TSX Trading Symbol: NAL
CALGARY, May 8, 2018 /CNW/ – Newalta Corporation (“Newalta”) (TSX:NAL) today reported results for the three months ended March 31, 2018.
FINANCIAL HIGHLIGHTS(1)
Three months ended |
||||||
($000s except per share data) (unaudited) |
2018 |
2017 |
% change |
|||
Revenue |
61,749 |
60,810 |
2 |
|||
General & administrative expenses |
6,851 |
7,531 |
(9) |
|||
Net loss |
(10,433) |
(14,475) |
(28) |
|||
– per share ($) basic and diluted |
(0.12) |
(0.16) |
(25) |
|||
Adjusted EBITDA(2) |
12,675 |
10,479 |
21 |
|||
– per share ($) basic and diluted |
0.14 |
0.12 |
17 |
|||
Maintenance capital expenditures(2) |
1,719 |
1,099 |
56 |
|||
Growth capital expenditures(2) |
6,817 |
1,069 |
n/m |
|||
Weighted average shares outstanding |
88,148 |
88,148 |
– |
|||
Shares outstanding, March 31,(3) |
88,148 |
88,148 |
– |
|||
(1) |
Refer to Newalta's Management's Discussion and Analysis (“MD&A”) and unaudited Condensed Consolidated Financial Statements for further information. References to GAAP are synonymous with IFRS and references to Consolidated Financial Statements and notes are synonymous with Financial Statements. |
(2) |
These financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Non-GAAP financial measures are identified and defined in our MD&A. |
(3) |
Newalta had 88,148,148 shares outstanding as at May 8, 2018. |
MANAGEMENT COMMENTARY
“Performance in the first quarter exceeded our guidance and reflects continued execution of our business strategy,” said John Barkhouse, President and Chief Executive Officer. “Adjusted EBITDA of $12.7 million is a 21% improvement over the prior year and is primarily driven by increased utilization in Drilling Services and production related waste volumes received at our Heavy Oil facilities, partially offset by decreased mining contributions from Heavy Oil Onsite.
“With the first quarter behind us, we turn our focus to Q2 and the remainder of 2018. Our Q2 Adjusted EBITDA guidance range is $8 million to $10 million, which reflects an anticipated prolonged spring break-up. Our full year guidance remains unchanged at $50 million to $60 million. We anticipate steady improvements to our business in 2018 predicated on the continuation of the recent strength in commodity prices and associated activity levels. Our Adjusted EBITDA guidance for full year 2018 is based on a WTI forecast of $60 to $70 per barrel.
“On April 30, 2018, we achieved another milestone on the path to merging with Tervita Corporation as the plan of arrangement resolution was approved with overwhelming support by our securityholders. Looking forward, the next steps in the process include receiving approval from the Competition Bureau and the Alberta Court of Queen's Bench. We remain on track for the arrangement to close late in the second quarter or early in the third quarter of 2018.”
FINANCIAL RESULTS
Heavy Oil
Oilfield
Corporate and Other
Recent Developments
On February 28, 2018, we entered into an arrangement agreement (the “Arrangement Agreement”) with Tervita Corporation (“Tervita”), pursuant to which Tervita has agreed, through a series of transactions, to acquire all of our issued and outstanding common shares on the basis of: (i) 0.1467 of a Class A Common share (“Amalco Share”) of Amalco (as defined herein); and (ii) 0.0307 of one warrant (“Amalco Warrant”) to purchase one Amalco Share, for each outstanding common share of Newalta, and Newalta and Tervita will amalgamate to form “Tervita Corporation” (“Amalco”). Each Amalco Warrant will be exercisable for a period of two years from the closing of the Arrangement (as defined herein) at a price of $18.75 per equivalent Amalco Share. The transaction is to be completed by way of a plan of arrangement (the “Arrangement”) under the Business Corporations Act (Alberta).
At the annual and special meeting of the securityholders of Newalta held on April 30, 2018, the Arrangement, among other matters, was approved by: (i) 99.83% of the votes cast by securityholders of Newalta who voted on the Arrangement, voting together as a single class; and (ii) pursuant to the rules and policies of the Toronto Stock Exchange (the “TSX”), 99.81% of the votes cast by shareholders of Newalta who voted on the Arrangement. Additionally, at the annual and special meeting of shareholders of Tervita held on April 30, 2018, the Arrangement, among other matters, was approved by 100% of the votes cast by shareholders of Tervita who voted on the Arrangement, voting together as a single class. On May 2, 2018, Tervita received conditional listing approval for the Amalco Shares and Amalco Warrants from the TSX. Such listing is subject to Amalco meeting minimum listing requirements and fulfilling all other application listing requirements of the TSX. Completion of the Arrangement remains subject to regulatory approvals including pursuant to the Competition Act (Canada), as well as approval by the Alberta Court of Queen's Bench. Assuming the satisfaction or waiver of these conditions, the Arrangement is expected to close by the end of the second quarter or early in the third quarter of 2018.
For additional details, please see the full text of the Arrangement Agreement included in our joint information circular dated March 23, 2018 filed under Newalta's SEDAR profile at www.sedar.com.
The following section contains forward-looking information as it outlines our Outlook for 2018. Our Outlook is based on several key assumptions including growth capital contributions, commodity prices and activity levels in the oil and gas industry. Changes to these assumptions could cause our actual results to differ materially. Please refer to our Forward-Looking Information later in this document. We are subject to a number of risks and uncertainties in carrying out our activities including market conditions, ability to expand the business, competition, regulation, and the ability to attract and retain personnel. A complete list of our risk factors is disclosed in our most recently filed Annual Information Form.
OUTLOOK & BUSINESS DRIVERS
Our business performance is tied to drilling and production related activities in western Canada and the United States. Sustained, stable oil and gas prices enable our customers to make capital decisions to invest in the drilling and completion of new wells and reactivation of shut-in wells. Activity levels, which correlate to the generation of production waste volumes, will vary among plays based on their cost profile. We provide enhanced value solutions to our customers, enabling them to extract greater value from their operations irrespective of cost profile.
The key drivers of our business performance are as follows:
Crude Oil Prices
Drilling Activity
Production Impact & Other
Outlook
Our outlook for 2018 is based on our expectation of year-over-year trends including:
Specifically, we anticipate the second quarter results to be impacted by lower drilling activity and production levels due to a prolonged spring breakup.
Our Q2 and full-year 2018 guidance ranges are:
The following table outlines the factors we expect to impact Adjusted EBITDA performance in the second quarter and full year of 2018:
Factor |
Actual(1) |
Assumption |
Expected impact on Adjusted EBITDA |
|
Q1 2018 |
Q2 and Full Year 2018 |
Q2 2018 |
2018 |
|
West Texas Intermediate (US$/bbl) |
Q1: $62.87 |
Q2 2018: $65 – $70 |
||
Canadian Light Sweet (CDN$/bbl)(2) |
Q1: $72.28 |
Q2 2018: $75 – $80 |
$0.25M – $0.75M ↑ |
$1M – $3.5M ↑ |
Western Canadian Select (CDN$/bbl)(2) |
Q1: $48.84 |
Q2 2018: $65 – $70 |
$0.25M – $0.75M ↑ |
$0.5M – $2.5M↑ |
Drilling activity(2) over prior year |
Q1: 25% |
Q2 2018: (10%) – Flat |
$0.5M ↓ – Flat |
$1M – $6M ↑ |
Production Impact & Other(3) |
Q1: $0.2M |
$1.5M – $1M ↓ |
$3M – $3.5M ↑ |
|
Adjusted EBITDA Guidance |
$8M – $10M |
$50M – $60M |
(1) |
M refers to millions. |
(2) |
Impact derived from annual sensitivities based on forecast performance and volumes outlined in the “Sensitivities” section of our 2017 Annual Report and may be adjusted for expected volumes. 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. |
Managing debt leverage and use of cash and capital are our highest priorities. We expect to remain within our debt covenants throughout 2018.
Management's Discussion and Analysis and Financial Statements
The 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.
Quarterly Conference Call
Management will hold a conference call on May 9, 2018 at 11:00 a.m. (ET) to discuss Newalta's performance for the quarter. To participate in the teleconference, please call 647-427-7450 or toll free 1-888-231-8191. 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 Wednesday, May 16, 2018, by dialing 855-859-2056 and using the pass code 2829719.
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, more than 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 SimplifiedTM. 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.
This press release contains references to certain financial measures, including some that 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 in our MD&A.
FORWARD-LOOKING INFORMATION
Certain statements contained in this document constitute “forward-looking information” as defined under applicable securities laws. When used in this document, the words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect”, “potential”, “strategy”, “target” and similar expressions, as they relate to Newalta Corporation and the subsidiaries of Newalta Corporation, or their management, are intended to identify forward-looking information. In particular, forward-looking information included or incorporated by reference in this document includes information with respect to:
Expected future financial and operating performance and related assumptions are set out under “Outlook & Operating Leverage”. Such information reflects our current views with respect to future events and are subject to certain risks, uncertainties and assumptions, including, without limitation:
By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Many other factors could also cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking information and readers are cautioned that the foregoing list of factors is not exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Furthermore, the forward-looking information contained in this document is made as of the date of this document and, in each case, is expressly qualified by this cautionary statement. Unless otherwise required by law, we do not intend, or assume any obligation, to update any such forward-looking information.
SOURCE Newalta Corporation
View original content: http://www.newswire.ca/en/releases/archive/May2018/08/c2208.html