Newalta Reports Second Quarter 2015 Results
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E-mailCALGARY, ALBERTA -- (Marketwired) -- 08/06/15 -- 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 Six months ended
June 30, 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)
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(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 $15 million of year-over-year EBITDA impact from our cost rationalization actions taken in the first half of the year.
The following table outlines the factors we expect to impact performance in the third quarter and for the remainder of the year.
Expected impact on
Adjusted EBITDA compared
Assumption to prior year period(1)
------------------------------------------------------
Factor Q2 2015(1) Q3 and Full year Q3 2015 2015
----------------------------------------------------------------------------
West Texas
Intermediate
(US$/bbl) $57.84 $50 - $60
----------------------------------------------------------------------------
Canadian Light Sweet Q3 2015: $55 -$70 $1M - $3M $6M -$9M
(CDN$/bbl)(2) $68.76 2015: $55 - $65 decrease decrease
----------------------------------------------------------------------------
Western Canadian Q3 2015: $45 -$55 $2M - $3M $9M - $11M
Select (CDN$/bbl)(2) $56.96 2015: $45 - $55 decrease decrease
----------------------------------------------------------------------------
Drilling activity(2) $7M - $10M $23M - $30M
decline approx. 50% 45% - 55% decrease decrease
----------------------------------------------------------------------------
Step Change(3) $8M - $11M $20M -$28M
($10M) decrease decrease
----------------------------------------------------------------------------
Savings from cost $30 million $6M -$8M $25M
rationalization $7.5 M annualized increase 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 Six months ended
June 30, 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
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(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, December 31,
2015 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
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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 For the six months
ended June 30, 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)
Accumulated
other
Shareholders' Contributed Retained comprehensive
capital surplus earnings 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 For the six months
ended June 30, 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 Six months ended
June 30, 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 Six months ended
June 30, 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 Six months ended
June 30, 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.
June 30, December 31,
($000s except per share data) 2015 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 Six months ended
June 30, June 30,
($000s except per share data) 2015 2014 2015 2014
----------------------------------------------------------------------------
Cash from (used in) Continuing
Operations 8,402 14,737 (6,830) 42,117
Add back (deduct):
Change in non-cash working capital (6,228) (2,029) 12,091 (8,692)
Decommissioning costs incurred 401 490 800 1,282
----------------------------------------------------------------------------
Funds from Operations 2,575 13,198 6,061 34,707
----------------------------------------------------------------------------
Weighted average number of Shares 56,220 55,780 56,205 55,650
----------------------------------------------------------------------------
Funds from operations per share 0.05 0.24 0.11 0.62
----------------------------------------------------------------------------
References to EBITDA, EBITDA per share, Adjusted EBITDA, Adjusted EBITDA per share, Divisional EBITDA, Adjusted net earnings, Adjusted net earnings per share, ROC - Cash, Net Debt, Funds from operations and Funds from operations per share throughout this document have the meanings set out above.
REPORTING STRUCTURE
In Q1 2015, we reorganized our reporting structure into two divisions - Heavy Oil and Oilfield. The new structure more closely aligns operations with customer activities, facilitates a seamless service package to customers, optimizes our resource allocations, and aids in the execution of our refreshed growth strategy.
The revised structure consists of:
Heavy Oil
-- Facilities business unit -- Onsite business unit
Oilfield
-- Facilities business unit (includes facilities in both Canada and the
U.S.)
-- Drilling Services business unit (includes drill site services in both
Canada and the U.S)
HEAVY OIL RESTATED INFORMATION BY QUARTER
2014 2013
($ millions) 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
Operating expenses 33.3 28.4 27.2 23.7 26.4 25.2 21.4 13.8
----------------------------------------------------------------------------
Divisional EBITDA 23.4 27.8 23.2 16.3 21.9 28.3 20.3 10.6
----------------------------------------------------------------------------
Divisional EBITDA %
of revenue 41% 49% 46% 41% 45% 53% 49% 43%
----------------------------------------------------------------------------
Depreciation and
amortization 5.6 5.5 4.2 2.7 4.5 5.1 3.2 1.4
----------------------------------------------------------------------------
Operating Profit 17.8 22.3 19.0 13.6 17.4 23.2 17.1 9.2
----------------------------------------------------------------------------
Operating Profit %
of revenue 31% 40% 38% 34% 36% 43% 41% 38%
----------------------------------------------------------------------------
Maintenance capital 2.6 1.6 3.0 1.0 7.4 1.5 0.6 0.2
Growth capital 29.8 18.6 8.4 5.8 18.0 12.4 13.4 3.8
----------------------------------------------------------------------------
Assets employed 261 237 223 217 210 189 178 168
----------------------------------------------------------------------------
Business Unit Revenue Contribution %
Facilities 28% 35% 35% 43% 32% 31% 33% 51%
Onsite 72% 65% 65% 57% 68% 69% 67% 49%
----------------------------------------------------------------------------
Metrics
Contracts % of
Onsite revenue 80% 77% 74% 77% 75% 86% 71% 67%
----------------------------------------------------------------------------
2012
($ millions) Q4 Q3 Q2 Q1
------------------------------------------------
Revenue 36.5 45.6 25.4 22.9
Operating expenses 19.0 24.9 12.8 11.5
------------------------------------------------
Divisional EBITDA 17.5 20.7 12.6 11.4
------------------------------------------------
Divisional EBITDA %
of revenue 48% 45% 50% 50%
------------------------------------------------
Depreciation and
amortization 3.4 2.3 1.4 1.2
------------------------------------------------
Operating Profit 14.1 18.4 11.2 10.2
------------------------------------------------
Operating Profit %
of revenue 39% 40% 44% 45%
------------------------------------------------
Maintenance capital 2.0 2.1 2.1 0.3
Growth capital 12.3 2.9 26.7 17.0
------------------------------------------------
Assets employed 165 158 155 129
------------------------------------------------
Business Unit
Revenue
Contribution %
Facilities 35% 30% 51% 57%
Onsite 65% 70% 49% 43%
------------------------------------------------
Metrics
Contracts % of
Onsite revenue 74% 71% 61% 65%
------------------------------------------------
HEAVY OIL RESTATED INFORMATION BY YEAR
2014 2013
($ millions) 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
Operating
expenses 112.6 79.3 50.9 23.7 86.8 60.4 35.2 13.8
----------------------------------------------------------------------------
Divisional
EBITDA 90.7 67.3 39.5 16.3 81.1 59.2 30.9 10.6
----------------------------------------------------------------------------
Divisional
EBITDA % of
revenue 45% 46% 44% 41% 48% 49% 47% 43%
----------------------------------------------------------------------------
Depreciation
and
amortization 18.0 12.4 6.9 2.7 14.2 9.7 4.6 1.4
----------------------------------------------------------------------------
Operating
Profit 72.7 54.9 32.6 13.6 66.9 49.5 26.3 9.2
----------------------------------------------------------------------------
Operating
Profit % of
revenue 36% 37% 36% 34% 40% 41% 40% 38%
----------------------------------------------------------------------------
Maintenance
capital 8.2 5.6 4.0 1.0 9.6 2.3 0.7 0.2
Growth capital 62.6 32.8 14.2 5.8 47.6 29.6 17.2 3.8
----------------------------------------------------------------------------
Business Unit Revenue Contribution %
Facilities 35% 37% 38% 43% 35% 36% 40% 51%
Onsite 65% 63% 62% 57% 65% 64% 60% 49%
----------------------------------------------------------------------------
Metrics
Contracts % of
Onsite
revenue 77% 76% 75% 77% 77% 77% 69% 67%
----------------------------------------------------------------------------
2012
($ millions) Q4 YTD Q3 YTD Q2 YTD Q1
---------------------------------------------
Revenue 130.4 93.9 48.3 22.9
Operating
expenses 68.2 49.2 24.3 11.5
---------------------------------------------
Divisional
EBITDA 62.2 44.7 24.0 11.4
---------------------------------------------
Divisional
EBITDA % of
revenue 48% 48% 50% 50%
---------------------------------------------
Depreciation
and
amortization 8.3 4.9 2.6 1.2
---------------------------------------------
Operating
Profit 53.9 39.8 21.4 10.2
---------------------------------------------
Operating
Profit % of
revenue 41% 42% 44% 45%
---------------------------------------------
Maintenance
capital 6.5 4.5 2.5 0.3
Growth capital 58.9 46.6 43.7 17.0
---------------------------------------------
Business Unit
Revenue
Contribution
%
Facilities 40% 42% 54% 57%
Onsite 60% 58% 46% 43%
---------------------------------------------
Metrics
Contracts % of
Onsite
revenue 69% 68% 63% 65%
---------------------------------------------
OILFIELD RESTATED INFORMATION BY QUARTER
2014 2013
($ millions) 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
Operating expenses 51.0 47.1 43.0 46.0 41.7 39.4 35.4 39.2
----------------------------------------------------------------------------
Divisional EBITDA 25.4 32.0 23.0 24.5 20.0 24.2 18.5 25.9
----------------------------------------------------------------------------
Divisional EBITDA %
of revenue 33% 40% 35% 35% 32% 38% 34% 40%
----------------------------------------------------------------------------
Depreciation and
amortization 8.0 5.7 4.6 4.4 4.4 3.9 4.0 4.1
----------------------------------------------------------------------------
Operating profit 17.4 26.3 18.4 20.1 15.6 20.3 14.5 21.8
----------------------------------------------------------------------------
Operating profit %
of revenue 23% 33% 28% 29% 25% 32% 27% 33%
----------------------------------------------------------------------------
Maintenance capital 6.0 3.7 2.1 1.3 2.8 2.8 1.9 1.5
Growth capital(1) 31.5 14.2 8.8 12.7 30.5 12.6 8.9 7.2
----------------------------------------------------------------------------
Assets employed 513 491 475 472 451 427 421 413
----------------------------------------------------------------------------
Business Unit Revenue Contribution %
Facilities 67% 69% 73% 76% 73% 75% 74% 71%
Canada % of
Facilities
revenue 86% 89% 85% 88% 92% 93% 90% 91%
U.S. % of
Facilities
revenue 14% 11% 15% 12% 8% 7% 10% 9%
----------------------------------------------------------------------------
Drilling Services 33% 31% 27% 24% 27% 25% 26% 29%
Canada % of
revenue(2) 29% 30% 24% 43% 35% 30% 26% 35%
U.S. % of
revenue(2) 71% 70% 76% 57% 65% 70% 74% 65%
----------------------------------------------------------------------------
Metrics
U.S. Recovered Crude
Oil ('000 bbl) 8.1 4.4 8.6 7.5 - - - -
U.S. Netback
(CDN$/bbl) 58.38 78.88 83.80 81.32 - - - -
U.S. Recovered Crude
Oil sales 0.5 0.3 0.7 0.6 - - - -
----------------------------------------------------------------------------
2012
($ millions) Q4 Q3 Q2 Q1
------------------------------------------------
Revenue 60.5 63.2 52.2 63.7
Operating expenses 39.8 39.3 36.6 37.1
------------------------------------------------
Divisional EBITDA 20.7 23.9 15.6 26.6
------------------------------------------------
Divisional EBITDA %
of revenue 34% 38% 30% 42%
------------------------------------------------
Depreciation and
amortization 4.0 4.1 3.6 4.1
------------------------------------------------
Operating profit 16.7 19.8 12.0 22.5
------------------------------------------------
Operating profit %
of revenue 28% 31% 23% 35%
------------------------------------------------
Maintenance capital 1.8 3.2 2.3 1.4
Growth capital(1) 15.6 8.8 4.5 5.7
------------------------------------------------
Assets employed 407 391 385 380
------------------------------------------------
Business Unit
Revenue
Contribution %
Facilities 70% 68% 67% 67%
Canada % of
Facilities
revenue 89% 91% 93% 95%
U.S. % of
Facilities
revenue 11% 9% 7% 5%
------------------------------------------------
Drilling Services 30% 32% 33% 33%
Canada % of
revenue(2) 38% 41% 36% 47%
U.S. % of
revenue(2) 62% 59% 64% 53%
------------------------------------------------
Metrics
U.S. Recovered Crude
Oil ('000 bbl) - - - -
U.S. Netback
(CDN$/bbl) - - - -
U.S. Recovered Crude
Oil sales - - - -
------------------------------------------------
OILFIELD RESTATED INFORMATION BY YEAR
2014 2013
($ millions) 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
Operating expenses 187.1 136.1 89.0 46.0 155.7 114.0 74.6 39.2
----------------------------------------------------------------------------
Divisional EBITDA 104.9 79.5 47.5 24.5 88.6 68.6 44.4 25.9
----------------------------------------------------------------------------
Divisional EBITDA %
of revenue 36% 37% 35% 35% 36% 38% 37% 40%
----------------------------------------------------------------------------
Depreciation and
amortization 22.7 14.7 9.0 4.4 16.4 12.0 8.1 4.1
----------------------------------------------------------------------------
Operating profit 82.2 64.8 38.5 20.1 72.2 56.6 36.3 21.8
----------------------------------------------------------------------------
Operating profit %
of revenue 28% 30% 28% 29% 30% 31% 31% 33%
----------------------------------------------------------------------------
Maintenance capital 13.1 7.1 3.4 1.3 9.0 6.2 3.4 1.5
Growth capital(1) 67.2 35.7 21.5 12.7 59.2 28.7 16.1 7.2
----------------------------------------------------------------------------
Business Unit Revenue Contribution %
Facilities 71% 73% 75% 76% 73% 73% 72% 71%
Canada % of
Facilities
revenue 87% 87% 87% 88% 91% 91% 91% 91%
U.S. % of
Facilities
revenue 13% 13% 13% 12% 9% 9% 9% 9%
----------------------------------------------------------------------------
Drilling Services 29% 27% 25% 24% 27% 27% 28% 29%
Canada % of
revenue(2) 31% 32% 33% 43% 32% 31% 31% 35%
U.S. % of
revenue(2) 69% 68% 67% 57% 68% 69% 69% 65%
----------------------------------------------------------------------------
Metrics
U.S. Recovered Crude
Oil ('000 bbl) 28.6 20.5 16.1 7.1 - - - -
U.S. Netback
(CDN$/bbl) 75.60 81.33 82.56 81.32 - - - -
U.S. Recovered Crude
Oil sales 2.1 1.6 1.3 0.6 - - - -
----------------------------------------------------------------------------
2012
($ millions) Q4 YTD Q3 YTD Q2 YTD Q1
------------------------------------------------
Revenue 239.6 179.1 115.9 63.7
Operating expenses 152.8 113.0 73.7 37.1
------------------------------------------------
Divisional EBITDA 86.8 66.1 42.2 26.6
------------------------------------------------
Divisional EBITDA %
of revenue 36% 37% 36% 42%
------------------------------------------------
Depreciation and
amortization 15.8 11.8 7.7 4.1
------------------------------------------------
Operating profit 71.0 54.3 34.5 22.5
------------------------------------------------
Operating profit %
of revenue 30% 30% 30% 35%
------------------------------------------------
Maintenance capital 8.7 6.8 3.7 1.4
Growth capital(1) 34.5 19.0 10.2 5.7
------------------------------------------------
Business Unit
Revenue
Contribution %
Facilities 68% 67% 67% 67%
Canada % of
Facilities
revenue 92% 93% 94% 95%
U.S. % of
Facilities
revenue 8% 7% 6% 5%
------------------------------------------------
Drilling Services 32% 33% 33% 33%
Canada % of
revenue(2) 39% 41% 42% 47%
U.S. % of
revenue(2) 61% 59% 58% 53%
------------------------------------------------
Metrics
U.S. Recovered Crude
Oil ('000 bbl) - - - -
U.S. Netback
(CDN$/bbl) - - - -
U.S. Recovered Crude
Oil sales - - - -
------------------------------------------------
(1) Growth capital has been restated from the information reported in our
Q1 2015 MD&A.
(2) Drilling Services revenue split by country has been restated from the
information reported in our Q1 2015 MD&A to include Environmental
Services.
G&A RESTATED INFORMATION
2014 2013 2012
($ 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:
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Impact on Impact on
Change in Annual Revenue Annual Adjusted
2014 benchmark ($)(1) EBITDA($)(1)
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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
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(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.
Contacts: Newalta Corporation Anne M. Plasterer Executive Director, Investor Relations (403) 806-7019 www.newalta.com
Source: Newalta Corporation
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