CALGARY, ALBERTA - May 8, 2012 /CNW/ - Newalta Corporation ("Newalta") (TSX:NAL) today reported continued gains in revenue and profitability for the three months ended March 31, 2O12. Reflecting its positive outlook and the momentum associated with growth initiatives, Newalta also announced a 25 percent increase in its quarterly dividend to $0.10 per share.
| FINANCIAL HIGHLIGHTS1 |
| Three months ended March 31, | % Increase | |||
| ($000s except per share data) (unaudited) | 2012 | 2011 | (Decrease) | |
| Revenue | 166,498 | 152,422 | 9 | |
| Gross profit | 42,878 | 39,218 | 9 | |
| - % of revenue | 26% | 26% | - | |
| Net earnings | 4,819 | 5,233 | (8) | |
| - per share ($) - basic | 0.10 | 0.11 | (9) | |
| - per share ($) - basic adjusted(2) | 0.28 | 0.21 | 33 | |
| - per share ($) - diluted | 0.10 | 0.11 | (9) | |
| Adjusted EBITDA(2) | 36,073 | 34,883 | 3 | |
| - per share ($)(2) | 0.74 | 0.72 | 3 | |
| Cash from operations | 36,240 | 6,977 | 419 | |
| - per share ($) | 0.75 | 0.14 | 436 | |
| Funds from operations(2) | 33,345 | 32,955 | 1 | |
| - per share ($)(2) | 0.69 | 0.68 | 1 | |
| Maintenance capital expenditures(2) | 3,612 | 2,473 | 46 | |
| Growth capital expenditures(2) | 28,574 | 10,810 | 164 | |
| Dividends declared | 3,893 | 3,153 | 23 | |
| - per share ($)(2) | 0.08 | 0.065 | 23 | |
| Dividends paid | 3,889 | 3,152 | 23 | |
| Book value per share, March 31 | 11.14 | 10.85 | 3 | |
| Weighted average shares outstanding | 48,579 | 48,495 | - | |
| Shares outstanding, March 31,(3) | 48,665 | 48,509 | - | |
| (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 48,665,101 shares outstanding as at May 8, 2012. |
Management Commentary
"We opened 2012 with solid results consistent with our expectations," said Al Cadotte, President and CEO of Newalta. "Profitability and return on capital continued to improve year-over-year, supporting higher dividends and enhanced financial flexibility.
"We remain on track to sustain growth at 15 percent per year and double the business by 2015 from a base of 2010. Ongoing improvements in our markets, Onsite growth and our capital investments will drive improved year-over-year performance for the remainder of the year."
Dividend Increase
In determining the dividend, the Board of Directors considers a number of factors including forecasts for operating and financial results, maintenance and growth capital requirements, market activity and economic conditions. After a review of all factors, the Board approved a 25 percent increase in the quarterly cash dividend to $0. 10 per share ($0.40 per share annualized) from $0.08 per share ($0.32 per share annualized), starting with the dividend payable to shareholders of record as of June 29, 2012.
Consolidated Overview
Growth continued in Q1 2012, with revenue up 9 percent year-over-year to $166.5 million, Adjusted EBITDA up 3 percent to $36.1 million and net earnings of $4.8 million were relatively flat year-over-year. Gross Debt to Adjusted EBITDA ratio improved to 2.36 from 2.61 a year ago, further enhancing financial flexibility.
Adjusted SG&A (SG&A before stock-based compensation and amortization) remained in line with our expectation of 10 percent of annual revenue and was up 17 percent to $17.4 million due to investments in people and people development to support future growth.
Trailing twelve month Adjusted EBITDA improved for the ninth consecutive quarter to $147.7 million for the period ended March 31, 2012. Return on capital, calculated on a trailing twelve-month basis, continued to move toward its long-term average of 18 percent with first quarter performance of 15.2 percent from 13.4 percent in Q1 2011.
Capital expenditures in Q1 2012 were $32.2 million and focused primarily on growth capital projects in Onsite.
Operational Overview
Facilities Division revenue and gross profit were $111.4 million and $28.3 million, up 4 percent and 1 percent, respectively, compared to Q1 2011. Growth in our Western and Eastern Facilities was offset by weaker performance at our Ville Ste-Catherine ("VSC") facility largely due to changes in commodity prices. Improved crude and base oil pricing coupled with increased product sales in oil recycling drove growth in the Western Facilities. Performance in eastern Canada increased year-over-year reflecting strong event-based business at the Stoney Creek Landfill ("SCL") and increased demand for our services. VSC sales volumes of 17,400MT were relatively flat, while the lagged LME price decreased by 18 percent to $2,080 $U.S./MT compared to Q1 2011. VSC performance was in line with our expectations and better than Q4 2011.
Onsite Division delivered strong results for the quarter driven by increased oil related activity. Revenue and gross profit increased by 20 percent and 31 percent, to $55.1 million and $14.6 million, respectively, compared to Q1 2011. Gross profit as a percentage of revenue increased to 26 percent compared to 24 percent last year. Growth in Heavy Oil and in U.S. projects drove the incremental revenue flow through to gross profit. In Western Onsite, our combined U.S. and Canadian utilization rate for Q1 2012 was 63 percent, consistent with Q1 2011. To date we have ten Onsite contracts, seven of which were operating in Q1 2012. Three contracts are in design or construction, with two anticipated to be commissioned in Q2 2012 and the third commissioned in the second half of the year.
Our Technical Development team is on track with our first commercial demonstration at a Western Facility in mid-2012.
Outlook
In Q2 2012, we anticipate continued year-over-year improvement in performance driven by growth in Onsite. Crude oil and lead prices are anticipated to remain at levels consistent with Q1 2012. Oil and gas drilling activity is expected to be impacted by normal seasonality but is expected to be stronger than Q2 2011. SCL volumes are expected to remain strong throughout the quarter, at or above our three year historical average, and Eastern processing facilities are expected to improve in line with strengthening market conditions. Performance at VSC will be relatively flat compared to Q1 2012, though lower than Q2 2011 due to lower lead prices. We anticipate Q2 2012 production at VSC to be approximately 17,000 MT.
In Onsite, we expect increased project and contract activity in Heavy Oil and increased demand for drill site equipment in the U.S. to drive year-over-year growth. 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 2013. We remain on target to spend approximately 60 percent of our capital budget of $145 million in the first half of 2012, with essentially all of our growth capital committed for 2012.
We are confident that we will deliver attractive returns to our shareholders in the quarters ahead and expect ongoing improvement towards our historical Return on capital average of 18 percent. With significant growth from our Onsite contracts, contributions from the 2011 capital program and improving market demand, we are positioned for strong growth in the second half of 2012.
Quarterly Conference Call
Management will hold a conference call on Wednesday, May 9, 2012 at 11:00 a.m. (ET) to discuss Newalta's performance for the first quarter ended March 31, 2012. To participate in the teleconference, please call 1-888-340-9655. 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 Wednesday, May 16, 2012 by dialing 1-800-408-3053 and using the pass code 4388273 followed by the pound sign.
Newalta will hold its annual meeting of shareholders on Friday, May 11, 2012 at 11:00 a.m. Mountain Time.
Location: Newalta's corporate office, Building 'C'
220 - 12th Avenue, S.W.
Calgary, Alberta
For those unable to attend the annual meeting, the presentation will be webcast live at www.newalta.com and subsequently archived on Newalta's website.
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 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 March 31, | ||||
| ($000s, except where otherwise noted) (unaudited) | 2012 | 2011 | % Increase (Decrease) |
|
| Facilities | ||||
| Revenue | 111,437 | 106,722 | 4 | |
| Gross Profit | 28,328 | 28,107 | 1 | |
| - % of revenue | 25% | 26% | (4) | |
| Revenue by Business Unit | ||||
| Western Facilities | 53% | 47% | 13 | |
| Eastern Facilities | 23% | 21% | 10 | |
| VSC | 24% | 32% | (25) | |
| Assets Employed(1) | 611,000 | 586,849 | 4 | |
| Onsite | ||||
| Revenue | 55,061 | 45,700 | 20 | |
| Gross Profit | 14,550 | 11,111 | 31 | |
| - % of revenue | 26% | 24% | 8 | |
| Revenue by Business Unit | ||||
| Western Onsite | 51% | 53% | (4) | |
| Eastern Onsite | 11% | 12% | (8) | |
| Heavy Oil | 38% | 35% | 9 | |
| Assets Employed(1) | 294,383 | 252,898 | 16 | |
| Capital Expenditures | ||||
| Maintenance capital expenditures | 3,612 | 2,473 | 46 | |
| Facilities | 2,324 | 1,499 | 55 | |
| Onsite | 388 | 613 | (37) | |
| Growth capital expenditures | 28,574 | 10,810 | 164 | |
| Facilities | 8,245 | 4,415 | 87 | |
| Onsite | 17,321 | 4,270 | 306 | |
| (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) |
| March 31, 2012 | December 31, 2011 | ||
| Assets | |||
| Current assets | |||
| Accounts and other receivables | 127,059 | 134,172 | |
| Inventories | 33,780 | 30,953 | |
| Prepaid expenses and other (Note 12) | 8,145 | 6,558 | |
| 168,984 | 171,683 | ||
| Non-current assets | |||
| Property, plant and equipment | 834,033 | 820,102 | |
| Permits and other intangible assets (Note 3) | 59,359 | 59,593 | |
| Other long-term assets (Note 12) | 11,779 | 10,746 | |
| Goodwill | 102,897 | 102,897 | |
| TOTAL ASSETS | 1,177,052 | 1,165,021 | |
| Equity and liabilities | |||
| Current liabilities | |||
| Bank indebtedness | 1,455 | 6,168 | |
| Accounts payable and accrued liabilities | 162,292 | 147,897 | |
| Dividends payable | 3,893 | 3,889 | |
| 167,640 | 157,954 | ||
| Non-current liabilities | |||
| Senior secured debt (Note 4) | 74,182 | 68,493 | |
| Senior unsecured debentures (Note 5) | 245,067 | 245,049 | |
| Other liabilities (Note 8) | 2,664 | 5,459 | |
| Deferred tax liability | 70,620 | 68,389 | |
| Decommissioning liability | 74,926 | 77,756 | |
| TOTAL LIABILITIES | 635,099 | 623,100 | |
| Shareholders' Equity | |||
| Shareholders' capital (Note 6) | 318,254 | 317,386 | |
| Contributed surplus | 2,700 | 2,700 | |
| Retained earnings | 224,605 | 223,679 | |
| Accumulated other comprehensive loss | (3,606) | (1,844) | |
| TOTAL EQUITY | 541,953 | 541,921 | |
| TOTAL EQUITY AND LIABILITIES | 1,177,052 | 1,165,021 | |
| Condensed Consolidated Statements of Operations |
| (Unaudited - Expressed in thousands of Canadian Dollars) |
| (Except per share data) |
| For the three months ended March 31, | |||
| 2012 | 2011 | ||
| Revenue | 166,498 | 152,422 | |
| Cost of sales | 123,620 | 113,204 | |
| Gross profit | 42,878 | 39,218 | |
| Selling, general and administrative | 29,538 | 22,637 | |
| Research and development | 809 | 583 | |
| Earnings before finance charges and income taxes | 12,531 | 15,998 | |
| Finance charges (Note 12) | 5,388 | 7,027 | |
| Earnings before income taxes | 7,143 | 8,971 | |
| Provision for income taxes | |||
| Current | 21 | 26 | |
| Deferred | 2,303 | 3,712 | |
| 2,324 | 3,738 | ||
| Net earnings | 4,819 | 5,233 | |
| Net earnings per share (Note 9) | 0.10 | 0.11 | |
| Diluted earnings per share (Note 9) | 0.10 | 0.11 | |
| Supplementary information: | |||
| Amortization included within cost of sales | 11,417 | 11,131 | |
| Amortization included in selling, general and administrative | 3,321 | 2,813 | |
| Total amortization | 14,738 | 13,944 | |
| Condensed Consolidated Statements of Comprehensive Income |
| (Unaudited - Expressed in thousands of Canadian Dollars) |
| For the three months ended March 31, | |||
| 2012 | 2011 | ||
| Net earnings | 4,819 | 5,233 | |
| Other comprehensive loss: | |||
| Exchange difference on translating foreign operations | (1,697) | - | |
| Unrealized loss on available for sale financial assets(1) | (65) | (318) | |
| Other comprehensive loss | (1,762) | (318) | |
| Comprehensive income | 3,057 | 4,915 | |
| (1) | Net of tax of nil for the three months ended March 31, 2012 ($0.1 million for the three months ended March 31, 2011). |
| Condensed Consolidated Statements of Cash Flows |
| (Unaudited - Expressed in thousands of Canadian Dollars) |
| For the three months ended March 31, | |||
| 2012 | 2011 | ||
| Cash provided by (used for): | |||
| Operating Activities | |||
| Net earnings | 4,819 | 5,233 | |
| Adjustments for: | |||
| Amortization | 14,738 | 13,944 | |
| Income taxes provision | 2,324 | 3,738 | |
| Income tax refund | (10) | (48) | |
| Stock-based compensation expense (Note 8) | 7,382 | 4,211 | |
| Finance charges expense | 5,388 | 7,027 | |
| Finance charges paid | (984) | (1,117) | |
| Other | (312) | (33) | |
| 33,345 | 32,955 | ||
| Decrease (increase) in non-cash working capital (Note 13) | 3,248 | (25,780) | |
| Decommissioning costs incurred | (353) | (198) | |
| 36,240 | 6,977 | ||
| Investing Activities | |||
| Additions to property, plant and equipment (Note 13) | (32,865) | (17,709) | |
| Other (Note 4) | 175 | 103 | |
| (32,690) | (17,606) | ||
| Financing Activities | |||
| Issuance of shares | - | 19 | |
| Increase in senior secured debt | 5,471 | 10,319 | |
| Decrease in bank indebtedness | (4,713) | 3,406 | |
| Decrease in note receivable | 55 | 37 | |
| Dividends paid (Note 10) | (3,889) | (3,152) | |
| Effect of foreign exchange on cash | (474) | - | |
| (3,550) | 10,629 | ||
| 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 March 31, | |||
| ($000s) | 2012 | 2011 | |
| Net earnings | 4,819 | 5,233 | |
| Add back (deduct): | |||
| Current income taxes | 21 | 26 | |
| Deferred income taxes | 2,303 | 3,712 | |
| Finance charges | 5,388 | 7,027 | |
| Amortization | 14,738 | 13,944 | |
| EBITDA | 27,269 | 29,942 | |
| Add back (deduct): | |||
| Stock-based compensation expense | 8,804 | 4,941 | |
| Adjusted EBITDA | 36,073 | 34,883 | |
| Weighted average number of shares | 48,579 | 48,495 | |
| EBITDA per share | 0.56 | 0.62 | |
| Adjusted EBITDA per share | 0.74 | 0.72 | |
"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. Stock-based compensation expense, a component of employee remuneration, can vary significantly with changes in the price of our common shares. 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) | 2012 | 2011 | |
| Net earnings | 4,819 | 5,233 | |
| Add back (deduct): | |||
| Stock-based compensation expense | 8,804 | 4,941 | |
| Adjusted net earnings | 13,623 | 10,174 | |
| Adjusted net earnings per share | 0.28 | 0.21 | |
"Book value per share" is used to assist management and investors in evaluating the book value compared to the market value.
| Three months ended March 31, | ||
| ($000s) | 2012 | 2011 |
| Total Equity | 514,953 | 526,139 |
| Shares outstanding, March 31, | 48,665 | 48,509 |
| Book value per share | 11.14 | 10.85 |
"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 March 31, | |||
| ($000s) | 2012 | 2011 | |
| Cash from operations | 36,240 | 6,977 | |
| Add back (deduct): | |||
| Increase (decrease) in non-cash working capital | (3,248) | 25,780 | |
| Decommissioning obligations incurred | 353 | 198 | |
| Funds from operations | 33,345 | 32,955 | |
| Weighted average number of shares | 48,579 | 48,495 | |
| Funds from operations per share | 0.69 | 0.68 | |
"Return on capital" is used to assist management and investors in measuring the returns realized from capital employed.
| ($000s) | Q1 2012 TTM | Q1 2011 TTM | |
| Adjusted EBITDA | 147,665 | 124,809 | |
| Total assets | 1,177,052 | 1,060,866 | |
| Current liabilities | (167,640) | (121,330) | |
| Capital employed | 1,009,412 | 939,536 | |
| 2-Year net assets average | 974,474 | 932,850 | |
| Return on capital (%) | 15.2% | 13.4% | |
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.