- Q1 2021 Adjusted EBITDA of
$55 million represented an increase of 4% compared to last year. We have had a steady rebound in performance supported by our resilient business model and continued market recovery from the impacts of the COVID-19 pandemic. Tervita's underlying business has demonstrated stable and steady improvement over the last three quarters, with Adjusted EBITDA excluding CEWS increasing 9% from Q3 2020 to Q4 2020 and 4% from Q4 2020 to Q1 2021.- Adjusted EBITDA Margin excluding the
Canada Emergency Wage Subsidy ("CEWS") increased to 38%, compared to 30% in Q1 2020. - Industrial Services Divisional EBITDA grew 83% compared to the prior year, driven by strong ferrous metals pricing, disciplined cost control, business optimizations and the acquisition of
Main Line Industries Ltd. ("Main Line"). - Generated strong Discretionary Free Cash Flow ("DFCF") of
$35 million in Q1 2021, up 40% compared to Q1 2020, resulting in a DFCF yield(1) of 15%. - Net debt of
$717 million decreased by$19 million since the end of Q4 2020, driven by our significant DFCF generation and reduced growth and expansion capital spending. - Growth and expansion capital additions of
$8 million in the quarter were largely related to the completion of Energy Services projects to increase water disposal capacity and growing the Industrial Services business. Maintenance capital additions were$7 million , a decrease of$1 million compared to the prior year. - Entered into an arrangement agreement with SECURE Energy Services Inc. ("SECURE"), which provides for the combination of SECURE and
Tervita creating a leading midstream infrastructure and environmental solutions business that is expected to provide enhanced free cash flow generation resulting from greater scale, sizeable cost synergies, and improved leverage, leading to superior returns for all investors.
"
"We recently announced the successful solicitation of consents for our senior secured notes, a milestone on the path to merging with SECURE. We are continuing the process of gaining approvals from various parties. Looking forward, next steps for the merger include releasing our joint information circular with respect to securityholder approvals
"With continued positive momentum we are well positioned for improved performance in 2021 as the economy continues to recover. We remain focused on operational excellence, progressing our Environment, Social and Governance initiatives, de-levering our balance sheet, and disciplined cost management while leveraging opportunities to grow our business and provide value for our shareholders and customers."
Q1 2021 Financial Highlights(2)
Three Months Ended | ||||||
2021 | 2020 | Increase | % Change | |||
Facilities revenue | 83 | 114 | (31) | (27)% | ||
Energy marketing revenue | 299 | 312 | (13) | (4)% | ||
Energy Services revenue | 382 | 426 | (44) | (10)% | ||
Industrial Services revenue | 53 | 62 | (9) | (15)% | ||
Intersegment eliminations | (1) | (2) | 1 | 50% | ||
Revenue | 434 | 486 | (52) | (11)% | ||
Revenue excluding energy marketing | 135 | 174 | (39) | (22)% | ||
Energy Services Divisional EBITDA(2) | 51 | 59 | (8) | (14)% | ||
Industrial Services Divisional EBITDA(2) | 11 | 6 | 5 | 83% | ||
Divisional EBITDA(2) | 62 | 65 | (3) | (5)% | ||
G&A expenses | (11) | (12) | (1) | (8)% | ||
G&A as % of revenue (excl. energy marketing) | 8% | 7% | 1% | |||
4 | — | 4 | 100% | |||
Net profit (loss) | — | (42) | 42 | 100% | ||
- per share ($), basic | 0.00 | (0.37) | 0.37 | 100% | ||
- per share ($), diluted | 0.00 | (0.38) | 0.38 | 100% | ||
Adjusted EBITDA(2) | 55 | 53 | 2 | 4% | ||
- per share ($), basic and diluted | 0.47 | 0.46 | 0.01 | 2% | ||
Adjusted EBITDA Margin(2) | 41% | 30% | 11% | |||
Maintenance capital additions | 7 | 8 | (1) | (13)% | ||
Growth and expansion capital additions | 8 | 12 | (4) | (33)% | ||
Capital additions | 15 | 20 | (5) | (25)% | ||
Discretionary Free Cash Flow(2) | 35 | 25 | 10 | 40% | ||
- per share ($), basic and diluted | 0.30 | 0.22 | 0.08 | 36% | ||
Net Debt to Adjusted EBITDA (LTM)(2)(4) | 3.41 | 3.37 | 0.04 | 1% | ||
Shares as at | ||||||
Shares outstanding | 115,655 | 113,107 | 2,548 | 2% | ||
Weighted average shares - basic | 116,400 | 113,992 | 2,408 | 2% | ||
Weighted average shares - diluted | 116,400 | 114,676 | 1,724 | 2% | ||
1. | DFCF yield is calculated by dividing the Last Twelve Months Q1 2021 DFCF by |
2. | Refer to |
3. | Q1 2021 included |
4. | Net Debt to Adjusted EBITDA (LTM) is at |
5. | As at |
Three Months Ended | |||||
2021 | 2020 | Increase | % Change | ||
Adjusted EBITDA(1) | 51 | 53 | (2) | (4)% | |
- per share ($), basic and diluted | 0.44 | 0.46 | (0.02) | (4)% | |
Adjusted EBITDA Margin(1) | 38% | 30% | 8% | ||
1. | These financial measures are Non-GAAP measures and are, therefore, unlikely to be comparable to similar measures presented by other issuers. These Non-GAAP financial measures are defined and reconciled in |
Outlook
Our strong performance in Q1 2021 demonstrates that, along with the ongoing recovery in Western Canadian oilfield and industrial activity, our focus on operational efficiencies and commercial customer strategies combined with contributions from our growth capital investments continue to gain traction. Oil and gas prices have strengthened considerably in Q1 and activity levels are slowly improving, generating cautious optimism within the energy industry. In our Industrial Services business, high activity levels and strong ferrous metals pricing are expected to continue to support improved performance in 2021.
Assuming an environment that includes the ongoing stability of energy pricing combined with general economic and industrial activity improvements, the Company continues to anticipate Adjusted EBITDA excluding CEWS in 2021 to exceed 2020, driven by contributions from:
- Stronger business performance in both our Energy Services and Industrial Services businesses in line with our expectations of continued economic recovery;
- The full year benefit from the
$31 million annualized structural cost savings instituted in the first half of 2020 (savings realized in 2020 of$23 million ); - Continued benefit of the commercial, organizational and cost strategies implemented within our Industrial Services business;
- Contributions from investments including a full year of operations at our
Montney water disposal facility and our acquisition of Main Line; and - Actively working with customers on the well abandonment and site rehabilitation program. We expect to see greater benefit from this funding program later in 2021 and into 2022 as customers increase their focus on remediation programs performed at their sites.
Capital Allocation
In 2021, we are taking a disciplined approach to the allocation of Discretionary Free Cash Flow between our two main priorities of de-levering our balance sheet and delivering low-cost, high-impact projects within our growth capital pipeline of opportunities. Based on current market conditions we anticipate our total capital additions in 2021 to be in line with or lower than 2020 levels. We remain responsive to opportunities and market changes and may revise our capital plans accordingly.
MD&A and Financial Statements
The Q1 2021 MD&A, Financial Statements, and Annual Information Form, which contain additional notes and disclosures, are available on SEDAR under
First Quarter 2021 Conference Call
Annual and Special Meeting
Meeting Date:
Meeting Location: Virtual only meeting. Please refer to the Notice of Meeting in the Company's recently released Management Information Circular for details on how to attend the meeting.
Record Date for Notice of Meeting:
For those unable to attend the annual meeting, the AGM presentation will be subsequently available on
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Forward-Looking Information
This news release contains forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to assumptions, risks and uncertainties, many of which are beyond the control of
Forward-looking statements relating to our business contain assumptions about, among other things: the satisfaction of the conditions to closing of the arrangement with SECURE in a timely manner and on the anticipated terms; the combined company's ability to successfully integrate the businesses of SECURE and
Forward-looking statements and information should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Actual results could differ materially from those anticipated in forward-looking statements as a result of uncertainties and risk factors, including but not limited to, those risks relating to
Any financial outlook set forth in this news release, including expectations regarding Adjusted EBITDA for 2021 and
Non-GAAP Financial Measures
Certain financial measures identified in this news release are not prescribed by Internal Financial Reporting Standards ("IFRS") and therefore are considered non-GAAP measures. All non-GAAP measures presented herein do not have any standardized meaning and therefore are unlikely to be comparable to similar measures presented by other companies. Therefore, these non-GAAP measures should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. All non-GAAP measures are included because management uses the information to analyze operating performance and results, and therefore may be considered useful information by investors. Any non-GAAP measure presented herein has been identified and the applicable definition and reconciliation of such non-GAAP measure can be found in MD&A for Q1 2021 available at www.tervita.com or www.sedar.com.
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