Newalta Announces Strong Operating Results
CALGARY ALBERTA-- Newalta Income Fund (NAL - TSE) is pleased to
announce its financial results for the fourth quarter and the year
ended December 31, 2001.
/T/
Financial Highlights ($000's)
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Three Months Year Ended
December 31 December 31
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(unaudited) % Increase (audited) % Increase
2001 2000 (Decrease) 2001 2000 (Decrease)
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Revenue 24,175 21,884 10 92,960 78,421 19
Operating income 4,427 2,479 79 14,932 10,103 48
Earnings 2,003 3,590 (44) 10,239 7,718 33
Earnings per share
(cents) 5.5 11.0 (50) 30.6 23.6 30
Diluted (cents) 5.5 10.9 (50) 30.6 23.5 30
EBITDA 7,869 5,490 43 27,525 22,110 24
Cash flow 6,778 4,428 53 23,543 17,902 32
Capital
expenditures, net 9,951 8,557 16 51,789 14,039 269
Working capital(1) - - 5,940 9,622 (38)
Long term debt(2) - - 63,353 51,680 23
Average shares
outstanding (000's) - - 33,447 32,749 2
Total shares
outstanding (000's) - - 35,408 32,798 8
(1) excludes current portion LTD
(2) includes current portion LTD
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For the three months ended December 31, 2001, revenues improved
10%, EBITDA increased 43% and cash flow was up 53%. The increase
in revenue is primarily attributable to the acquisition of Anadime
Corporation ("Anadime"). The improvements in EBITDA and cash
flows reflect the Anadime acquisition and the cost reductions
achieved in the integration of the Anadime's operations into
Newalta's operations. Excluding the integration costs, EBITDA and
cash flow, for the three months ended December 31, 2001 increased
57% and 71%, respectively, as compared to the same period in 2000.
Diluted earnings per share for the fourth quarter, declined 50% to
5.5 cents per share from 10.9 cents in the fourth quarter of 2000,
as a result of the application of the liability method of tax
allocation for income taxes. The tax provision in the fourth
quarter 2001 includes an expense of $0.8 million to adjust for
rate changes in the second quarter of 2001. The tax provision in
the fourth quarter, 2000 included a reduction of income tax
expense of $2.3 million to reflect the cumulative effect of the
substantively enacted federal income tax rate reductions.
For the year ended December 31, 2001 Newalta delivered record
financial performance. The effects of lower crude oil prices in
the fourth quarter of 2001 were largely offset by the Anadime
acquisition, which contributed approximately $4.3 million in
revenue from August 20, 2001 to December 31, 2001. Revenue for
2001 improved 19% to $93.0 million as compared to $78.4 in 2000.
EBITDA and cash flow for 2001, improved 24% and 32%, respectively.
Excluding the costs to successfully defend the unsolicited
Canadian Crude Separators Inc. ("CCS") takeover bid and the
integration costs related to the Anadime acquisition, EBITDA and
cash flow for 2001 increased 36% and 46% respectively as compared
to 2000. Diluted earnings per share in 2001 improved 30% to 30.6
cents per share from 23.5 cents in 2000. Excluding the
aforementioned takeover and integration costs, diluted earnings
per share for 2001 would have increased 66% to 39 cents.
A full year's contribution from the Anadime facilities, combined
with the 2001 capital upgrades and expansions and higher heavy oil
netbacks should result in continued strong performance for Newalta
in 2002. In addition, Newalta will continue to aggressively
evaluate business development activities in eastern Canada.
Newalta is a Canadian resource recovery and recycling company.
/T/
Newalta Income Fund
CONSOLIDATED BALANCE SHEETS
As at December 31
2001 2000
($000's) (audited) (audited)
-------------------------------------
ASSETS
Current
Cash - 891
Accounts receivable 20,330 15,696
Inventory 4,645 3,046
Future income tax 4,000 1,179
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28,975 20,812
Capital assets (note 3) 189,576 149,824
Goodwill (note 3) 13,687 10,402
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232,238 181,038
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LIABILITIES
Current
Bank indebtedness 10,374 -
Accounts payable 12,661 11,190
Current portion of long-term debt 15,273 60
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38,308 11,250
Long-term debt 45,080 51,620
Debentures 3,000 -
Future income taxes 29,779 22,088
Site restoration 2,308 1,865
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118,475 86,823
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SHAREHOLDERS' EQUITY
Share capital (note 2) 69,481 59,216
Retained earnings 44,282 34,999
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44,282 94,215
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232,238 181,038
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Newalta Income Fund
CONSOLIDATED STATEMENTS OF OPERATIONS & RETAINED EARNINGS
For the periods ended December 31
Three Months Year
Ended Dec 31 Ended Dec 31
------------------------------------------
2001 2000 2001 2000
($000's) (unaudited) (audited)
Revenue
24,175 21,884 92,960 78,421
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Expenses
Operating 14,967 15,764 60,837 54,314
General and
administrative 565 630 2,070 1,997
Interest 962 922 3,493 3,753
Depreciation 2,480 2,089 9,100 8,254
Takeover bid and
integration costs (note 4) 774 2,528
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19,748 19,405 78,028 68,318
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Operating income 4,427 2,479 14,932 10,103
Income taxes
Current 129 140 489 455
Future 2,295 (1,251) 4,204 1,930
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Earnings for the period 2,003 3,590 10,239 7,718
Retained earnings -
beginning of period 42,320 31,413 34,999 28,485
Reduction from
implementation of
accounting standards - - -- (1,200)
Repurchase of common
shares (41) (4) (956) (4)
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Retained earnings -
end of period 44,282 34,999 44,282 34,999
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------------------------------------------
Earnings per share
(cents) 5.5 11.0 30.6 23.6
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------------------------------------------
Diluted earnings per
share (cents) 5.5 10.9 30.6 23.5
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Newalta Income Fund
CONSOLIDATED STATEMENTS OF CASH FLOW
For the periods ended December 31
Three Months Year Ended
Ended Dec 31 December 31
2001 2000 2001 2000
(unaudited) (audited)
-----------------------------------
($000's)
NET INFLOW (OUTFLOW) OF CASH RELATED TO
THE FOLLOWING ACTIVITIES:
Operations:
Cash flow from operations
Earnings for the period 2,003 3,590 10,239 7,718
Items not requiring cash
Depreciation 2,480 2,089 9,100 8,254
Future income taxes 2,295 (1,251) 4,204 1,930
-----------------------------------
Funds provided from
operations before changes
in non-cash working capital 6,778 4,428 23,543 17,902
Changes in non-cash
working capital (3,608) 4,067 (4,706) 2,521
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3,170 8,495 18,837 20,423
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Investments:
Additions to capital assets (10,216) (8,570) (27,804)(14,124)
Acquisition of Anadime,
including bank indebtedness
(note 2 and 3(b)) (753) - (4,620) -
Site restoration (134) (105) (136) (121)
Proceeds on sale of capital assets 3 13 84 85
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(11,100) (8,662) (32,476)(14,160)
-----------------------------------
Financing:
Issuance of common shares - - 23 307
Repurchase of common shares (123) (15) (2,685) (15)
Increase (decrease)
in long-term debt 5,193 - 5,036 (3,060)
-----------------------------------
5,070 (15) 2,374 (2,768)
-----------------------------------
Net cash inflow
(outflow) (2,860) (182) (11,265) 3,495
Cash (bank indebtedness),
beginning of period (7,514) 1,073 891 (2,604)
-----------------------------------
Cash (bank indebtedness),
end of period (10,374) 891 (10,374) 891
-----------------------------------
-----------------------------------
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Newalta Income Fund NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the three month (unaudited) and twelve month (audited) periods
ended December 31, 2001 ($000's)
1. ACCOUNTING POLICIES
Interim Financial Statements
The accompanying interim consolidated financial statements of
Newalta Income Fund (the "Corporation") have been prepared in
accordance with Canadian generally accepted accounting principles.
These interim financial statements and the notes thereto should
be read in conjunction with the Company's financial statements
contained in its Annual Report for the year ended December 31,
2001
Accounting Change
Effective January 1, 2001, the Company retroactively adopted
recommendations of the CICA Handbook section 3500 regarding
earnings per share. Under the revised standard, the treasury
stock method is used instead of the imputed earnings approach for
determining the dilutive effect of options issued. Prior to the
adoption of the new recommendations diluted per share amounts were
determined using the imputed earnings method. If the imputed
earnings method were utilized, diluted earnings per common share
would have been 5.8 cents per share in Q4 and 29.5 cents per share
in the twelve months ended December 31, 2000 (10.2 cents and 22.7
cents in 2000). On December 31, 2001, the basic number of shares
outstanding was 33,447,000 (2000 - 32,749,000 and the diluted
number of shares was 33,626,000 (2000 - 32,797,000).
2. SHARE EQUITY
Pursuant to the December 19, 2000 normal course issuer bid, the
Company purchased 960,450 common shares for a total cost of
$2,685, of which $1,729 was charged to share capital and the
balance to retained earnings.
On June 20, 2001, the Company purchased the Calgary facility of
Aqua-Pure Ventures Inc. ("Aqua-Pure") for $3,500. The purchase
price consisted of 857,143 common shares of the Corporation and
$500 cash.
On August 20, 2001, the Company acquired all the issued and
outstanding shares of Anadime Corporation ("Anadime") in exchange
for the issuance of 2,677,894 common shares of the Corporation,
$3,261 in acquisition and related costs, and the assumption of
liabilities and net working capital deficiency. The Company's
shares were valued at $3.35 based on the average market price of
the Company's common shares over the three week period before the
terms of the acquisition were agreed to and announced.
The non-cash components of the above transactions are not included
in additions to capital assets or issuance of common shares in the
consolidated statements of cash flows.
3. AQUISITIONS
(a) The following table summarizes the value of the consideration
given, and the assets and liabilities acquired in the purchase of
the Aqua Pure facility:
/T/
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Shares issued $ 3,000
Cash 500
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Total consideration $ 3,500
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Land, building, and equipment $ 3,500
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/T/
(b) On August 20, 2001 the Corporation acquired all the issued and
outstanding shares of Anadime in exchange for the issuance of
2,677,894 of the Corporations common shares, $3,261 in acquisition
and related costs, and the assumption of liabilities and net
working capital deficiency of Anadime. Anadime was engaged in the
recovery and recycling of oilfield waste materials. The six
facilities operated by Anadime are complementary to the oilfield
facilities operated by the Corporation. The following table
summarizes the value of the consideration given, and the values of
the assets and liabilities acquired in the acquisition of Anadime:
/T/
($000's)
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Shares issued $ 8,971
Cash 3,261
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Total consideration $ 12,232
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Fixed Assets $ 16,900
Goodwill 3,962
Working capital deficiency (1,173)
Long term debt (3,637)
Convertible debenture (3,000)
Future income tax (667)
Site restoration (153)
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Total $ 12,232
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/T/
The above valuations include some accruals and are management's
best estimate at the present time. Some values may change as
actual costs are incurred. Management is currently completing its
valuation of a partnership interest and its underlying assets
acquired in this acquisition. Once this valuation is complete,
there may be a change in the values assigned to fixed assets and
goodwill.
4. TAKE-OVER BID AND INTEGRATION COSTS
On May 2, 2001, Canadian Crude Separators Inc. ("CCS") made an
unsolicited offer for the common shares and warrants of the
Company. CCS terminated the offer on July 6, 2001. The costs of
defending against the take-over bid, in the amount of $1,754 were
expensed during the second quarter.
In connection with the integration of the Anadime acquisition, the
Company reorganized its operations. In accordance with CICA
Handbook EIC 114, $774 in severance, relocation and facility
closure costs related to the integration were expensed in the
fourth quarter.
5. SEGMENTED EARNINGS
The Company has two reportable segments. The Conventional and
Heavy Oilfield segment recovers and resells crude oil from
oilfield waste. The Industrial and Oil Recycling segment collects
waste lubricating oil, automotive, and industrial wastes in
western Canada, which are processed into resaleable products.
Segmented information for the twelve months ended December 31
($000's, audited)
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2001 Conventional Industrial Corporate
and Heavy and Oil Inter- and Consolidated
Oilfield Recycling segment Unallocated Total
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External revenue 62,870 30,090 92,960
Inter segment revenue 365 66 (431)
Operating expense 28,583 21,260 (431) 49,412
Indirect operating
expense 3,909 2,139 5,377 11,425
Depreciation and
amortization 5,756 2,923 421 9,100
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Net margin 24,987 3,834 (5,798) 23,023
General and
administrative 2,070 2,070
Interest expense 3,493 3,493
Takeover &
integration costs 2,528 2,528
Operating income 24,987 3,834 (13,889) 14,932
Capital expenditures 37,523 13,208 1,142 51,873
Total assets 146,962 77,001 8,275 232,238
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2000
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External revenue 51,482 26,939 78,421
Inter segment revenue 79 447 (526)
Operating expense 23,384 20,013 (526) 42,871
Indirect operating
expense 4,600 2,088 4,755 11,443
Depreciation and
amortization 5,030 2,504 720 8,254
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Net margin 18,547 2,781 (5,475) 15,853
General and
administrative 1,997 1,997
Interest expense 3,753 3,753
Operating income 18,547 2,781 (11,225) 10,103
Capital expenditures 10,035 2,798 1,291 14,124
Note: Inter-segment revenue is recorded at market, less the costs of
serving external customers. Management does not allocate general and
administrative, taxes, and interest costs in the segment analysis.
Segmented information for the three months ended December 31, 2001
($000's unaudited)
2001 Conventional Industrial Corporate
and Heavy and Oil Inter- and Consolidated
Oilfield Recycling segment Unallocated Total
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External revenue 16,919 7,256 24,175
Inter segment revenue 128 (72) (56)
Operating expense 7,114 5,104 (56) 12,162
Indirect operating
expense 731 584 1,490 2,805
Depreciation and
amortization 1,662 727 91 2,480
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Net margin 7,540 769 (1,581) 6,728
General and
administrative 565 565
Interest expense 962 962
Takeover &
integration costs 774 774
Operating income 7,540 769 (3,882) 4,427
Capital expenditures 7,045 5,010 (2,020) 10,035
Total assets 146,962 77,001 8,275 232,238
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2000
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External revenue 14,624 7,260 21,884
Inter segment revenue 11 112 (123)
Operating expense 6,970 5,493 (123) 12,340
Indirect operating
expense 808 503 2,113 3,424
Depreciation and
amortization 1,283 400 406 2,089
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Net margin 5,574 976 (2,519) 4,031
General and
administrative 630 630
Interest expense 922 922
Takeover &
reorganization costs
Operating income 5,574 976 (4,071) 2,479
Capital expenditures 6,264 1,713 593 8,570
Total assets 111,125 65,252 4,661 181,038
Note: Inter-segment revenue is recorded at market, less the costs of
serving external customers. Management does not allocate general and
administrative, taxes, and interest costs in the segment analysis.
For further information: Newalta Income Fund - Ronald L. Sifton, Senior Vice President, Finance and Chief Financial Officer, (403) 206-2684; Website: www.newalta.com