CALGARY, ALBERTA--(Marketwired - Aug. 6, 2015) - Newalta Corporation ("Newalta") (TSX:NAL) today reported results for the three and six months ended June 30, 2015 and maintained its previous guidance for performance improvements in the second half of 2015 and in 2016.
FINANCIAL HIGHLIGHTS(1)
| Three months ended June 30, |
Six months ended June 30, |
||||||||||||
| ($000s except per share data) (unaudited) |
2015 | 2014 | % Change |
2015 | 2014 | % Change |
|||||||
| Continuing Operations(2) | |||||||||||||
| Revenue | 81,838 | 116,368 | (30 | ) | 179,417 | 226,805 | (21 | ) | |||||
| Divisional EBITDA(3) | 26,403 | 46,245 | (43 | ) | 53,227 | 86,973 | (39 | ) | |||||
| % of Revenue | 32 | % | 40 | % | (20 | ) | 30 | % | 38 | % | (21 | ) | |
| Net loss from Continuing Operations(4) | (13,376 | ) | (13,815 | ) | - | (36,640 | ) | (5,091 | ) | n/m | |||
| - per share ($) basic | (0.24 | ) | (0.25 | ) | (4 | ) | (0.65 | ) | (0.09 | ) | n/m | ||
| - per share ($) diluted | (0.24 | ) | (0.24 | ) | - | (0.65 | ) | (0.09 | ) | n/m | |||
| Adjusted net (loss) earnings(4) | (4,293 | ) | 3,907 | n/m | (9,175 | ) | 11,452 | (180 | ) | ||||
| - per share ($) basic adjusted(4) | (0.08 | ) | 0.07 | n/m | (0.16 | ) | 0.21 | (176 | ) | ||||
| Adjusted EBITDA(4) | 15,478 | 30,446 | (49 | ) | 28,372 | 55,454 | (49 | ) | |||||
| - per share(4) | 0.28 | 0.55 | (49 | ) | 0.50 | 1.00 | (50 | ) | |||||
| Cash from (used in) Continuing Operations | 8,402 | 14,737 | (43 | ) | (6,830 | ) | 42,117 | (116 | ) | ||||
| - per share ($) | 0.15 | 0.26 | (42 | ) | (0.12 | ) | 0.76 | (116 | ) | ||||
| Funds from operations(4) | 2,575 | 13,198 | (80 | ) | 6,061 | 34,707 | (83 | ) | |||||
| - per share ($)(4) | 0.05 | 0.24 | (79 | ) | 0.11 | 0.62 | (82 | ) | |||||
| Maintenance capital expenditures(4) | 4,132 | 6,510 | (37 | ) | 6,464 | 9,443 | (32 | ) | |||||
| Growth capital expenditures(4) | 15,558 | 20,441 | (24 | ) | 47,952 | 41,350 | 16 | ||||||
| Dividends declared | 7,029 | 6,979 | 1 | 14,054 | 13,107 | 7 | |||||||
| - per share ($)(4) | 0.125 | 0.125 | - | 0.250 | 0.235 | 6 | |||||||
| Dividends paid | 7,026 | 4,980 | 41 | 12,750 | 9,439 | 35 | |||||||
| Weighted average Shares outstanding | 56,220 | 55,780 | 1 | 56,205 | 55,650 | 1 | |||||||
| Shares outstanding, June 30,(5) | 56,237 | 55,828 | 1 | 56,237 | 55,828 | 1 | |||||||
| Combined Operations(2) | |||||||||||||
| Revenue | 81,838 | 213,114 | (62 | ) | 221,525 | 400,894 | (45 | ) | |||||
| Net loss | (13,289 | ) | (8,183 | ) | 62 | (41,030 | ) | (1,680 | ) | n/m | |||
| - per share ($) basic | (0.24 | ) | (0.15 | ) | 60 | (0.73 | ) | (0.03 | ) | n/m | |||
| - per share ($) diluted | (0.24 | ) | (0.14 | ) | 71 | (0.73 | ) | (0.03 | ) | n/m | |||
| Cash from (used in) Operating Activities | 8,230 | 25,221 | (67 | ) | (28,271 | ) | 36,858 | (177 | ) | ||||
| - per share ($) basic | 0.15 | 0.45 | (67 | ) | (0.50 | ) | 0.66 | (176 | ) | ||||
| (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 Consolidated Financial Statements and notes are synonymous with Financial Statements. All financial figures are unaudited. |
| (2) | On February 27, 2015, we completed the sale of our Industrial Division to Revolution. As a result, we have defined our Industrial Division as "Discontinued Operations", the remaining operations as "Continuing Operations" and the total Discontinued Operations and Continuing Operations as "Combined Operations". In accordance with the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, income and expenses and cash flow provided and used associated with the business to be sold have been classified as Discontinued Operations in our Financial Statements for the periods presented. |
| (3) | As a result of the change in our financial statement presentation from functional to nature based, we have reclassified the sales expense directly attributable to the divisions from Corporate and Other to the respective division. Prior period comparative figures have been amended to conform to current period's presentation. Please refer to "Reporting Structure" at the end of this document for the restated the historical segmented information and key metrics. |
| (4) | 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 throughout this document. |
| (5) | Newalta has 56,236,548 Shares outstanding as at August 6, 2015. |
MANAGEMENT COMMENTARY
"Second quarter results were in line with our expectations and validate the actions we've taken to date to rationalize costs, work with customers to find mutually sustaining solutions and accelerate our four key strategies outlined in Vision 2020," said John Barkhouse, President and CEO. "While Revenue and Adjusted EBITDA were 30% and 49% below last year, respectively, on a 35% decline in crude oil prices and 50% reduction in drilling activity, current market conditions provide us with unique opportunities to leverage our capabilities to engineer effective customer solutions that are highly relevant in today's cost-driven environment. As a responsive and resilient business, we are weathering this downturn and will use it to secure additional competitive advantages and market share."
During Q2 2015, stable contract revenue and the completion of the planned second phase of a company-wide rationalization provided offsets to the industry downturn, including lower oil prices and decreased drilling activity. The rationalization program achieved cost savings of $7.5 million in the quarter and is expected to provide $30 million in annualized savings going forward.
"Three months ago, we forecast an improvement in results in the back half of 2015 and into 2016 which was not predicated on any price or activity recovery and we remain comfortable with that guidance today," said Mr. Barkhouse. "More specifically, we expect a significant increase in Adjusted EBITDA in the second half of 2015 over the first half driven by growth capital investments and contracts, and the benefit of our cost reductions. Extending our expected second half run-rate improvements into 2016 with oil remaining at US$50-60 WTI and with associated activity levels, Adjusted EBITDA in 2016 would range between $120 million to $140 million. We have confidence in our outlook based on current market conditions and we will continue to move aggressively forward with Vision 2020's growth strategies."
Vision 2020, launched in May, 2015, directs Newalta to enhance the recovery of value from oil and gas waste streams for our customers at each stage of drilling, completions, production and reclamation using a business approach called Sustainability Simplified™ and to enhance performance for our shareholders with emphasis on improving corporate scale and operating footprint geographically, growing our onsite business and contracts and leveraging our core capabilities to add differentiated services. These actions will make Newalta the North American leader in environmental energy services and drive accelerated progress.
SECOND 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. Newalta's Continuing Operations include two divisions - Heavy Oil and Oilfield - a structure adopted in Q1 2015 to more closely align operations with customer activities, facilitate a seamless service package to customers, optimize our resource allocations, and aid in the execution of our growth strategies.
Continuing Operations
Q2 revenue and Adjusted EBITDA decreased 30% and 49%, respectively, to $81.8 million and $15.5 million compared to prior year. Performance in the second quarter of 2015 continued to be significantly impacted by the challenging environment, in line with previous guidance. The year-over-year decline of $15.0 million in Adjusted EBITDA reflects both lower crude oil prices and drilling activity ($3.5 million and $8.5 million, respectively) in Canada and the U.S.. Crude oil prices decreased by over $30/bbl or 35%, while drilling activity in the areas we serve declined approximately 50% over prior year. Reduced production related activity further decreased Adjusted EBITDA by approximately $8.0 million. Stable contract revenue combined with savings from the two-phase cost rationalization program initiated in Q1 partially mitigated the impacts of the depressed environment. Net loss from Continuing Operations for the quarter was $13.4 million compared to $13.8 million in the prior year. Lower EBITDA was offset by lower finance charges and embedded derivative losses.
Year-to-date Adjusted EBITDA was $28.4 million, down 49% over prior year. Year-to-date results reflect the same factors as the quarter with the decline in crude oil prices having a more significant impact. Year-to-date, Net loss from Continuing Operations was $36.6 million compared to $5.1 million in the prior year, reflecting the same factors as the quarter and higher restructuring and other related costs.
To date, our contract model has performed well during this downturn, continuing to provide steady, predictable cash flow. These contracts generally are not tied directly to commodity price changes or drilling activity and provide a solid foundation for our business, particularly in depressed markets. On a trailing-twelve month basis, contracts represented 27% of our revenue.
In April 2015, we completed the second phase of the two-phase program initiated in Q1 to maximize business efficiencies and drive improved margins. Actions over the two-phases include the elimination of positions, office space consolidation and general reductions in all expense categories including discretionary items. In addition to the overhead reductions, we suspended the company-matching payments to employee savings plans and implemented hiring and salary freezes. We have realized $7.5 million and $10.5 million in the quarter and year-to-date, respectively, in cost savings from these actions.
During the quarter, we incurred $7.1 million in restructuring and other related costs, including $3.0 million in non-cash onerous lease charges for corporate office consolidation, and additional charges for severance and related costs.
Divisional Results
Heavy Oil revenue and Divisional EBITDA in the quarter decreased by 27% and 38%, respectively, to $36.7 million and $14.4 million compared to prior year. Contributions from both Heavy Oil Facilities and Onsite were weighed down by reduced activity in the heavy oil sector and lower crude oil prices. Year-to-date, revenue and Divisional EBITDA decreased by 17% and 34%, respectively to $75.1 million and $26.0 million compared to prior year. The decrease was driven by lower contributions from Heavy Oil Facilities. Onsite contributions were relatively flat, supported by our mature fine tailings (MFT) contracts.
Heavy Oil made progress with several growth initiatives:
- Completed construction of the second MFT plant at Shell Canada Limited's Jackpine Mine and began MFT processing in the first quarter.
- Signed an extension on the original Syncrude MFT contract to operate in the second half of 2015.
- Completed construction and commissioning late in the second quarter of the Fort McMurray full-service facility to serve the oil sands.
- Commenced commissioning on a new modular processing facility (MPF) near Silver Lake to serve the conventional heavy oil market. This facility will be fully operational in Q3 2015.
Oilfield revenue and Divisional EBITDA in the quarter decreased 32% and 48%, respectively, to $45.1 million and $12.0 million. Performance was driven by lower contributions from both Oilfield Facilities and Drilling Services due primarily to reduced drilling activity and lower crude oil prices. Year-to-date Oilfield revenue and Divisional EBITDA decreased 24% and 43%, respectively, to $104.3 million and $27.2 million compared to prior year. Results were impacted by the same factors as the quarter with reduced crude oil prices having a more significant impact on year-to-date results.
Oilfield made progress with several growth initiatives:
- Entered into a joint venture agreement with a midstream provider for one commissioned modular processing facility (MPF), which is anticipated to be expanded to include a full-service offering to customers.
- Completed commissioning of the Alexander, North Dakota MPF in the Bakken early in Q1.
- Completed construction and commissioning at two new MPFs at Fox Creek and Gold Creek, Alberta in Q1. These MPFs are expected to contribute in the second half of 2015.
- Construction of our Gold Creek landfill is on track for completion in late Q3 2015 and fully operational in early Q4 2015. The landfill is strategically located near our Gold Creek MPF to improve operational efficiencies and provide more seamless service for our customers.
Capital expenditures from Continuing Operations for the three and six months ended June 30, 2015 were $19.7 million and $54.4 million, focused primarily on the completion of modular processing facilities, the Fort McMurray facility, and an additional drill cuttings treatment unit.
At June 30, 2015, Total Debt was $321.5 million, reduced by $150.7 million from December 31, 2014. Total Debt to EBITDA as at June 30, 2015 is 3.23.
Discontinued Operations
Q2 2015 Discontinued Operations net earnings before loss on sale was $0.3 million compared to $7.6 million in prior year. Q2 2015 results reflect customary purchase price adjustments. Year-to-date, net loss before loss on sale was $9.8 million compared to net earnings of $4.7 million in prior year. The decrease in performance was driven by the timing of the sale in February, weaker performance across all business lines, and restructuring and other related charges.
Dividends
In determining the dividend to be paid to our shareholders, the Board of Directors considers a number of factors, including: the forecasts for operating and financial results, maintenance and growth capital requirements, as well as market activity and conditions. After review of all factors, the Board declared $7.0 million in dividends or $0.125 per share, paid July 15, 2015, to shareholders on record as at June 30, 2015.
The Board reviews dividends on a quarterly basis. In light of the current market environment and outlook, we will provide an update in the quarters ahead regarding any changes in dividends as visibility of our market environment improves.
The following section contains forward-looking information as it outlines our Outlook for 2015. 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.
OUTLOOK
Our performance in 2015 has been significantly impacted by the sharp drop in oil prices and activity levels in the oil and gas industry. The magnitude of this downturn is expected to continue to impact our results for the balance of 2015. To date, results are in line with our expectations and previous guidance provided to the market. Our Q1 guidance for 2015 and 2016 remains unchanged.
Adjusted EBITDA in the second half of 2015 is expected to increase significantly over the first half. The improvement in the second half of the year will be driven primarily by contributions from our growth capital investments and contracts, and benefits from our cost rationalization. In Heavy Oil, contributions will improve from our mature fine tailings (MFT) contracts, the full-service facility in Fort McMurray and the Silver Lake modular processing facility (MPF). In Oilfield, growth will be driven by two new MPFs, Fox Creek and Gold Creek, anticipated to contribute in Q3. In addition, in the second half of 2015, we expect to realize approximately $15 million of year-over-year EBITDA impact from our cost rationalization actions taken in the first half of the year.
The following table outlines the factors we expect to impact performance in the third quarter and for the remainder of the year.
| Assumption | Expected impact on Adjusted EBITDA compared to prior year period(1) | |||
| Factor | Q2 2015(1) | Q3 and Full year | Q3 2015 | 2015 |
| West Texas Intermediate (US$/bbl) | $57.84 | $50 - $60 | ||
| Canadian Light Sweet (CDN$/bbl)(2) | $68.76 | Q3 2015: $55 -$70 2015: $55 - $65 |
$1M - $3M decrease | $6M -$9M decrease |
| Western Canadian Select (CDN$/bbl)(2) | $56.96 | Q3 2015: $45 -$55 2015: $45 - $55 |
$2M - $3M decrease | $9M - $11M decrease |
| Drilling activity(2) decline | ~50% | 45% - 55% | $7M - $10M decrease | $23M - $30M decrease |
| Step Change(3) | ($10M) | $8M - $11M decrease | $20M -$28M decrease | |
| Savings from cost rationalization | $7.5 M | $30 million annualized | $6M -$8M increase | $25M increase |
| (1) | M refers to millions. |
| (2) | Impact derived from annual sensitivities based on 2015 forecast performance and volumes outlined in the "Sensitivities" section. The actual impact from crude oil prices may vary with fluctuations in volumes. |
| (3) | This factor is expected to have an impact on our performance through the year, and cannot be quantified on any linear sensitivity. |
The expected impact of crude oil prices on Adjusted EBITDA is derived from the change in crude oil price and annual recovered crude oil volumes. At current activity levels, we expect to recover fewer barrels of crude oil in 2015 compared to 2014. This decrease reduces our sensitivity on an annual basis. For every $10 change in our Canadian benchmarks we expect a $6 million change in Adjusted EBITDA in 2015, as compared to an $8 million change in 2014. The impact of the reduced volumes has increased the expected impact on performance from Step Change in 2015.
Crude oil prices
- Lower crude oil prices directly impact the value of the products we recover from waste. Year-to-date, crude oil prices have dropped over 40% compared to 2014. We anticipate oil prices to remain low for the balance of 2015.
Drilling Activity
- Since December 2014, drilling activity in the WCSB and the U.S. basins where we operate (Bakken, Eagleford, Marcellus) has declined 50%. We anticipate drilling activity to remain depressed for the balance of 2015, with a staged recovery in 2016 and 2017.
Step Change (Production waste volumes, shifts in waste mix, customer pricing reductions, offset by returns from growth capital and operational efficiencies)
- In concert with the revised crude oil sensitivities and the factors outlined below, we have increased the expected impact of step change on our 2015 results.
- Year-to-date, the impact was predominately characterized by a change in the amount and nature of production-driven waste volumes received at our facilities and to a lesser extent pricing pressure in Drilling Services. To date, production driven volumes declined by approximately 30%. We expect reduced production related activity to continue to impact results for the balance of the year.
- We are working with our customers to bundle opportunities, partner through contractual relationships, collaborate with our suppliers and reducing our operating cost structure to mitigate the impact of pricing pressure.
- In 2014, growth capital of $130 million was directed to our Heavy Oil and Oilfield Divisions. Year-to-date, the severe decline in crude oil prices and activity reduced contributions from these investments. Although, we expect this trend to continue for the balance of 2015, we expect results in the second half of 2015 to benefit from the timing of contracts and contributions from three new MPFs, the full-service Fort McMurray facility and a new Oilfield landfill in the second half of 2015.
Savings from Cost Rationalization
- We anticipate cost reduction and rationalization initiatives will drive approximately $30 million in annualized ongoing savings and $25 million in 2015.
Net Debt and Leverage
We have a resilient business model and a strong balance sheet to weather the volatile market. Management of our debt leverage and optimal use of our cash and capital are of the highest priority. We will remain within our debt covenants throughout 2015. Given our assumptions for reduced oil prices and drilling activity for the remainder of the year, we anticipate our Net Debt leverage to increase beyond 3.50 before the end of the year.
Restructuring and Other Related Costs
We expect to incur approximately $2 million in the second half of 2015 in additional restructuring and other related costs.
Outlook beyond 2015
Performance in the second half of 2015, and resulting run rate improvements to Adjusted EBITDA are not predicated on any recovery in oil pricing or drilling activity over our first half performance baseline, underscoring the strength of our business model. Extending the second half run rate improvements into 2016 with oil remaining between US$50 - $60 WTI and with associated activity levels, Adjusted EBITDA in 2016 is anticipated to range from $120 to $140 million. As a result, we anticipate our Net Debt leverage to decrease steadily throughout 2016, ending at or below 3.00. For additional context, in a normalized US$70 to $75 WTI oil price environment with improved activity levels, we would expect Adjusted EBITDA in excess of $170 million.
Quarterly Conference Call
Management will hold a conference call on Friday, August 7, 2015 at 11:00 a.m. (ET) to discuss Newalta's performance for the quarter ended June 30, 2015. To participate in the teleconference, please call 647-788-4922 or 877-291-4570. 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 at www.newalta.com and, until midnight on Friday, August 14, 2015 by dialing 800-585-8367 and entering passcode 79352661 followed by the pound sign.
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 www.newalta.com.
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 unaudited interim Condensed Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on SEDAR at www.sedar.com or our website at www.newalta.com under Investor Relations/Financial Reports.
SELECTED FINANCIAL INFORMATION
| Three months ended June 30, |
Six months ended June 30, |
||||||||||||
| ($000s except per share data) (unaudited) |
2015 | 2014 | % Change |
2015 | 2014 | % Change |
|||||||
| Heavy Oil | |||||||||||||
| Revenue | 36,696 | 50,370 | (27 | ) | 75,099 | 90,342 | (17 | ) | |||||
| Divisional EBITDA(1) | 14,419 | 23,193 | (38 | ) | 26,045 | 39,493 | (34 | ) | |||||
| - % of revenue | 39 | % | 46 | % | (15 | ) | 35 | % | 44 | % | (20 | ) | |
| Revenue by Business Unit | |||||||||||||
| Facilities | 25 | % | 35 | % | (29 | ) | 25 | % | 38 | % | (34 | ) | |
| Onsite | 75 | % | 65 | % | 15 | 75 | % | 62 | % | 21 | |||
| Assets Employed(2) | 283,710 | 222,518 | 27 | ||||||||||
| Oilfield | |||||||||||||
| Revenue | 45,142 | 65,998 | (32 | ) | 104,318 | 136,463 | (24 | ) | |||||
| Divisional EBITDA(1) | 11,984 | 23,052 | (48 | ) | 27,182 | 47,480 | (43 | ) | |||||
| - % of revenue | 27 | % | 35 | % | (23 | ) | 26 | % | 35 | % | (26 | ) | |
| Revenue by Business Unit | |||||||||||||
| Facilities | 72 | % | 73 | % | (1 | ) | 71 | % | 75 | % | (5 | ) | |
| Drilling Services | 28 | % | 27 | % | 4 | 29 | % | 25 | % | 16 | |||
| Assets Employed(2) | 528,344 | 474,740 | 11 | ||||||||||
| Capital Expenditures | |||||||||||||
| Maintenance capital expenditures | 4,132 | 6,510 | (37 | ) | 6,464 | 9,443 | (32 | ) | |||||
| Heavy Oil | 2,596 | 3,021 | (14 | ) | 4,150 | 4,004 | 4 | ||||||
| Oilfield | 291 | 2,060 | (86 | ) | 607 | 3,384 | (82 | ) | |||||
| Growth capital expenditures | 15,558 | 20,441 | (24 | ) | 47,952 | 41,350 | 16 | ||||||
| Heavy Oil | 7,457 | 8,384 | (11 | ) | 18,477 | 14,172 | 30 | ||||||
| Oilfield | 6,582 | 8,838 | (26 | ) | 25,360 | 21,552 | 18 | ||||||
| (1) | Divisional EBITDA does not have any standardized meaning prescribed by GAAP. |
| (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. Assets employed as defined does not include capital assets held by corporate. Corporate assets include information technology, leasehold improvements, and technical development. |
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited - Expressed in thousands of Canadian Dollars)
| June 30, 2015 |
December 31, 2014 |
||
| Assets | |||
| Current assets | |||
| Cash | - | 4,129 | |
| Accounts and other receivables | 74,782 | 104,945 | |
| Inventories | 6,189 | 7,681 | |
| Prepaid expenses and other assets | 6,018 | 9,150 | |
| Assets held for sale | - | 365,262 | |
| 86,989 | 491,167 | ||
| Non-current assets | |||
| Property, plant and equipment | 833,460 | 804,522 | |
| Other long-term assets | 8,807 | 8,953 | |
| Goodwill | 60,443 | 60,443 | |
| TOTAL ASSETS | 989,699 | 1,365,085 | |
| Liabilities | |||
| Current liabilities | |||
| Bank indebtedness | 1,711 | - | |
| Accounts payable and accrued liabilities | 98,626 | 170,541 | |
| Dividends payable | 7,029 | 7,003 | |
| Liabilities held for sale | - | 97,131 | |
| 107,366 | 274,675 | ||
| Non-current liabilities | |||
| Senior secured debt | 24,948 | 183,104 | |
| Senior unsecured debentures | 271,270 | 270,837 | |
| Other liabilities | 986 | 1,973 | |
| Deferred tax liability | 26,878 | 43,180 | |
| Provisions | 79,939 | 68,410 | |
| TOTAL LIABILITIES | 511,387 | 842,179 | |
| Shareholders' Equity | |||
| Shareholders' capital | 426,061 | 422,991 | |
| Contributed surplus | 11,082 | 10,916 | |
| Retained earnings | 20,977 | 76,061 | |
| Accumulated other comprehensive income | 20,192 | 12,938 | |
| TOTAL SHAREHOLDERS' EQUITY | 478,312 | 522,906 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 989,699 | 1,365,085 | |
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, |
||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||
| Revenue | 81,838 | 116,368 | 179,417 | 226,805 | |||||
| Operating expenses | 55,435 | 70,123 | 126,190 | 139,832 | |||||
| General and administrative | 10,925 | 15,799 | 24,855 | 31,519 | |||||
| Depreciation and amortization | 15,362 | 12,179 | 29,783 | 22,256 | |||||
| Stock-based compensation | 992 | 2,839 | (970 | ) | 7,690 | ||||
| Impairment | 869 | - | 5,745 | - | |||||
| Restructuring and other related costs | 7,083 | - | 25,463 | 526 | |||||
| Finance charges | 4,113 | 13,455 | 14,393 | 19,708 | |||||
| Embedded derivative loss (gain) | 139 | 14,883 | (2,773 | ) | 8,327 | ||||
| Total expenses | 94,918 | 129,278 | 222,686 | 229,858 | |||||
| Loss before income taxes | (13,080 | ) | (12,910 | ) | (43,269 | ) | (3,053 | ) | |
| Deferred income tax expense (recovery) | 296 | 905 | (6,629 | ) | 2,038 | ||||
| Net loss from continuing operations | (13,376 | ) | (13,815 | ) | (36,640 | ) | (5,091 | ) | |
| Net earnings (loss) from discontinued operations | 87 | 5,632 | (4,390 | ) | 3,411 | ||||
| Net loss | (13,289 | ) | (8,183 | ) | (41,030 | ) | (1,680 | ) | |
| Other comprehensive (loss) income: | |||||||||
| Exchange difference on translating foreign operations | (2,488 | ) | (4,167 | ) | 7,254 | 20 | |||
| Other comprehensive (loss) income | (2,488 | ) | (4,167 | ) | 7,254 | 20 | |||
| Total comprehensive loss | (15,777 | ) | (12,350 | ) | (33,776 | ) | (1,660 | ) | |
| (Loss) earnings per share: | |||||||||
| Basic and diluted from continuing operations | (0.24 | ) | (0.25 | ) | (0.65 | ) | (0.09 | ) | |
| Basic and diluted from discontinued operations | - | 0.10 | (0.08 | ) | 0.06 | ||||
| Loss per share | (0.24 | ) | (0.15 | ) | (0.73 | ) | (0.03 | ) | |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited - Expressed in thousands of Canadian Dollars)
| Shareholders' capital |
Contributed surplus |
Retained earnings |
Accumulated other comprehensive income |
Total | ||||||
| Balance, December 31, 2013 | 409,894 | 15,251 | 245,834 | 4,183 | 675,162 | |||||
| Changes in equity for the six months ended June 30, 2014 | ||||||||||
| Expense related to vesting of options | - | 1,294 | - | - | 1,294 | |||||
| Exercise of options | 6,426 | (6,194 | ) | - | - | 232 | ||||
| Issuance of shares | 2,776 | - | - | - | 2,776 | |||||
| Dividends declared | - | - | (13,107 | ) | - | (13,107 | ) | |||
| Other comprehensive income | - | - | - | 20 | 20 | |||||
| Net loss for the period | - | - | (1,680 | ) | - | (1,680 | ) | |||
| Balance, June 30, 2014 | 419,096 | 10,351 | 231,047 | 4,203 | 664,697 | |||||
| Changes in equity for the six months ended December 31, 2014 | ||||||||||
| Expense related to vesting of options | - | 1,349 | - | - | 1,349 | |||||
| Exercise of options | 1,023 | (784 | ) | - | - | 239 | ||||
| Issuance of shares | 2,872 | - | - | - | 2,872 | |||||
| Dividends declared | - | - | (13,993 | ) | - | (13,993 | ) | |||
| Other comprehensive income | - | - | - | 8,735 | 8,735 | |||||
| Net loss for the period | - | - | (140,993 | ) | - | (140,993 | ) | |||
| Balance, December 31, 2014 | 422,991 | 10,916 | 76,061 | 12,938 | 522,906 | |||||
| Changes in equity for the six months ended June 30, 2015 | ||||||||||
| Expense related to vesting of options | - | 1,598 | - | - | 1,598 | |||||
| Exercise of options | 1,791 | (1,432 | ) | - | - | 359 | ||||
| Issuance of shares | 1,279 | - | - | - | 1,279 | |||||
| Dividends declared | - | - | (14,054 | ) | - | (14,054 | ) | |||
| Other comprehensive income | - | - | - | 7,254 | 7,254 | |||||
| Net loss for the period | - | - | (41,030 | ) | - | (41,030 | ) | |||
| Balance, June 30, 2015 | 426,061 | 11,082 | 20,977 | 20,192 | 478,312 |
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, |
||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||
| Cash provided by (used for): | |||||||||
| Operating Activities | |||||||||
| Net loss from continuing operations | (13,376 | ) | (13,815 | ) | (36,640 | ) | (5,091 | ) | |
| Adjustments for: | |||||||||
| Depreciation and amortization | 15,362 | 12,179 | 29,783 | 22,256 | |||||
| Impairment | 869 | - | 5,745 | - | |||||
| Onerous lease | 3,022 | - | 12,881 | - | |||||
| Onerous lease paid | (1,079 | ) | - | (1,079 | ) | - | |||
| Income tax provision | 296 | 905 | (6,629 | ) | 2,038 | ||||
| Income tax paid | (94 | ) | 25 | (150 | ) | (7 | ) | ||
| Non-cash stock-based compensation expense (recovery) | 887 | 1,417 | (2,039 | ) | 4,037 | ||||
| Finance charges | 4,113 | 13,455 | 14,393 | 19,708 | |||||
| Embedded derivative loss (gain) | 139 | 14,883 | (2,773 | ) | 8,327 | ||||
| Finance charges paid | (8,715 | ) | (15,989 | ) | (9,530 | ) | (16,847 | ) | |
| Other | 1,150 | 138 | 2,098 | 286 | |||||
| Funds from Operations | 2,574 | 13,198 | 6,060 | 34,707 | |||||
| Change in non-cash working capital | 6,228 | 2,029 | (12,091 | ) | 8,692 | ||||
| Decommissioning costs incurred | (401 | ) | (490 | ) | (800 | ) | (1,282 | ) | |
| Cash from (used in) continuing operations | 8,401 | 14,737 | (6,831 | ) | 42,117 | ||||
| Cash (used in) from discontinued operations | (172 | ) | 10,484 | (21,441 | ) | (5,259 | ) | ||
| Cash from (used in) Operating Activities | 8,229 | 25,221 | (28,272 | ) | 36,858 | ||||
| Investing Activities | |||||||||
| Additions to property, plant and equipment | (45,072 | ) | (30,481 | ) | (102,953 | ) | (87,149 | ) | |
| Proceeds on sale of discontinued operations | - | - | 295,347 | - | |||||
| Proceeds on sale of property, plant and equipment | 156 | 532 | 425 | 561 | |||||
| Other | 6,956 | (614 | ) | 6,241 | (1,040 | ) | |||
| Cash (used in) from continuing operations | (37,960 | ) | (30,563 | ) | 199,060 | (87,628 | ) | ||
| Cash used in discontinued operations | - | (5,144 | ) | (4,041 | ) | (9,263 | ) | ||
| Cash (used in) from Investing Activities | (37,960 | ) | (35,707 | ) | 195,019 | (96,891 | ) | ||
| Financing Activities | |||||||||
| Issuance of shares | 126 | 232 | 358 | 232 | |||||
| Issuance of series 3 senior unsecured debentures | - | 147,069 | - | 147,069 | |||||
| Redemption of series 1 senior unsecured debentures | - | (125,000 | ) | - | (125,000 | ) | |||
| Increase (decrease) in senior secured debt | 24,948 | (1,746 | ) | (158,156 | ) | 53,013 | |||
| Increase (decrease) in bank indebtedness | 1,711 | (739 | ) | 1,711 | (1,321 | ) | |||
| Dividends paid | (7,026 | ) | (4,980 | ) | (12,750 | ) | (9,439 | ) | |
| Cash from (used in) continuing operations | 19,759 | 14,836 | (168,837 | ) | 64,554 | ||||
| Cash from (used in) Financing Activities | 19,759 | 14,836 | (168,837 | ) | 64,554 | ||||
| Effect of foreign exchange on cash | 440 | 326 | (2,039 | ) | 155 | ||||
| Change in cash | (9,532 | ) | 4,676 | (4,129 | ) | 4,676 | |||
| Cash, beginning of period | 9,532 | - | 4,129 | - | |||||
| Cash, end of period | - | 4,676 | - | 4,676 | |||||
FORWARD-LOOKING STATEMENTS
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 statements with respect to:
- future operating and financial results;
- business prospects and strategy including related timelines;
- capital expenditure programs and other expenditures;
- realization of anticipated benefits from the sale of the Industrial Division, including the ability to reinvest net proceeds of disposition in a timely and efficient manner;
- realization of anticipated benefits of growth capital investments, acquisitions, divestitures and our innovation and process development initiatives;
- realization of anticipated benefits from the implementation of cost rationalization initiatives including the anticipated value and sustainability of the cash savings from such initiatives;
- anticipated industry activity levels;
- anticipated commodity prices;
- expected demand for our services;
- expected expansion opportunities for our business;
- the amount of dividends declared or payable in the future;
- our projected cost structure; and
- expectations and implications of changes in legislation.
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 is subject to certain risks, uncertainties and assumptions, including, without limitation:
- strength of the oil and gas industry, including drilling activity;
- general market conditions;
- fluctuations in commodity prices for oil and the price we receive for our recovered oil;
- fluctuations in interest rates and exchange rates;
- 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 innovation and process development strategies, including integration of businesses and processes into our operations, and potential liabilities from acquisitions;
- potential operational and safety risks and hazards, obtaining insurance for such risks and hazards on reasonable financial terms, and potential failure of meeting customer safety standards;
- the seasonal nature of our operations;
- risk of pending and future legal proceedings;
- risk to our reputation;
- our ability to attract, retain, and integrate skilled employees;
- 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 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;
- costs associated with operating our landfills; and
- such other risks or factors described from time to time in reports we file with securities regulatory authorities.
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
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 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 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.
EBITDA and Adjusted EBITDA from Continuing Operations are calculated as follows:
| Three months ended June 30, |
Six months ended June 30, |
||||||||
| ($000s except per share data) | 2015 | 2014 | 2015 | 2014 | |||||
| Net (loss) from Continuing Operations | (13,376 | ) | (13,815 | ) | (36,640 | ) | (5,091 | ) | |
| Add back: | |||||||||
| Deferred income tax expense (recovery) | 296 | 905 | (6,629 | ) | 2,038 | ||||
| Embedded derivative loss (gain) | 139 | 14,883 | (2,773 | ) | 8,327 | ||||
| Finance charges | 4,113 | 13,455 | 14,393 | 19,708 | |||||
| Impairment | 869 | - | 5,745 | - | |||||
| Depreciation and amortization(1) | 15,362 | 12,179 | 29,783 | 22,256 | |||||
| EBITDA | 7,403 | 27,607 | 3,879 | 47,238 | |||||
| Add back: | |||||||||
| Stock-based compensation(2) | 992 | 2,839 | (970 | ) | 7,690 | ||||
| Restructuring and other related costs | 7,083 | - | 25,463 | 526 | |||||
| Adjusted EBITDA | 15,478 | 30,446 | 28,372 | 55,454 | |||||
| Weighted average number of Shares | 56,220 | 55,780 | 56,205 | 55,650 | |||||
| EBITDA per share | 0.13 | 0.49 | 0.07 | 0.85 | |||||
| Adjusted EBITDA per share | 0.28 | 0.55 | 0.50 | 1.00 | |||||
| (1) | Includes non-cash gains or losses on asset disposal and other non-cash charges. |
| (2) | Stock-based compensation includes $887 and ($2,039) for Q2 2015 and 2015 year-to-date, respectively, and $1,416 and $4,037 for Q2 2014 and 2014 year-to-date, respectively of non-cash stock-based compensation. |
"Divisional EBITDA" provides an indication of the results generated by the division's principal business activities prior to how activities are financed, the assets are amortized or impaired and before allocation of General and Administrative costs (G&A), 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:
| Three months ended June 30, |
Six months ended June 30, |
||||||||
| ($000s except per share data) | 2015 | 2014 | 2015 | 2014 | |||||
| Net loss before Income tax from Continuing Operations | (13,080 | ) | (12,910 | ) | (43,269 | ) | (3,053 | ) | |
| Add back: | |||||||||
| Embedded derivative loss (gain) | 139 | 14,883 | (2,773 | ) | 8,327 | ||||
| Finance charges | 4,113 | 13,455 | 14,393 | 19,708 | |||||
| Restructuring and other related costs | 7,083 | - | 25,463 | 526 | |||||
| Impairment | 869 | - | 5,745 | - | |||||
| Stock-based compensation | 992 | 2,839 | (970 | ) | 7,690 | ||||
| Depreciation and amortization | 15,362 | 12,179 | 29,783 | 22,256 | |||||
| G&A(1) | 10,925 | 15,799 | 24,855 | 31,519 | |||||
| Divisional EBITDA | 26,403 | 46,245 | 53,227 | 86,973 | |||||
| Heavy Oil | 14,419 | 23,193 | 26,045 | 39,493 | |||||
| Oilfield | 11,984 | 23,052 | 27,182 | 47,480 | |||||
| Deduct: | |||||||||
| G&A(1) | 10,925 | 15,799 | 24,855 | 31,519 | |||||
| Adjusted EBITDA | 15,478 | 30,446 | 28,372 | 55,454 | |||||
| Stock-based compensation | 992 | 2,839 | (970 | ) | 7,690 | ||||
| Restructuring and other related costs | 7,083 | - | 25,463 | 526 | |||||
| EBITDA | 7,403 | 27,607 | 3,879 | 47,238 | |||||
| (1) | As a result of the change in our financial statement presentation from functional to nature based, we have reclassified the sales expense directly attributable to the divisions from Corporate and Other to the respective division. Prior period comparative figures have been amended to conform to current period's presentation. Please refer to "Reporting Structure" for the restated the historical segmented information and key metrics. |
"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 recovery or expense, 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 (gain) 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.
| Three months ended June 30, |
Six months ended June 30, |
||||||||
| ($000s except per share data) | 2015 | 2014 | 2015 | 2014 | |||||
| Net loss from Continuing Operations | (13,376 | ) | (13,815 | ) | (36,640 | ) | (5,091 | ) | |
| Add back: | |||||||||
| Embedded derivative loss (gain) | 139 | 14,883 | (2,773 | ) | 8,327 | ||||
| Restructuring and other related costs | 7,083 | - | 25,463 | 526 | |||||
| Impairment | 869 | - | 5,745 | - | |||||
| Stock-based compensation | 992 | 2,839 | (970 | ) | 7,690 | ||||
| Adjusted net (loss) earnings | (4,293 | ) | 3,907 | (9,175 | ) | 11,452 | |||
| Weighted average number of Shares | 56,220 | 55,780 | 56,205 | 55,650 | |||||
| Adjusted net (loss) earnings per share | (0.08 | ) | 0.07 | (0.16 | ) | 0.21 | |||
"Tangible book value per share" is used to assist management and investors in evaluating the book value compared to the market value.
| ($000s except per share data) | June 30, 2015 |
December 31, 2014 |
|
| Total Assets | 989,699 | 1,365,085 | |
| Less: | |||
| Goodwill | 60,443 | 60,443 | |
| Other long-term assets | 8,807 | 8,953 | |
| Assets held for sale | - | 365,262 | |
| Total Tangible Assets | 920,449 | 930,427 | |
| Weighted average number of Shares | 56,220 | 55,518 | |
| Tangible book value per share | 16.37 | 16.76 | |
"Return on Capital Employed" (ROCE) is used to assist management and investors in measuring the returns realized at the consolidated level from capital employed. ROCE is derived from Net earnings plus tax-adjusted interest divided by the average of the beginning and ending balances of our total assets less current liabilities for the period (Net Assets).
"Cash Basis Return on Capital" (ROC - Cash) is also used to assist management and investors in measuring the returns realized at the consolidated level from capital employed. ROC - Cash is derived from Adjusted EBITDA less cash stock-based compensation, cash taxes and maintenance capital divided by Net Assets.
"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:
| Three months ended June 30, |
Six months ended June 30, |
||||||||
| ($000s except per share data) | 2015 | 2014 | 2015 | 2014 | |||||
| Cash from (used in) Continuing Operations | 8,402 | 14,737 | (6,830 | ) | 42,117 | ||||
| Add back (deduct): | |||||||||
| Change in non-cash working capital | (6,228 | ) | (2,029 | ) | 12,091 | (8,692 | ) | ||
| Decommissioning costs incurred | 401 | 490 | 800 | 1,282 | |||||
| Funds from Operations | 2,575 | 13,198 | 6,061 | 34,707 | |||||
| Weighted average number of Shares | 56,220 | 55,780 | 56,205 | 55,650 | |||||
| Funds from operations per share | 0.05 | 0.24 | 0.11 | 0.62 | |||||
References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Divisional EBITDA, Adjusted net earnings, Adjusted net earnings per share, ROC - Cash, Net Debt, Funds from operations and Funds from operations per share throughout this document have the meanings set out above.
REPORTING STRUCTURE
In Q1 2015, we reorganized our reporting structure into two divisions - Heavy Oil and Oilfield. The new structure more closely aligns operations with customer activities, facilitates a seamless service package to customers, optimizes our resource allocations, and aids in the execution of our refreshed growth strategy.
The revised structure consists of:
Heavy Oil
- Facilities business unit
- Onsite business unit
Oilfield
- Facilities business unit (includes facilities in both Canada and the U.S.)
- Drilling Services business unit (includes drill site services in both Canada and the U.S)
HEAVY OIL RESTATED INFORMATION BY QUARTER
| 2014 | 2013 | 2012 | ||||||||||
| ($ millions) | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| Revenue | 56.7 | 56.2 | 50.4 | 40.0 | 48.3 | 53.5 | 41.7 | 24.4 | 36.5 | 45.6 | 25.4 | 22.9 |
| Operating expenses | 33.3 | 28.4 | 27.2 | 23.7 | 26.4 | 25.2 | 21.4 | 13.8 | 19.0 | 24.9 | 12.8 | 11.5 |
| Divisional EBITDA | 23.4 | 27.8 | 23.2 | 16.3 | 21.9 | 28.3 | 20.3 | 10.6 | 17.5 | 20.7 | 12.6 | 11.4 |
| Divisional EBITDA % of revenue | 41% | 49% | 46% | 41% | 45% | 53% | 49% | 43% | 48% | 45% | 50% | 50% |
| Depreciation and amortization | 5.6 | 5.5 | 4.2 | 2.7 | 4.5 | 5.1 | 3.2 | 1.4 | 3.4 | 2.3 | 1.4 | 1.2 |
| Operating Profit | 17.8 | 22.3 | 19.0 | 13.6 | 17.4 | 23.2 | 17.1 | 9.2 | 14.1 | 18.4 | 11.2 | 10.2 |
| Operating Profit % of revenue | 31% | 40% | 38% | 34% | 36% | 43% | 41% | 38% | 39% | 40% | 44% | 45% |
| Maintenance capital | 2.6 | 1.6 | 3.0 | 1.0 | 7.4 | 1.5 | 0.6 | 0.2 | 2.0 | 2.1 | 2.1 | 0.3 |
| Growth capital | 29.8 | 18.6 | 8.4 | 5.8 | 18.0 | 12.4 | 13.4 | 3.8 | 12.3 | 2.9 | 26.7 | 17.0 |
| Assets employed | 261 | 237 | 223 | 217 | 210 | 189 | 178 | 168 | 165 | 158 | 155 | 129 |
| Business Unit Revenue Contribution % | ||||||||||||
| Facilities | 28% | 35% | 35% | 43% | 32% | 31% | 33% | 51% | 35% | 30% | 51% | 57% |
| Onsite | 72% | 65% | 65% | 57% | 68% | 69% | 67% | 49% | 65% | 70% | 49% | 43% |
| Metrics | ||||||||||||
| Contracts % of Onsite revenue | 80% | 77% | 74% | 77% | 75% | 86% | 71% | 67% | 74% | 71% | 61% | 65% |
HEAVY OIL RESTATED INFORMATION BY YEAR
| 2014 | 2013 | 2012 | ||||||||||
| ($ millions) | Q4 YTD | Q3 YTD | Q2 YTD | Q1 | Q4 YTD | Q3 YTD | Q2 YTD | Q1 | Q4 YTD | Q3 YTD | Q2 YTD | Q1 |
| Revenue | 203.3 | 146.6 | 90.4 | 40.0 | 167.9 | 119.6 | 66.1 | 24.4 | 130.4 | 93.9 | 48.3 | 22.9 |
| Operating expenses | 112.6 | 79.3 | 50.9 | 23.7 | 86.8 | 60.4 | 35.2 | 13.8 | 68.2 | 49.2 | 24.3 | 11.5 |
| Divisional EBITDA | 90.7 | 67.3 | 39.5 | 16.3 | 81.1 | 59.2 | 30.9 | 10.6 | 62.2 | 44.7 | 24.0 | 11.4 |
| Divisional EBITDA % of revenue | 45% | 46% | 44% | 41% | 48% | 49% | 47% | 43% | 48% | 48% | 50% | 50% |
| Depreciation and amortization | 18.0 | 12.4 | 6.9 | 2.7 | 14.2 | 9.7 | 4.6 | 1.4 | 8.3 | 4.9 | 2.6 | 1.2 |
| Operating Profit | 72.7 | 54.9 | 32.6 | 13.6 | 66.9 | 49.5 | 26.3 | 9.2 | 53.9 | 39.8 | 21.4 | 10.2 |
| Operating Profit % of revenue | 36% | 37% | 36% | 34% | 40% | 41% | 40% | 38% | 41% | 42% | 44% | 45% |
| Maintenance capital | 8.2 | 5.6 | 4.0 | 1.0 | 9.6 | 2.3 | 0.7 | 0.2 | 6.5 | 4.5 | 2.5 | 0.3 |
| Growth capital | 62.6 | 32.8 | 14.2 | 5.8 | 47.6 | 29.6 | 17.2 | 3.8 | 58.9 | 46.6 | 43.7 | 17.0 |
| Business Unit Revenue Contribution % | ||||||||||||
| Facilities | 35% | 37% | 38% | 43% | 35% | 36% | 40% | 51% | 40% | 42% | 54% | 57% |
| Onsite | 65% | 63% | 62% | 57% | 65% | 64% | 60% | 49% | 60% | 58% | 46% | 43% |
| Metrics | ||||||||||||
| Contracts % of Onsite revenue | 77% | 76% | 75% | 77% | 77% | 77% | 69% | 67% | 69% | 68% | 63% | 65% |
OILFIELD RESTATED INFORMATION BY QUARTER
| 2014 | 2013 | 2012 | |||||||||||
| ($ millions) | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Revenue | 76.4 | 79.1 | 66.0 | 70.5 | 61.7 | 63.6 | 53.9 | 65.1 | 60.5 | 63.2 | 52.2 | 63.7 | |
| Operating expenses | 51.0 | 47.1 | 43.0 | 46.0 | 41.7 | 39.4 | 35.4 | 39.2 | 39.8 | 39.3 | 36.6 | 37.1 | |
| Divisional EBITDA | 25.4 | 32.0 | 23.0 | 24.5 | 20.0 | 24.2 | 18.5 | 25.9 | 20.7 | 23.9 | 15.6 | 26.6 | |
| Divisional EBITDA % of revenue | 33% | 40% | 35% | 35% | 32% | 38% | 34% | 40% | 34% | 38% | 30% | 42% | |
| Depreciation and amortization | 8.0 | 5.7 | 4.6 | 4.4 | 4.4 | 3.9 | 4.0 | 4.1 | 4.0 | 4.1 | 3.6 | 4.1 | |
| Operating profit | 17.4 | 26.3 | 18.4 | 20.1 | 15.6 | 20.3 | 14.5 | 21.8 | 16.7 | 19.8 | 12.0 | 22.5 | |
| Operating profit % of revenue | 23% | 33% | 28% | 29% | 25% | 32% | 27% | 33% | 28% | 31% | 23% | 35% | |
| Maintenance capital | 6.0 | 3.7 | 2.1 | 1.3 | 2.8 | 2.8 | 1.9 | 1.5 | 1.8 | 3.2 | 2.3 | 1.4 | |
| Growth capital(1) | 31.5 | 14.2 | 8.8 | 12.7 | 30.5 | 12.6 | 8.9 | 7.2 | 15.6 | 8.8 | 4.5 | 5.7 | |
| Assets employed | 513 | 491 | 475 | 472 | 451 | 427 | 421 | 413 | 407 | 391 | 385 | 380 | |
| Business Unit Revenue Contribution % | |||||||||||||
| Facilities | 67% | 69% | 73% | 76% | 73% | 75% | 74% | 71% | 70% | 68% | 67% | 67% | |
| Canada % of Facilities revenue | 86% | 89% | 85% | 88% | 92% | 93% | 90% | 91% | 89% | 91% | 93% | 95% | |
| U.S. % of Facilities revenue | 14% | 11% | 15% | 12% | 8% | 7% | 10% | 9% | 11% | 9% | 7% | 5% | |
| Drilling Services | 33% | 31% | 27% | 24% | 27% | 25% | 26% | 29% | 30% | 32% | 33% | 33% | |
| Canada % of revenue(2) | 29% | 30% | 24% | 43% | 35% | 30% | 26% | 35% | 38% | 41% | 36% | 47% | |
| U.S. % of revenue(2) | 71% | 70% | 76% | 57% | 65% | 70% | 74% | 65% | 62% | 59% | 64% | 53% | |
| Metrics | |||||||||||||
| U.S. Recovered Crude Oil ('000 bbl) | 8.1 | 4.4 | 8.6 | 7.5 | - | - | - | - | - | - | - | - | |
| U.S. Netback (CDN$/bbl) | 58.38 | 78.88 | 83.80 | 81.32 | - | - | - | - | - | - | - | - | |
| U.S. Recovered Crude Oil sales | 0.5 | 0.3 | 0.7 | 0.6 | - | - | - | - | - | - | - | - | |
OILFIELD RESTATED INFORMATION BY YEAR
| 2014 | 2013 | 2012 | |||||||||||
| ($ millions) | Q4 YTD | Q3 YTD | Q2 YTD | Q1 | Q4 YTD | Q3 YTD | Q2 YTD | Q1 | Q4 YTD | Q3 YTD | Q2 YTD | Q1 | |
| Revenue | 292.0 | 215.6 | 136.5 | 70.5 | 244.3 | 182.6 | 119.0 | 65.1 | 239.6 | 179.1 | 115.9 | 63.7 | |
| Operating expenses | 187.1 | 136.1 | 89.0 | 46.0 | 155.7 | 114.0 | 74.6 | 39.2 | 152.8 | 113.0 | 73.7 | 37.1 | |
| Divisional EBITDA | 104.9 | 79.5 | 47.5 | 24.5 | 88.6 | 68.6 | 44.4 | 25.9 | 86.8 | 66.1 | 42.2 | 26.6 | |
| Divisional EBITDA % of revenue | 36% | 37% | 35% | 35% | 36% | 38% | 37% | 40% | 36% | 37% | 36% | 42% | |
| Depreciation and amortization | 22.7 | 14.7 | 9.0 | 4.4 | 16.4 | 12.0 | 8.1 | 4.1 | 15.8 | 11.8 | 7.7 | 4.1 | |
| Operating profit | 82.2 | 64.8 | 38.5 | 20.1 | 72.2 | 56.6 | 36.3 | 21.8 | 71.0 | 54.3 | 34.5 | 22.5 | |
| Operating profit % of revenue | 28% | 30% | 28% | 29% | 30% | 31% | 31% | 33% | 30% | 30% | 30% | 35% | |
| Maintenance capital | 13.1 | 7.1 | 3.4 | 1.3 | 9.0 | 6.2 | 3.4 | 1.5 | 8.7 | 6.8 | 3.7 | 1.4 | |
| Growth capital(1) | 67.2 | 35.7 | 21.5 | 12.7 | 59.2 | 28.7 | 16.1 | 7.2 | 34.5 | 19.0 | 10.2 | 5.7 | |
| Business Unit Revenue Contribution % | |||||||||||||
| Facilities | 71% | 73% | 75% | 76% | 73% | 73% | 72% | 71% | 68% | 67% | 67% | 67% | |
| Canada % of Facilities revenue | 87% | 87% | 87% | 88% | 91% | 91% | 91% | 91% | 92% | 93% | 94% | 95% | |
| U.S. % of Facilities revenue | 13% | 13% | 13% | 12% | 9% | 9% | 9% | 9% | 8% | 7% | 6% | 5% | |
| Drilling Services | 29% | 27% | 25% | 24% | 27% | 27% | 28% | 29% | 32% | 33% | 33% | 33% | |
| Canada % of revenue(2) | 31% | 32% | 33% | 43% | 32% | 31% | 31% | 35% | 39% | 41% | 42% | 47% | |
| U.S. % of revenue(2) | 69% | 68% | 67% | 57% | 68% | 69% | 69% | 65% | 61% | 59% | 58% | 53% | |
| Metrics | |||||||||||||
| U.S. Recovered Crude Oil ('000 bbl) | 28.6 | 20.5 | 16.1 | 7.1 | - | - | - | - | - | - | - | - | |
| U.S. Netback (CDN$/bbl) | 75.60 | 81.33 | 82.56 | 81.32 | - | - | - | - | - | - | - | - | |
| U.S. Recovered Crude Oil sales | 2.1 | 1.6 | 1.3 | 0.6 | - | - | - | - | - | - | - | - | |
| (1) | Growth capital has been restated from the information reported in our Q1 2015 MD&A. |
| (2) | Drilling Services revenue split by country has been restated from the information reported in our Q1 2015 MD&A to include Environmental Services. |
G&A RESTATED INFORMATION
| 2014 | 2013 | 2012 | ||||||||||
| ($ millions) | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 |
| G&A - by quarter | 18.6 | 16.6 | 15.8 | 15.7 | 20.8 | 17.0 | 15.7 | 16.1 | 15.1 | 13.8 | 14.5 | 13.1 |
| G&A - YTD | 66.7 | 48.1 | 31.5 | 15.7 | 69.6 | 48.8 | 31.8 | 16.1 | 56.4 | 41.4 | 27.6 | 13.1 |
SENSITIVITIES
Results from Continuing Operations are sensitive to changes in commodity prices for crude oil. The direct impact of these commodity prices is reflected in the revenue received from the sale of products such as crude oil. Approximately 20% of our revenue is sensitive to the direct impact of commodity prices. Our results are also impacted by drilling activity. Drilling sensitivities are impacted by the area in which drilling occurs, compared to areas where we operate and the drilling techniques employed. Where possible, we actively manage these impacts by strategically geographically balancing mobile assets to meet demand and shifts in activity levels where necessary.
We have revised our sensitivities for crude oil prices to better reflect the lower recovered crude oil volumes recovered at our facilities. Year-to-date, volumes have declined approximately 40%. As a result, the assumptions and relationships used to derive the previously disclosed sensitivities have been revised. The following table provides our estimates of fluctuations in key inputs and prices, and the direct impact on revenue and Adjusted EBITDA from product sales:
| 2014 | Change in benchmark |
Impact on Annual Revenue ($)(1) |
Impact on Annual Adjusted EBITDA($)(1) |
||
| Canadian Light Sweet ($/bbl) | 94 | 10 | 2 to 2.5 million | 2 to 2.5 million | |
| WCS ($/bbl) | 81 | 10 | 3 to 3.5 million | 3 to 3.5 million | |
| Drilling activity(2)(3) | 5% change | 5 to 8 million | 2 to 3 million | ||
| Metres drilled (million metres) | 25 | 1 | 1.5 million | 0.8 million | |
| Active rigs in WCSB | 370 | 100 rigs | 4 million | 1 million | |
| (1) | Based on 2015 forecast performance and volumes. The actual impact from crude oil prices may vary with fluctuations in recovered crude oil volumes. |
| (2) | Impact from changes in drilling activity assumes a change in the key drilling metrics including metres drilled, and active rigs in the WCSB and in the U.S. |
| (3) | U.S. results are impacted by changes in drilling activity in the respective plays we serve, as indicated by active rigs, and to a greater extent changes in our market share and operations. A sensitivity for active rigs in the U.S. has not been provided because of the overriding impact of shifts in market share on our results. |
Stock-based compensation expense is sensitive to changes in our share price. At June 30, 2015, a $1 change in our share price between $12 per share and $18 per share has approximately a $1.0 million direct impact on annual stock-based compensation reflected in G&A from Continuing Operations. Stock-based compensation is also impacted by dividend rate changes and the effects of vesting.
Contact Information:
Anne M. Plasterer
Executive Director, Investor Relations
(403) 806-7019
www.newalta.com