31, 2011 | 317,386 | 2,700 | 223,679 | (1,844) | 541,921 |
| Changes in equity for the six months ended June 30, 2012 | |||||
| Exercise of options | 1,510 | - | - | - | 1,510 |
| Cancellation of shares | (181) | 181 | |||
| Dividends declared | - | - | (8,623) | - | (8,623) |
| Other comprehensive loss | - | - | - | (570) | (570) |
| Net earnings for the period | - | - | 23,445 | - | 23,445 |
| Balance, June 30, 2012 | 318,715 | 2,881 | 238,501 | (2,414) | 557,683 |
| Changes in equity for the six months ended December 31, 2012 | |||||
| Exercise of options | 933 | - | - | - | 933 |
| Issuance of shares | 74,400 | - | - | - | 74,400 |
| Dividends declared | - | - | (10,295) | - | (10,295) |
| Other comprehensive loss | - | - | - | (640) | (640) |
| Net earnings for the period | - | - | 19,359 | - | 19,359 |
| Balance, December 31, 2012 | 394,048 | 2,881 | 247,565 | (3,054) | 641,440 |
| Changes in equity for the six months ended June 30, 2013 | |||||
| Exercise of options | 7,832 | - | - | - | 7,832 |
| Reduction of 2012 share issuance costs | 124 | - | - | - | 124 |
| Shares issued under dividend reinvestment plan | 2,881 | - | - | - | 2,881 |
| Dividends declared | - | - | (11,525) | - | (11,525) |
| Other comprehensive income | - | - | - | 6,834 | 6,834 |
| Net earnings for the period | - | - | 19,103 | - | 19,103 |
| Balance, June 30, 2013 | 404,885 | 2,881 | 255,143 | 3,780 | 666,689 |
Condensed Consolidated Statements of Cash Flows
(Unaudited - Expressed in thousands of Canadian Dollars)
| For the three months ended June 30, |
For the six months ended June 30, |
||||
| 2013 | 2012 | 2013 | 2012 | ||
| Cash provided by (used for): | |||||
| Operating Activities | |||||
| Net earnings | 4,944 | 18,626 | 19,103 | 23,445 | |
| Adjustments for: | |||||
| Amortization | 17,693 | 14,381 | 32,083 | 29,119 | |
| Income tax expense | 1,753 | 4,366 | 2,738 | 6,690 | |
| Income tax paid (refund) | 364 | (33) | 157 | (43) | |
| Stock-based compensation recovery | (332) | (7,542) | (4,645) | (160) | |
| Finance charges | 7,010 | 6,507 | 13,603 | 13,265 | |
| Embedded derivative loss (gain) (Note 11) | 6,931 | (6,680) | (137) | (8,050) | |
| Finance charges paid | (10,942) | (10,305) | (11,948) | (11,289) | |
| Other | 223 | (109) | 389 | (421) | |
| Funds from Operations | 27,644 | 19,211 | 51,343 | 52,556 | |
| Decrease (increase) in non-cash working capital (Note 12) | 2,715 | (16,950) | (39,009) | (13,702) | |
| Decommissioning costs incurred | (872) | (582) | (1,900) | (935) | |
| Cash (used in) from Operating Activities | 29,487 | 1,679 | 10,434 | 37,919 | |
| Investing Activities | |||||
| Additions to property, plant and equipment (Note 12) | (29,626) | (33,645) | (69,408) | (66,510) | |
| Other | 463 | 259 | (3,182) | 434 | |
| Cash used in Investing Activities | (29,163) | (33,386) | (72,590) | (66,076) | |
| Financing Activities | |||||
| Issuance of shares | 714 | 642 | 2,361 | 642 | |
| Increase in senior secured debt | 3,499 | 33,000 | 53,000 | 38,471 | |
| (Decrease) increase in bank indebtedness | (1,630) | 1,261 | 13,137 | (3,453) | |
| Decrease in note receivable | 73 | 68 | 124 | 123 | |
| Dividends paid (Note 9) | (3,708) | (3,753) | (8,019) | (7,642) | |
| Cash (used in) from Financing Activities | (1,052) | 31,218 | 60,603 | 28,141 | |
| Effect of foreign exchange on cash | 728 | 489 | 1,144 | 16 | |
| Change in cash | - | - | (409) | - | |
| Cash, beginning of period | - | - | 409 | - | |
| Cash, end of period | - | - | - | - | |
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:
- future operating and financial results;
- anticipated industry activity levels;
- expected demand for our services;
- business prospects and strategy;
- capital expenditure programs and other expenditures;
- the amount of dividends declared or payable in the future;
- realization of anticipated benefits of growth capital investments, acquisitions and our technical development initiatives;
- our projected cost structure; and
- expectations and implications of changes in legislation.
Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation:
- general market conditions of the industries we service;
- strength of the oil and gas industry, including drilling activity;
- fluctuations in commodity prices for oil and the price we received for our recovered oil;
- fluctuations in commodity prices for lead including the price differential we pay for lead feedstock and the price we receive for our lead products;
- fluctuations in base oil prices including the price differential we pay for used oil and the price we receive for our finished lube oil products;
- fluctuations in interest rates and exchange rates;
- supply of waste lead acid batteries as feedstock to support direct lead sales;
- demand for our finished lead products by the battery manufacturing industry;
- 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.;
- success of our growth, acquisition and technical development strategies including integration of businesses and processes into our operations and potential liabilities from acquisitions;
- potential operational and safety risks and hazards and obtaining insurance for such risks and hazards on reasonable financial terms;
- the seasonal nature of our operations;
- costs associated with operating our landfills and reliance on third party waste volumes;
- risk of pending and future legal proceedings;
- risk to our reputation;
- our ability to attract and retain skilled employees and maintain positive labour union relationships;
- open access for new industry entrants and the general unprotected nature of technology used in the waste industry;
- 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;
- financial covenants in our debt agreements that may restrict our ability to engage in transactions or to obtain additional financing; and
- such other risks or factors described from time to time in reports we file with securities regulatory authorities.
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:
| Three months ended June 30, |
Six months ended June 30, |
||||
| ($000s) | 2013 | 2012 | 2013 | 2012 | |
| Net earnings | 4,944 | 18,626 | 19,103 | 23,445 | |
| Add back (deduct): | |||||
| Income taxes | 1,753 | 4,366 | 2,738 | 6,690 | |
| Net finance (income) expense | 13,941 | (173) | 13,466 | 5,215 | |
| Amortization | 17,693 | 14,381 | 32,083 | 29,119 | |
| EBITDA | 38,331 | 37,200 | 67,390 | 64,469 | |
| Add back (deduct): | |||||
| Stock-based compensation expense (recovery) | 19 | (6,952) | (1,320) | 1,851 | |
| Adjusted EBITDA | 38,350 | 30,248 | 66,070 | 66,320 | |
| Weighted average number of shares | 54,928 | 48,682 | 54,721 | 48,650 | |
| EBITDA per share | 0.70 | 0.76 | 1.23 | 1.33 | |
| Adjusted EBITDA per share | 0.70 | 0.62 | 1.21 | 1.36 | |
"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:
| Three months ended June 30, |
Six months ended June 30, |
||||
| ($000s) | 2013 | 2012 | 2013 | 2012 | |
| Divisional EBITDA | |||||
| New Markets | 23,516 | 16,270 | 39,001 | 32,590 | |
| Oilfield | 16,761 | 13,152 | 38,915 | 35,852 | |
| Industrial | 19,185 | 20,473 | 30,377 | 35,748 | |
| Subtotal | 59,462 | 49,895 | 108,293 | 104,190 | |
| Deduct: | |||||
| Selling, general and administrative(1) | (20,719) | (12,108) | (40,288) | (38,325) | |
| Research and development | (412) | (587) | (615) | (1,396) | |
| EBITDA | 38,331 | 37,200 | 67,390 | 64,469 | |
| (1) | Selling, general and administrative excludes amortization of $3,608 and $7,002 for Q2 2013 and 2013 year-to-date, respectively, and $3,322 and $6,643 for Q2 2012 and 2012 year-to-date, respectively. |
"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.
| Three months ended June 30, |
Six months ended June 30, |
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| ($000s) | 2013 | 2012 | 2013 | 2012 | |
| Net earnings | 4,944 | 18,626 | 19,103 | 23,445 | |
| Add back (deduct): | |||||
| Stock-based compensation expense (recovery) | 19 | (6,952) | (1,320) | 1,851 | |
| Embedded derivative gain | 6,931 | (6,680) | (137) | (8,050) | |
| Adjusted net earnings | 11,894 | 4,994 | 17,646 | 17,246 | |
| Weighted average number of shares | 54,928 | 48,682 | 54,721 | 48,650 | |
| Adjusted net earnings per share | 0.22 | 0.10 | 0.32 | 0.35 | |
"Book value per share" is used to assist management and investors in evaluating the book value compared to the market value.
| Six months ended June 30, |
|||
| ($000s) | 2013 | 2012 | |
| Total Equity | 666,689 | 557,683 | |
| Shares outstanding, June 30, | 55,006 | 48,698 | |
| Book value per share | 12.12 | 11.45 | |
"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:
| Three months ended June 30, |
Six months ended June 30, |
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| ($000s) | 2013 | 2012 | 2013 | 2012 | |
| Cash (used in) from operations | 29,487 | 1,679 | 10,434 | 37,919 | |
| Add back (deduct): | |||||
| (Decrease) increase in non-cash working capital | (2,715) | 16,950 | 39,009 | 13,702 | |
| Decommissioning obligations incurred | 872 | 582 | 1,900 | 935 | |
| Funds from operations | 27,644 | 19,211 | 51,343 | 52,556 | |
| Weighted average number of shares | 54,928 | 48,682 | 54,721 | 48,650 | |
| Funds from operations per share | 0.50 | 0.39 | 0.94 | 1.08 | |
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.