Newalta Reports First Quarter 2016 Results
(firmenpresse) - CALGARY, ALBERTA -- (Marketwired) -- 05/10/16 -- Newalta Corporation ("Newalta") (TSX: NAL) today reported results for the three months ended March 31, 2016.
FINANCIAL HIGHLIGHTS(1)
MANAGEMENT COMMENTARY
"First quarter results were in line with our expectations, which anticipated continued impacts from the decline in oil prices and activity levels," said John Barkhouse, President and Chief Executive Officer. "As customers minimized their activities on a further drop in oil prices in the first weeks of 2016, we experienced a 50% decrease in revenue in the first quarter versus prior year. In response, we took additional steps to permanently reduce costs and create greater financial flexibility."
During the first quarter, Newalta initiated cost rationalization actions to drive $12 million in incremental annualized savings - a program that has driven in excess of $50 million in annualized savings compared to 2014 levels - suspended its quarterly dividend and worked with its lenders to improve financial flexibility. Early in the second quarter, Newalta successfully completed an equity financing to raise $54.2 million in gross proceeds which were primarily used to reduce the amount drawn on our Credit Facility.
"These steps enhance Newalta''s ability to withstand the current industry downturn, but equally important are the actions taken to solidify our customer relationships as a safe, reliable and cost-effective operator," said Mr. Barkhouse. "We''ve seen pockets of improved facility utilization and our contract business has continued to provide steady cash flow, accounting for 30% of our trailing-twelve month revenue."
In early May, a massive wildfire in Fort McMurray and surrounding areas of Alberta caused Newalta and many producers to reduce or suspend operations in the region in order for employees to safely evacuate.
"Our immediate priority is to support our people and their families as they cope with this disaster," said Mr. Barkhouse. "We''re incredibly fortunate that all of our employees are safe and that our Fort McMurray facility and equipment located at various SAGD and mining locations remain intact. I am extremely proud of how Newalta responded under these trying circumstances. We will continue to do everything we can to help the community and to prepare for a safe return to normal operations."
The timing of the resumption of operations by our customers will be the key determinant of the financial impact on our business. There is currently limited visibility as to when and to what extent normal operations will resume. Based on a staged Oil Sands operational recovery through May and June, our preliminary estimate of the non-recurring impact to Adjusted EBITDA is $5 million.
"Looking ahead, our key priorities remain on continuing efforts to minimize our costs, preserve cash to protect the balance sheet and drive revenue growth opportunities through leveraging our network of facilities, operating experience and modular assets," said Mr. Barkhouse. "I believe the organization is prepared for the challenges of fundamental industry change and we are well positioned with a business model that has the capacity to realize operating leverage on a sustained increase in customer activity."
FIRST QUARTER RESULTS
Continuing Operations reflect the ongoing pure play environmental energy services business of Newalta and exclude the Industrial Division which was sold in the first quarter of 2015.
Continuing Operations
Heavy Oil
Oilfield
Capital Expenditures
G&A and Restructuring
ACTIONS TAKEN TO PROTECT PROFITABILITY AND OUR BALANCE SHEET
DISCONTINUED OPERATIONS
In Q1 2016, net loss from Discontinued Operations was $0.1 million compared to net loss of $4.5 million in the prior year. Q1 2016 results reflect a pre-tax loss of $0.1 million compared to a loss of $3.2 million in the prior year.
RECENT DEVELOPMENTS
Equity Issuance
On April 20, 2016, we closed on our bought deal and private placement equity financings. The public and private offerings of common shares raised total gross proceeds of $54.2 million (net proceeds of approximately $51.6 million). A total of 31.9 million common shares were issued at $1.70 per share, with 18.0 million sold on a bought deal basis to the public and 13.9 million sold by way of private placement to certain institutional investors, certain officers and all directors of Newalta. The net proceeds were used to reduce the amount drawn on our Credit Facility. These actions enhance our ability to withstand the prolonged market downturn, protect against further market deterioration and better position the company upon market recovery.
Heavy Oil Contract Extension
Effective April 1, 2016, we amended our contract with a Heavy Oil customer to extend operations on the customer''s site. The amended contract expires December 31, 2017, and provides for revised pricing for services. While the contract amendments are expected to result in an increase to cash flow over the remaining term of the contract, due to lease accounting implications of contracts of this nature, an extension of the term of the contract will result in a portion of Adjusted EBITDA (approximately $3 million) being recorded for this contract in 2017, as opposed to 2016. As a part of our March bank credit facility amendment process, these potential contract amendments were reviewed with the lending syndicate, and an add back adjustment to the definition of EBITDA for the purpose of covenant calculations was obtained, such that we do not expect to see any material impact to our covenant performance as a result.
The following section contains forward-looking information as it outlines our Outlook for 2016. Our Outlook is based on several key assumptions including growth capital contributions, commodity prices and activity levels of the industries we serve. Changes to these assumptions could cause our actual results to differ materially. Please refer to our Forward-Looking Information later in this document.
OUTLOOK
Our performance in 2016 has been significantly impacted by the drop in oil prices and activity levels in the oil and gas industry. In the first weeks of 2016, oil prices dropped below WTI $30/bbl and drove incremental behavioural and market shifts. We anticipate that continued market weakness will result in a year-over-year reduction in production volumes and additional pricing pressure, with these factors being partially offset by additional savings from our rationalization initiatives.
In early May 2016, a massive wildfire in Fort McMurray and surrounding areas caused Newalta and many producers to reduce or suspend operations in the region in order for employees to safely evacuate. Our people and their families are safe. While our Fort McMurray facility and equipment located at various SAGD and mining locations remain intact, our financial performance will be impacted by reduced operations. The key factor in determining the impact on our performance will be the timing in which customers bring their production back online and resume normal operations. There is currently limited visibility as to when and to what extent normal operations will resume. Based on a staged Oil Sands operational recovery through May and June, our preliminary estimate of the non-recurring impact to Adjusted EBITDA is $5 million.
Prior to the impact of the Fort McMurray wildfire, we maintained our 2016 floor guidance for Adjusted EBITDA of $25 million despite the downward adjustment for the contract extension, with performance in the second half expected to be substantially stronger than the first half. This was based on expected improvement in commodity prices, increased production volumes flowing into our facilities, targeted improvement in performance within our drill site business, and the impact of management''s ongoing focus on cost management. Notwithstanding the impact of the wildfire, our business model will continue to be underpinned by the strength and stability of our Heavy Oil contract business. We have reduced the upper end of our guidance for the year to reflect the impact of the contract extension and our limited visibility to the ongoing and generally weak drilling and production environment.
Factoring in the preliminary estimate for the wildfire, our revised full year Adjusted EBITDA guidance range is now $20 million to $30 million.
The following table outlines the factors we expect to impact performance in the second quarter and full year.
Crude Oil Prices
Drilling Activity
Step Change (production waste volumes, shifts in waste mix, customer pricing reductions, offset by returns from growth capital and operational efficiencies)
Savings from Cost Rationalization
Fort McMurray Wildfire
Restructuring and Other Related Costs
Excluding onerous lease charges, we expect to incur approximately $6 million in restructuring charges, of which we anticipate $3 million will be paid out in 2016.
Capital Expenditures
Our guidance for capital expenditures remains unchanged at approximately $15 million, with maintenance capital comprising approximately one-third of the total spend.
Free Cash Flow Generation, Net Debt and Leverage
We have proactively structured our business model for a "lower for longer" environment. Our equity financing, rationalization initiatives, amended Credit Facility, reduced capital spend and suspension of dividends provide the liquidity and flexibility to operate in a sustained downturn.
In 2016, we will continue to manage cash flow to ensure our financing obligations are met and spending is minimized wherever possible. Tied to our EBITDA guidance and its underlying assumptions, we anticipate being cash flow negative in the year after the impact of working capital changes and cash costs for severance, onerous lease payments, financing costs, tax and capital expenditures.
Beyond 2016, subject to partial recovery in oil price and activity levels, we will target positive Free Cash Flow generation after all cash financing, tax and capital expenditures.
The waiver of our Total Debt to EBITDA covenant ratio, as well as the revised Senior Debt to EBITDA and Interest Coverage covenant thresholds under our Credit Facility provide us with additional flexibility to manage our balance sheet successfully during this downturn. Managing debt leverage and use of cash and capital are our highest priorities. We will remain within our debt covenants throughout the balance of the year.
Customer Solutions
In addition to aggressively managing the internal business levers, we have continued to focus business development and sales on the pursuits of targeted customer opportunities. This approach leverages our extensive facility network, operating experience and modular assets to provide customers with a step change in cost-efficiency and liability management.
Leverage on Recovery
Inherent in our business model is the capacity to leverage significant upside with recovery in oil pricing and activity levels. In a sustained $60 WTI environment with associated activity levels (using 2015 operating results as a base), we would expect Adjusted EBITDA to be in the range of $100 to $140 million. For further details, please refer to page 24 of our 2015 Annual Report.
Quarterly Conference Call
Management will hold a conference call on May 11, 2016 at 11:00 a.m. (ET) to discuss Newalta''s performance for the quarter. To participate in the teleconference, please call 416-340-8010 or toll free 866-226-1798. To access the simultaneous webcast, please visit . For those unable to listen to the live call, a taped broadcast will be available at and, until midnight on Wednesday, May 18, 2016 by dialing 800-408-3053 and using the pass code 6501608.
About Newalta
Newalta is a leading provider of innovative engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from oil and gas exploration and production waste streams. We simplify the critical challenges of sustainable environmental practices through the use of advanced processing capabilities deployed through a differentiated business model. We serve customers onsite directly at their operations and through a network of locations throughout North America. Our proven processes and excellent record of safety make us the first-choice provider of sustainability-enhancing services for oil and gas customers. With a highly skilled team of people, a two-decade track record of innovation and a commitment to commercializing new solutions, Newalta is positioned for sustained future growth and improvement. We are Sustainability Simplified™. Newalta trades on the TSX as NAL. For more information, visit .
The press release contains certain statements that constitute forward-looking information. Please refer to the section below, "Forward-Looking Information", for further discussion of assumptions and risks relating to this forward looking information.
The Condensed Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on SEDAR at or our website at under Investor Relations/Financial Reports.
SELECT FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - Expressed in thousands of Canadian dollars)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS & COMPREHENSIVE LOSS
(Unaudited - Expressed in thousands of Canadian dollars except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited - Expressed in thousands of Canadian dollars)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - Expressed in thousands of Canadian dollars)
FORWARD-LOOKING INFORMATION
Certain statements contained in this document constitute "forward-looking information" as defined under applicable securities laws. When used in this document, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "potential", "strategy", "target" and similar expressions, as they relate to Newalta Corporation and the subsidiaries of Newalta Corporation, or their management, are intended to identify forward-looking information. In particular, forward-looking information included or incorporated by reference in this document includes information with respect to:
Expected future financial and operating performance and related assumptions are set out under "Outlook".
Such information reflects our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation:
By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Many other factors could also cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking information and readers are cautioned that the foregoing list of factors is not exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Furthermore, the forward-looking information contained in this document is made as of the date of this document and, in each case, is expressly qualified by this cautionary statement. Unless otherwise required by law, we do not intend, or assume any obligation, to update any such forward-looking information.
RECONCILIATION OF NON-GAAP MEASURES
The following MD&A contains references to certain financial measures, including some that do not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other corporations or entities. These financial measures are identified and defined below.
"EBITDA", "EBITDA per share", "Adjusted EBITDA", and "Adjusted EBITDA per share" are measures of our operating profitability. EBITDA provides an indication of the results generated by our principal business activities prior to how these activities are financed, assets are amortized or impaired, or how the results are taxed in various jurisdictions. In addition, Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation and restructuring and other related costs. Adjusted EBITDA provides improved continuity with respect to the comparison of our operating results over a period of time. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our common shares (Shares), while restructuring and other related costs are outside of our normal course of business. Restructuring and other related costs are charges primarily attributable to cost rationalization initiatives. EBITDA and Adjusted EBITDA are derived from the consolidated statements of operations and comprehensive income. EBITDA per share and Adjusted EBITDA per share are derived by dividing EBITDA and Adjusted EBITDA by the basic weighted average number of Shares.
EBITDA and Adjusted EBITDA from Continuing Operations are calculated as follows:
"Divisional EBITDA" provides an indication of the results generated by the division''s principal business activities prior to how activities are financed, assets are amortized or impaired and before allocation of general and administrative (G&A) costs, restructuring and other related costs or stock-based compensation. Divisional EBITDA is derived from Net (loss) earnings before income tax from Continuing Operations as follows:
"Adjusted net earnings" and "Adjusted net earnings per share" are measures of our profitability from Continuing Operations. Adjusted net earnings from Continuing Operations (Adjusted net earnings) provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation, the gain or loss on embedded derivatives, impairment and restructuring and other related charges. Stock-based compensation, a component of employee remuneration, can vary significantly with changes in the price of our Shares. The loss on the embedded derivative is a result of the change in the trading price of the debentures and the volatility of the applicable bond market. Impairment and restructuring and other related costs are related to initiatives outside of our normal course of business. As such, Adjusted net earnings provides improved continuity with respect to the comparison of our results over a period of time. Adjusted net earnings per share is derived by dividing Adjusted net earnings by the basic weighted average number of Shares.
"Tangible book value per share" is used to assist management and investors in evaluating the book value compared to the market value.
"Net Debt" is defined as sum of amount drawn on the Credit Facility, Letters of Credit and Senior Unsecured Debentures less Cash on hand.
"Funds from Operations" is used to assist management and investors in analyzing cash flow and leverage from Continuing Operations. Funds from Operations as presented is not intended to represent operating funds from operations or operating profits for the period, nor should it be viewed as an alternative to cash flow from operating activities, net earnings or other measures of financial performance calculated in accordance with IFRS. Funds from Operations is derived from the condensed consolidated statements of cash flows and is calculated as follows:
"Free Cash Flow" is defined as Funds from Operations less dividends paid, capital expenditures and decommissioning costs incurred.
References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Divisional EBITDA, Adjusted net earnings, Adjusted net earnings per share, Net Debt, Funds from Operations, Funds from Operations per share, and Free Cash Flow throughout this document have the meanings set out above.
Contacts:
Newalta Corporation
Anne M. Plasterer
Executive Director, Investor Relations
(403) 806-7019
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 10.05.2016 - 18:51 Uhr
Sprache: Deutsch
News-ID 1434098
Anzahl Zeichen: 2230
contact information:
Contact person:
Town:
CALGARY, ALBERTA
Phone:
Kategorie:
Oil & Gas
Typ of Press Release:
type of sending:
Date of sending:
Anmerkungen:
Diese Pressemitteilung wurde bisher 256 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Newalta Reports First Quarter 2016 Results
"
steht unter der journalistisch-redaktionellen Verantwortung von
Newalta Corporation (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
