Tervita Corporation Provides Positive Preliminary Third Quarter Results, Full Year 2020 Financial Guidance and Credit Facility Amendment Update

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Tervita Corporation Provides Positive Preliminary Third Quarter Results, Full Year 2020 Financial Guidance and Credit Facility Amendment Update

by ahnationtalk on October 20, 202026 Views

CALGARY, AB, Oct. 19, 2020– Tervita Corporation (“Tervita” or the “Company”) (TSX: TEV) announced today its preliminary unaudited financial and operating results for the three months ended September 30, 2020 with full year Adjusted EBITDA1 guidance and provided an update on the Company’s Credit Facility amendment.

Highlights of the preliminary financial results include:

  • Q3 2020 Adjusted EBITDA1 and Discretionary Free Cash Flow (“DFCF”) 1 of $56 million2 and $45 million, respectively, driven by ongoing recovery in our Energy Services business, stability and strength provided by Industrial Services, and continued focus on cost discipline and efficiencies.
  • Q3 2020 Adjusted EBITDA Margin1 excluding Canada Emergency Wage Subsidy (“CEWS”)2,3 remained strong and stable compared to prior year at 34%.
  • Our Energy Services business generated Divisional EBITDA1 of $44 million in Q3 2020 with a 58% Divisional EBITDA Margin1,3 driven largely by increased production-based revenues. The Industrial Services business continued to deliver stable results with $11 million of Q3 2020 Divisional EBITDA1 and a 20% Divisional EBITDA Margin1,3.
  • Net Debt1 of $722 million at the end of the quarter with an undrawn credit facility and cash of $52 million. Net Debt to Adjusted EBITDA1,4 was 3.4x at September 30, 2020.
  • Anticipated 2020 full year Adjusted EBITDA1 and DFCF1 of approximately $210 million2 and $75 million, respectively. Full year 2020 maintenance and total capital budget remains at approximately $25 million and $60 million, respectively.
  • Adjusted EBITDA1 for 20215 is anticipated to exceed 2020 Adjusted EBITDA1 excluding CEWS2 allowing Tervita to continue to reduce leverage.

“We are extremely pleased to announce such strong third quarter preliminary results and full year guidance that underscore the stability and resiliency in our production-based business and continued strong performance in our Industrial Services business segment,” said John Cooper, President and CEO. “While 2020 has posed challenges with the COVID-19 pandemic and economic downturn, our preliminary Q3 results highlight our continued business resiliency and exhibit the strength we had forecast for the second half of the year.”

Looking forward to the remainder of 2020 and into 2021, Tervita expects this positive momentum to continue. The Company currently anticipates Adjusted EBITDA in 20215 to exceed 2020 Adjusted EBITDA excluding CEWS, driven by contributions from:

  • The full year annualized benefit from the approximately $32 million of sustainable cost savings instituted in Q2 2020 (savings expected for 2020 to be approximately $23 million);
  • Continued benefit of the commercial, organizational and cost strategies implemented within our Industrial Services business; and
  • Full year of operations at our Montney water disposal facility that has been fully operational servicing producers since the end of Q1 2020.

Credit Facility

Tervita has received commitments from its lending syndicate to increase the existing facility from $275 million to a minimum of $325 million and extend the term to December 2022. At September 30, 2020 the credit facility was undrawn. Closing of the amended and restated credit facility is subject to the execution of the refinancing of our senior secured notes due in December 2021 and the satisfaction of customary closing conditions.

“I am pleased with the progress these commitments make toward our refinancing plan, which is structured to position us well to pursue the execution of our strategic plan.  I am grateful for the continued support of our banking partners that reflects our reliable and consistent performance.  Building on this positive momentum, we continue to advance our discussions to refinance our senior secured notes as we continue to grow long-term value for our stakeholders,” said John Cooper, President and CEO.

About Tervita

Tervita is one of the largest waste and environmentally-focused service providers in Canada, providing a broad and integrated array of services and environmental management solutions for customers in the energy, industrial, and natural resource sectors, predominantly in Western Canada.

For over 40 years, Tervita has been focused on delivering safe and efficient solutions through all phases of a project while minimizing impact, maximizing returns™. Our dedicated and experienced employees are trusted sustainability partners to our clients. Safety is our top priority: it influences our actions and shapes our culture. Tervita trades on the TSX as TEV. For more information, visit www.tervita.com.

Footnotes & Advisories

(1)

These financial measures are non-GAAP measures and are, therefore, unlikely to be comparable to similar measures presented by other issuers. See Non-GAAP Financial Measures advisory in this news release.

(2)

The estimates of Adjusted EBITDA for Q3 2020 and the full year 2020 are inclusive of the CEWS of $11 million in Q3 and approximately $27 million for the full year.

(3)

Adjusted EBITDA Margin excluding CEWS and Divisional EBITDA Margin have been calculated using preliminary Q3 2020 revenue excluding energy marketing of $132 million, comprised of Energy Services net revenue of $76 million and Industrial Services revenue of $56 million.

(4)

Net Debt to Adjusted EBITDA is calculated using the last twelve month Adjusted EBITDA.

(5)

The current economic environment includes approximately US$40 WTI, the continued improvement of oil and gas production toward pre-pandemic levels and general economic and industrial activity improvements associated with a steady reopening following the pandemic related shutdowns.

The preliminary unaudited results set forth above are based on an initial review of the Company’s operations for the quarter ended September 30, 2020 and are subject to change. Actual results could differ from these preliminary results following the completion of quarter-end closing procedures, final adjustments and other developments arising between now and the time that the Company’s financial results are finalized, and such changes could be material. The Company’s independent chartered professional accountants firm, Ernst & Young LLP, has not completed its review with respect to the preliminary financial results and other data set forth in this news release, and accordingly does not express an opinion or any other form of assurance with respect thereto. The preliminary results have been prepared by, and are the responsibility of, the Company’s management. In addition, these preliminary results are not a comprehensive statement of the Company’s financial results for the quarter ended September 30, 2020. They should not be viewed as a substitute for financial statements and are not necessarily indicative of the Company’s results for any future period.

Non-GAAP Financial Measures

Certain financial measures included in this news release, including, but not limited to, Adjusted EBITDA and Discretionary Free Cash Flow, are not prescribed by International Financial Reporting Standards (“IFRS”) and therefore are considered non-GAAP measures.  In addition, the Adjusted EBITDA and Discretionary Free Cash Flow included in this news release for the three and nine months ended September 30, 2020 are based on preliminary results.  These results are preliminary and unaudited and are inherently uncertain and subject to change as we complete our financial statements for the three and nine months ended September 30, 2020. Given the timing of these estimates, we have not completed our customary financial closing and review procedures as at and for the three and nine months ended September 30, 2020, and there can be no assurance that our final results will not differ from these estimates.

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.

Readers should refer to Tervita’s most recently filed unaudited financial statements and accompanying management discussion and analysis, filed under Tervita’s profile on www.sedar.com, for Tervita’s definition of, and rationale for using, Adjusted EBITDA, Adjusted EBITDA Margin, Divisional EBITDA, Divisional EBITDA Margin, Net Debt, Net Debt to Adjusted EBITDA and Discretionary Free Cash Flow, as well as reconciliations of these non-GAAP measures to the most directly comparable GAAP measure in Tervita’s financial statements for prior completed periods.

U.S. Securities Advisory

Tervita anticipates that any future financing involving the senior secured notes referenced herein will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or any state securities law and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act and applicable state securities laws. Any such securities will be offered in the United States only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. In addition, Tervita anticipates that such securities referenced herein will not be qualified for sale to the public by prospectus under applicable Canadian securities laws and, accordingly, any offer and sale of securities in Canada will be made on a basis, which is exempt from the prospectus requirements of such securities laws.

NT4

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