News Releases

CALGARY, ALBERTA - Aug. 2, 2012 /CNW/ - Newalta Corporation ("Newalta") (TSX:NAL) today reported solid financial results for the second quarter ended June 30, 2012 resulting from higher demand for services and increased operating performance.

FINANCIAL HIGHLIGHTS1

	Three months ended June 30,			Six months ended June 30,
($000s except per share data) (unaudited)	2012	2011	% Increase (Decrease)	2012	2011	% Increase (Decrease)
Revenue	171,130	164,294	4	337,628	316,716	7
Gross profit	38,836	38,691	-	81,714	77,909	5
- % of revenue	23%	24%	(4)	24%	25%	(4)
Net earnings	18,626	10,483	78	23,445	15,716	49
- per share ($) - basic	0.38	0.22	73	0.48	0.32	50
- per share ($) - basic adjusted(2)	0.10	0.20	(50)	0.35	0.41	(15)
- per share ($) - diluted	0.38	0.21	81	0.48	0.32	50
Adjusted EBITDA(2)	30,248	33,044	(8)	66,320	67,927	(2)
- per share ($)(2)	0.62	0.68	(9)	1.36	1.40	(3)
Cash from operations	1,679	33,017	(95)	37,919	39,994	(5)
- per share ($)	0.03	0.68	(96)	0.78	0.82	(5)
Funds from operations(2)	19,211	23,157	(17)	52,556	56,112	(6)
- per share ($)(2)	0.39	0.48	(19)	1.08	1.16	(7)
Maintenance capital expenditures(2)	7,580	7,271	4	11,192	9,744	15
Growth capital expenditures(2)	42,844	19,304	122	71,418	30,114	137
Dividends declared	4,730	3,889	22	8,623	7,042	22
- per share ($)(2)	0.10	0.08	25	0.18	0.15	20
Dividends paid	3,753	3,153	19	7,642	6,305	21
Book value per share, June 30	11.45	10.98	4	11.45	10.98	4
Weighted average shares outstanding	48,682	48,523	-	48,650	48,530	-
Shares outstanding, June 30,(3)	48,698	48,607	-	48,698	48,607	-

(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 48,697,951 shares outstanding as at August 2, 2012.

Management Commentary

"Improved performance from the increased demand for our services was offset by weaker prices for our crude oil and lead products, which were both down about 20% year-over-year," said Al Cadotte, President and CEO of Newalta. "Excluding the impact of the $7.2 million decline due to lower recovered product prices, our Q2 2012 revenue and Adjusted EBITDA would have increased 8% and 13% to $178.2 million and $37.4 million, respectively.

"Our capital investment plans for 2012 remain on track and we are bolstering our organization to support continued growth next year."

Consolidated Overview

Second quarter revenue grew 4% year-over-year to $171.1 million. Gross profit was flat to Q2 2011 as a result of improved performance driven by the increased demand for our services, which offset the impact of lower prices for recovered products. Adjusted EBITDA decreased 8% to $30.2 million compared to Q2 2011 due primarily to a $2.7 million increase in Adjusted SG&A (SG&A before stock-based compensation and amortization) to support our continued growth in 2013. Net earnings increased 78% as a result of lower stock-based compensation expense and finance charges.

In the first half of 2012, Adjusted EBITDA was marginally down to $66.3 million from $67.9 million for the same period in 2011. Stronger activity was offset by lower value received for our products of $7.1 million and higher Adjusted SG&A expenses.

Operational Overview

Facilities second quarter revenue and gross profit were $110.2 million and $24.7 million, respectively, in line with Q2 2011. Performance at Eastern facilities improved significantly year-over-year driven by increased demand for services and operational efficiencies. Western Facilities performance remained strong as a result of higher oil and gas production-related activity levels, offset by the decline in crude oil price. Ville Ste-Catherine ("VSC") lead processing volumes of 17,600 MT in Q2 were in line with average quarterly production, but lower lead prices negatively affected VSC's contribution. The lagged LME price decreased 21% to $2,041 $U.S./MT compared to Q2 2011. The decline in crude oil and lead product prices reduced Facilities gross profit by approximately $5.8 million quarter-over-quarter. Year-to-date Facilities performance was comparable to the prior year, reflecting the same factors as for the quarter, with improved performance within Western Facilities having a larger impact on results.

Onsite revenue grew 18% year-over-year in the second quarter of 2012 to $61.0 million due to increased business activity reflecting strong market demand across all operations. Gross profit was $14.2 million, flat compared to a year ago as positive market activity was offset by the $1.4 million impact of lower recovered oil prices. Results in the quarter were also impacted by the year-over-year timing of the Mature Fine Tailings ("MFT") contract. By comparison, the MFT pilot project was operational in Q2 2011 and contributed to prior year quarterly results. In Q2 2012, additional capital and services were added to the MFT contract. The contract will be operational in Q3 2012 and is expected to deliver meaningful contributions in the second half of 2012. Year-to-date Onsite revenues increased 19% and gross profit increased 12% from the prior year period, driven primarily by growth in Heavy Oil and U.S. projects.

Technical Development began the demonstration of new technology at a Western Facility during the quarter, consistent with its plan. We expect this process to be in commercial production in the fourth quarter of 2012.

Other Highlights

Newalta's Board of Directors declared a second quarter dividend of $0.10 per share ($0.40 per share annualized) paid July 16, 2012 to shareholders of record June 29, 2012. This higher dividend rate established earlier this year reflects our strong financial position and positive outlook.

Capital expenditures for the three and six months ended June 30, 2012 were $50.4 million and $82.6 million respectively, focused primarily on growth capital projects in Onsite.

Trailing 12-month Adjusted EBITDA is $144.9 million for the period ended June 30, 2012. Return on capital on a trailing 12 month basis improved from 14.0% to 14.4% for Q2 2012.

Our Gross Debt to Adjusted EBITDA ratio increased from 2.43 in Q2 2011 to 2.68 in Q2 2012. We anticipate ending the year at or better than our leverage ratio at December 31, 2011.

On July 12, 2012, Newalta amended and extended its credit facility to increase financial flexibility and reduce financing costs. Key changes to the agreement included: extending the term by three years to July 12, 2015 with annual extensions available at management's discretion; an increase in the amount available from $200 million to $225 million, with an additional $50 million accordion feature; and, an increase in the covenant protection for Total Debt to EBITDA from 3.5x to 4.0x.

Outlook

With significant growth from Onsite contracts, contributions from the 2011 capital program and robust market demand, Newalta is positioned for strong growth in the second half of 2012.

In Q3 2012, we anticipate year-over-year improvement in performance driven by growth in Onsite. We anticipate the price of recovered products to be consistent with the second half of 2011, effectively eliminating the downside experienced in Q2 2012.

Drilling activity is expected to be flat compared to Q3 2011. Eastern processing facilities are expected to continue to improve with increasing demand for services combined with productivity improvements.

In Onsite, we expect year-over-year improvement in the second half of the year from increased project and contract activity in Heavy Oil and the U.S., including gains from the contract to process mature fine tailings. Focus remains on growing the portfolio of longer term contracts, strengthening the division's stable cash flow foundation, and maximizing cash flow from existing assets.

We have good visibility on our pipeline of organic growth capital projects, extending well into 2013. We remain on target to spend our capital budget of $145.0 million, with essentially all growth capital committed for 2012. We expect Adjusted SG&A to be on target at 10% of revenue for the year.

We are confident we will continue to deliver attractive returns to our shareholders and expect ongoing improvement towards our historical corporate Return on capital average of 18%.

Quarterly Conference Call

Management will hold a conference call on Friday, August 3, 2012 at 11:00 a.m. (ET) to discuss Newalta's performance for the second quarter ended June 30, 2012. To participate in the teleconference, please call 1-877-440-9795. To access the simultaneous webcast, please visitwww.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 Friday, August 10, 2012 by dialing 1-800-408-3053 and using the pass code 7374198 followed by the pound sign.

The unaudited interim Condensed Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on SEDAR at www.sedar.com and 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 facilities 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)		2012	2011	% Increase (Decrease)	2012	2011	% Increase (Decrease)
Facilities
Revenue		110,166	112,705	(2)	221,603	219,427	1
Gross Profit		24,657	24,262	2	52,985	52,369	1
- % of revenue		22%	22%	-	24%	24%	-
Revenue by Business Unit
	Western Facilities	46%	41	12	49%	44%	11
	Eastern Facilities	27%	26	4	25%	24%	4
	VSC	27%	33	(18)	26%	32%	(19)
Assets Employed(1)					632,300	591,436	7
Onsite
Revenue		60,964	51,589	18	116,025	97,289	19
Gross Profit		14,179	14,429	(2)	28,729	25,540	12
- % of revenue		23%	28%	(18)	25%	26%	(4)
Revenue by Business Unit
	Western Onsite	45%	42%	7	48%	47%	2
	Eastern Onsite	18%	15%	20	14%	14%	-
	Heavy Oil	37%	43%	(14)	38%	39%	(3)
Assets Employed(1)					343,067	261,890	31
Capital Expenditures
Maintenance capital expenditures		7,580	7,271	4	11,192	9,744	15
	Facilities	4,087	4,457	(8)	6,411	5,956	8
	Onsite	2,324	2,183	6	2,712	2,796	(3)
Growth capital expenditures		42,844	19,304	122	71,418	30,114	137
	Facilities	7,759	7,904	(2)	16,004	12,319	30
	Onsite	28,367	9,438	201	45,688	13,708	233

(1) "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.

Condensed Consolidated Balance Sheets

(Unaudited - Expressed in thousands of Canadian Dollars)

		June 30, 2012	December 31, 2011
Assets
Current assets
	Accounts and other receivables	135,101	134,172
	Inventories	33,411	30,953
	Prepaid expenses and other	13,342	6,558
		181,854	171,683
Non-current assets
	Property, plant and equipment	877,495	820,102
	Permits and other intangible assets (Note 4)	59,125	59,593
	Other long-term assets	17,978	10,746
	Goodwill	102,897	102,897
TOTAL ASSETS		1,239,349	1,165,021
Equity and liabilities
Current liabilities
	Bank indebtedness	2,715	6,168
	Accounts payable and accrued liabilities	158,081	147,897
	Deferred Revenue	5,297	-
	Dividends payable	4,870	3,889
		170,963	157,954
Non-current liabilities
	Senior secured debt (Note 5)	107,401	68,493
	Senior unsecured debentures (Note 6)	245,256	245,049
	Other liabilities (Note 10)	2,117	5,459
	Deferred tax liability	74,664	68,389
	Decommissioning liability (Note 7)	81,265	77,756
TOTAL LIABILITIES		681,666	623,100
Shareholders' Equity
Shareholders' capital (Note 8)		318,715	317,386
Contributed surplus		2,881	2,700
Retained earnings		238,501	223,679
Accumulated other comprehensive loss		(2,414)	(1,844)
TOTAL EQUITY		557,683	541,921
TOTAL EQUITY AND LIABILITIES		1,239,349	1,165,021

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,
		2012	2011	2012	2011
Revenue		171,130	164,294	337,628	316,716
Cost of sales		132,294	125,603	255,914	238,807
Gross profit		38,836	38,691	81,714	77,909
	Selling, general and administrative	15,430	18,619	44,968	41,256
	Research and development	587	628	1,396	1,211
Earnings before finance charges and income taxes		22,819	19,444	35,350	35,442
	Finance charges	6,507	5,812	13,265	12,839
	Embedded derivative gain (Note 14)	(6,680)	-	(8,050)	-
Net financing charges (recovery) expense		(173)	5,812	5,215	12,839
Earnings before income taxes		22,992	13,632	30,135	22,603
Deferred taxes		4,366	3,149	6,690	6,887
Net earnings		18,626	10,483	23,445	15,716
Net earnings per share (Note 11)		0.38	0.22	0.48	0.32
Diluted earnings per share (Note 11)		0.38	0.21	0.48	0.32
Supplementary information:
Amortization included within cost of sales		11,059	11,385	22,476	22,516
Amortization included in selling, general and administrative		3,322	2,819	6,643	5,632
Total amortization		14,381	14,204	29,119	28,148

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,
		2012	2011	2012	2011
Net earnings		18,626	10,483	23,445	15,716
Other comprehensive loss:
	Exchange difference on translating foreign operations	1,255	-	(443)	-
	Unrealized loss on available for sale financial assets(1) (Note 14)	(63)	(95)	(127)	(413)
Other comprehensive gain (loss)		1,192	(95)	(570)	(413)
Comprehensive income		19,818	10,388	22,875	15,303

(1) Net of tax of nil for the three and six months ended June 30, 2012 (nil and $0.1 million for the three and six months ended June 30, 2011).

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,
		2012	2011	2012	2011
Cash provided by (used for):
Operating Activities
Net earnings		18,626	10,483	23,445	15,716
Adjustments for:
	Amortization	14,381	14,204	29,119	28,148
	Income taxes provision	4,366	3,149	6,690	6,887
	Income tax refund	(33)	(361)	(43)	(409)
	Stock-based compensation (recovery) expense (Note 10)	(7,542)	(1,282)	(160)	2,929
	Finance charges	6,507	5,812	13,265	12,839
	Embedded derivative gain (Note 14)	(6,680)	-	(8,050)	-
	Finance charges paid	(10,305)	(8,847)	(11,289)	(9,964)
	Other	(109)	(1)	(421)	(34)
Funds from Operations		19,211	23,157	52,556	56,112
Decrease (increase) in non-cash working capital (Note 15)		(16,950)	10,293	(13,702)	(15,487)
Decommissioning costs incurred		(582)	(433)	(935)	(631)
Cash from Operating Activities		1,679	33,017	37,919	39,994
Investing Activities
	Additions to property, plant and equipment (Note 15)	(33,645)	(26,369)	(66,510)	(44,078)
	Other	259	-	434	103
Cash used in Investing Activities		(33,386)	(26,369)	(66,076)	(43,975)
Financing Activities
	Issuance of shares	642	1,230	642	1,249
	Increase (decrease) in senior secured debt	33,000	(12,725)	38,471	(2,406)
	Increase (decrease) in bank indebtedness	1,261	7,948	(3,453)	11,354
	Decrease in note receivable	68	52	123	89
	Dividends paid (Note 12)	(3,753)	(3,153)	(7,642)	(6,305)
Cash from (used in) Financing Activities		31,218	(6,648)	28,141	3,981
	Effect of foreign exchange on cash	489	-	16	-
Change in cash and cash equivalents		-	-	-	-
Cash and cash equivalents, beginning of period		-	-	-	-
Cash and cash equivalents, 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 lead;

- 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;

- 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 consolidated statements of operations, comprehensive income and retained earnings. 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)		2012	2011	2012	2011
Net earnings		18,626	10,483	23,445	15,716
Add back (deduct):
	Deferred income taxes	4,366	3,149	6,690	6,887
	Net Finance charges (recovery)	(173)	5,812	5,215	12,839
	Amortization	14,381	14,204	29,119	28,148
EBITDA		37,200	33,648	64,469	63,590
Add back (deduct):
	Stock-based compensation expense	(6,952)	(604)	1,851	4,337
Adjusted EBITDA		30,248	33,044	66,320	67,927
Weighted average number of shares		48,682	48,523	48,650	48,530
EBITDA per share		0.76	0.69	1.33	1.31
Adjusted EBITDA per share		0.62	0.68	1.36	1.40

"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 expense and the gain or loss on embedded derivatives. Stock-based compensation expense, 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,
($000s)		2012	2011	2012	2011
Net earnings		18,626	10,483	23,445	15,716
Add back (deduct):
	Stock-based compensation expense (recovery)	(6,952)	(604)	1,851	4,337
	Embedded derivative gain	(6,680)	-	(8,050)	-
	Adjusted net earnings	4,994	9,879	17,246	20,053
Adjusted net earnings per share		0.10	0.20	0.35	0.41

"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)	2012	2011
Total Equity	557,683	533,869
Shares outstanding, June 30,	48,698	48,607
Book value per share	11.45	10.98

"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,
($000s)		2012	2011	2012	2011
Cash from operations		1,679	33,017	37,919	39,994
Add back (deduct):
	Increase (decrease) in non-cash working capital	16,950	(10,293)	13,702	15,487
	Decommissioning obligations incurred	582	433	935	631
Funds from operations		19,211	23,157	52,556	56,112
Weighted average number of shares		48,682	48,523	48,650	48,530
Funds from operations per share		0.39	0.48	1.08	1.16

"Return on capital" is used to assist management and investors in measuring the returns realized from capital employed.

($000s)		Q2 2012 TTM	Q2 2011 TTM
Adjusted EBITDA		144,869	131,279
	Total assets	1,239,349	1,072,217
	Current liabilities	(170,963)	(134,189)
Capital employed		1,068,386	938,028
2-Year net assets average		1,003,207	936,484
Return on capital (%)		14.4%	14.0%

References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Adjusted net earnings, Adjusted net earnings per share, Funds from operations, Funds from operations per share and Return on capital throughout this document have the meanings set out above.