- Q4 2020 Adjusted EBITDA of $54
million represented a decrease of only 8% from last year.
The Company's cost savings initiatives, commercial customer
strategies, contributions from growth capital investments and the
Canadian Emergency Wage Subsidy ("CEWS") moderated the impact of
reduced activity and oil prices.
- Adjusted EBITDA excluding CEWS increased 9% sequentially
compared to Q3 2020 as Tervita continued to strengthen from the
abrupt slowdown in the first half of the year.
- Adjusted EBITDA Margin excluding CEWS increased to 37%,
compared to 34% in Q4 2019.
- Industrial Services Divisional EBITDA grew 38% in the second
half of 2020 compared to the first half, driven by rapid market
recovery from the impacts of the COVID-19 pandemic, increased
ferrous prices and the benefit of business optimization and cost
savings initiatives.
- 2020 Adjusted EBITDA of $208
million was a decrease of only 11% from the prior year,
continuing to demonstrate the strength and resiliency of our
business model.
- Generated Discretionary Free Cash Flow ("DFCF") of
$79 million in 2020, down just
$11 million compared to 2019,
resulting in a DFCF yield(1) of 19%.
- Successfully refinanced our existing senior secured notes
with a combination of new senior secured notes and a draw on our
amended and extended credit facility, enhancing Tervita's ability
to reduce debt with free cash flow.
- Released Tervita's inaugural Sustainability Report
highlighting our 2019 accomplishments and targets developed towards
our commitment to Environment, Social and Governance ("ESG") &
sustainability.
- Acquired Main Line Industries Ltd. ("Main Line"), a
specialty contractor primarily servicing the rail services,
excavation and pipe jacking industries near Winnipeg, Manitoba, complementing our metals
recycling and rail services business and expanding our footprint in
Manitoba.
- 2020 growth and expansion capital additions of $33 million primarily focused on completing our
Montney water disposal facility,
increasing water disposal capacity and blending capabilities,
landfill expansion and purchasing industrial equipment for
long-term customer backed contracts. We prudently managed our 2020
capital in response to the market environment with capital
additions of $60 million for the
year, in line with our expectations and a 56% reduction from 2019
additions.
- Non-binding mediation occurred as scheduled in late 2020
with respect to the Secure litigation. The trial is scheduled to
commence on January 10,
2022.
CALGARY, AB, March 4, 2021 /CNW/ - Tervita Corporation
("Tervita" or the "Company") (TSX: TEV) announced today the results
for the three months and year ended December
31, 2020. All financial figures are in millions of Canadian
dollars unless otherwise noted.
"Tervita's results in 2020 reflected the strength of our
resilient business model, and with positive momentum exiting the
year we are well positioned to capture upside in an energy sector
recovery while continuing to grow our Industrial Services business.
Our disciplined focus on managing costs, optimizing our locations
and achieving business efficiencies drove strong Adjusted EBITDA
Margins excluding CEWS of 37% in Q4 2020," said John Cooper, President and CEO. "Both the
Industrial Services and Energy Services business lines contributed
to these results, delivering a sequential improvement in overall
Divisional EBITDA compared to Q3 2020.
"We successfully completed our debt refinancing in the fourth
quarter, which will allow us to execute on our strategic
initiatives while providing flexibility to use free cash flow
towards de-levering our balance sheet. We also advanced growth in
our Industrial Services business with the acquisition of Main Line,
providing a platform to expand our market share and geographic
reach.
"Over the past year, we proved our agility to respond to the
market and adapt our business to keep our people safe, reduce
costs, capture market value, and protect liquidity. I am
incredibly proud of the many significant milestones we achieved in
2020, including advancing our strategic priorities while
strengthening our balance sheet, increasing profitability and
generating meaningful Discretionary Free Cash Flow despite the
challenging environment. Looking forward to 2021, we remain
focused on operational excellence, progressing our ESG 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."
Q4 2020 Financial Highlights(2)
|
|
|
|
|
|
|
Three Months Ended
December 31
|
|
Twelve Months
Ended December 31
|
|
|
2020
|
2019
|
Increase
(Decrease)
|
%
Change
|
|
2020
|
2019
|
Increase
(Decrease)
|
%
Change
|
Facilities
revenue
|
|
80
|
115
|
(35)
|
(30)
%
|
|
329
|
465
|
(136)
|
(29)
%
|
Energy marketing
revenue
|
|
250
|
416
|
(166)
|
(40)
%
|
|
875
|
1,607
|
(732)
|
(46)
%
|
Energy Services
revenue
|
|
330
|
531
|
(201)
|
(38)
%
|
|
1,204
|
2,072
|
(868)
|
(42)
%
|
Industrial Services
revenue
|
|
56
|
62
|
(6)
|
(10)
%
|
|
220
|
256
|
(36)
|
(14)
%
|
Intersegment
eliminations
|
|
(5)
|
(2)
|
(3)
|
(150)
%
|
|
(7)
|
(5)
|
(2)
|
(40)
%
|
Revenue
|
|
381
|
591
|
(210)
|
(36)
%
|
|
1,417
|
2,323
|
(906)
|
(39)
%
|
Revenue excluding
energy marketing
|
|
131
|
175
|
(44)
|
(25)
%
|
|
542
|
716
|
(174)
|
(24)
%
|
|
|
|
|
|
|
|
|
|
|
|
Energy Services
Divisional EBITDA(2)
|
|
47
|
60
|
(13)
|
(22)
%
|
|
179
|
238
|
(59)
|
(25)
%
|
Industrial Services
Divisional EBITDA(2)
|
|
11
|
10
|
1
|
10
%
|
|
38
|
41
|
(3)
|
(7)
%
|
Divisional
EBITDA(2)
|
|
58
|
70
|
(12)
|
(17)
%
|
|
217
|
279
|
(62)
|
(22)
%
|
G&A
expenses
|
|
(9)
|
(11)
|
(2)
|
(18)
%
|
|
(39)
|
(46)
|
(7)
|
(15)
%
|
G&A as a % of
revenue (excl. energy marketing)
|
|
7
%
|
6 %
|
1 %
|
|
|
7
%
|
6 %
|
1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada Emergency Wage
Subsidy(3)
|
|
5
|
—
|
5
|
100
%
|
|
30
|
—
|
30
|
100
%
|
Net profit
(loss)
|
|
(22)
|
(123)
|
101
|
82
%
|
|
(43)
|
(116)
|
73
|
63
%
|
- per share ($), basic
and diluted
|
|
(0.19)
|
(1.07)
|
0.88
|
82
%
|
|
(0.38)
|
(0.99)
|
0.61
|
62
%
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
|
54
|
59
|
(5)
|
(8)
%
|
|
208
|
233
|
(25)
|
(11)
%
|
- per share ($), basic
and diluted
|
|
0.47
|
0.51
|
(0.04)
|
(8)
%
|
|
1.83
|
2.00
|
(0.17)
|
(9)
%
|
Adjusted EBITDA
Margin(2)
|
|
41
%
|
34 %
|
7 %
|
|
|
38
%
|
33 %
|
5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance capital
additions
|
|
9
|
11
|
(2)
|
(18)
%
|
|
27
|
33
|
(6)
|
(18)
%
|
Growth and expansion
capital additions
|
|
7
|
41
|
(34)
|
(83)
%
|
|
33
|
106
|
(73)
|
(69)
%
|
Capital
additions
|
|
16
|
52
|
(36)
|
(69)
%
|
|
60
|
139
|
(79)
|
(57)
%
|
Acquisitions
(4)
|
|
16
|
—
|
16
|
100
%
|
|
16
|
—
|
16
|
100
%
|
|
|
|
|
|
|
|
|
|
|
|
Discretionary Free
Cash Flow(2)
|
|
8
|
9
|
(1)
|
(11)
%
|
|
79
|
90
|
(11)
|
(12)
%
|
- per share ($), basic
and diluted
|
|
0.07
|
0.08
|
(0.01)
|
(13)
%
|
|
0.69
|
0.77
|
(0.08)
|
(10)
%
|
|
|
|
|
|
|
|
|
|
|
|
Net Debt to Adjusted
EBITDA (LTM)(2)(5)
|
|
3.54
|
3.17
|
0.37
|
12
%
|
|
3.54
|
3.17
|
0.37
|
12
%
|
|
|
|
|
|
|
|
|
|
|
|
Shares as at December
31 (000's of shares)(6)
|
|
|
|
|
|
|
|
|
|
|
Shares
outstanding
|
|
115,655
|
114,355
|
1,300
|
1 %
|
|
115,655
|
114,355
|
1,300
|
1 %
|
Weighted average
shares - basic and diluted
|
|
114,202
|
115,260
|
(1,058)
|
(1)
%
|
|
113,688
|
116,732
|
(3,044)
|
(3)
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
DFCF yield is
calculated by dividing 2020 DFCF by Tervita's market
capitalization of $422 million as at March 4,
2021.
|
2.
|
Refer to Tervita's
Q4 2020 Management's Discussion and Analysis ("MD&A") and
audited annual Consolidated Financial Statements ("Financial
Statements") for further information. 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 Tervita's Q4 2020
MD&A.
|
3.
|
Q4 2020 included
$2 million related to employees in Energy Services, $2 million in
Industrial Services, and $1 million in Corporate. 2020
included $14 million related to employees in Energy Services, $11
million in Industrial Services, and $5 million in Corporate. Refer
to Tervita's Q4 2020 MD&A for further information on
CEWS.
|
4.
|
Refer to note 3 of
the Annual Financial Statements for details
regarding acquisitions.
|
5.
|
Net Debt to
Adjusted EBITDA (LTM) is at December 31, 2020 and 2019 and is based
on the Last Twelve Months at that date. See Tervita's Q4 2020
MD&A for further definition and reconciliation.
|
6.
|
As at March 4,
2021, the Company had 115,654,851 common shares and 2,696,236 stock
options outstanding. Each option outstanding is exercisable for one
common share.
|
Tervita's results for the three and twelve months ended
December 31 excluding
CEWS(1) were as follows:
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31
|
|
Twelve Months
Ended December 31
|
|
|
2020
|
2019
|
Increase
(Decrease)
|
%
Change
|
|
2020
|
2019
|
Increase
(Decrease)
|
%
Change
|
Adjusted
EBITDA(1)(2)
|
|
49
|
59
|
(10)
|
(17)%
|
|
178
|
233
|
(55)
|
(24)%
|
- per share ($), basic
and diluted
|
|
0.43
|
0.51
|
(0.08)
|
(16)%
|
|
1.57
|
2.00
|
(0.43)
|
(22)%
|
Adjusted EBITDA
Margin(1)(2)
|
|
37
%
|
34 %
|
3 %
|
|
|
33
%
|
33 %
|
— %
|
|
|
|
1.
|
Refer to Tervita's
Q4 2020 MD&A for further information on CEWS.
|
2.
|
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 Tervita's
Q4 2020 MD&A.
|
Outlook
Tervita demonstrated the strength of our resilient business
model in 2020, delivering Adjusted EBITDA that declined only 11%
despite the challenging environment, and we are well positioned for
growth as the economy continues to recover. Tervita's performance
recovered significantly in the second half of the year from the
sharp decline in activity levels and commodity pricing and the
negative impact of COVID-19 experienced in the first half.
Looking forward to 2021, we expect our positive momentum from
the second half of 2020 to continue. Assuming an environment which
includes the ongoing stability of energy pricing combined with
general economic and industrial activity improvements associated
with a steady reopening following the pandemic-related shutdowns,
the Company anticipates 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
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 Main Line acquisition; and,
- Actively working with customers through the early stages of the
well abandonment and site rehabilitation program.
Capital Allocation
In 2021, we plan to take 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 that meet our return on
capital hurdle rates, with a focus on growth projects in the
Industrial Services business. Based on current market conditions we
anticipate capital additions in 2021 to be in line with 2020
levels. We continue to look for and execute opportunities to reduce
costs, improve efficiencies and ensure all open and operating
facilities are generating positive cash flows. We remain responsive
to opportunities and market changes and may revise our capital
plans accordingly.
MD&A and Financial Statements
The Q4 2020
MD&A, Financial Statements, and Annual Information Form, which
contain additional notes and disclosures, are available on SEDAR
under Tervita Corporation at www.SEDAR.com or on our website at
www.tervita.com on the Investor Relations page.
Fourth Quarter and Year End 2020 Conference Call
Tervita will host a conference call on Friday, March 5, 2021 at 7:00 a.m. MST to discuss the fourth quarter
results. To participate in the conference call, dial 416-764-8650
or toll free 888-664-6383. To access the simultaneous webcast,
please visit www.tervita.com. For those unable to listen to the
live call, a taped broadcast will be available at www.tervita.com
and, until midnight MST on Friday, March 12,
2021 by dialing 888-390-0541 and using the pass code
639605#.
About Tervita
Tervita is a leading
environmentally-focused waste service provider 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.
Advisories
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 Tervita.
Forward-looking statements are statements that are not historical
facts and are generally, but not always, identified by the words
"expects", "plans", "anticipates", "believes", "intends",
"estimates", "projects", "potential" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or
"should" occur or be achieved. These statements are not guarantees
of future performance and are subject to risks, uncertainties and
other key factors that could cause actual results or events to be
materially different from those anticipated in such forward-looking
statements.
Specific forward-looking statements contained in this news
release includes, amongst others, statements and management's
beliefs, expectations or intentions regarding the following:
economic recovery and business performance; progress on Tervita's
ESG initiatives; de-levering its balance sheet; exercising
disciplined cost management, anticipated benefits from annualized
structural cost savings implemented in the first half of 2020;
anticipated benefits from commercial, organizational and cost
strategies implemented within Tervita's Industrial Services
business; anticipated benefits from investments at Tervita's
Montney water disposal facility
and business acquisitions; capital allocation plans for 2021,
including planned expenditures related to growth and expansion and
maintenance; reopening following COVID-19 pandemic-related
shutdowns and the impact of reopening on Tervita's business
performance; 2021 Adjusted EBIDTA expectations; plans to allocate
discretionary free cash flow between Tervita's two main priorities:
de-levering its balance sheet and delivering low-cost, high-impact
projects and the expected results therefrom; plans to continue
looking for cost reduction opportunities and efficiencies and the
expected results therefrom; Tervita's business continuity plan in
response to the COVID-19 pandemic; and assessments regarding legal
matters.
Forward-looking statements relating to our business contain
assumptions about, among other things: current economic and
operating conditions, including commodity prices, interest rates,
and environmental and regulatory matters; the ability of Tervita's
customers to recover from the current economic and operating
conditions; the ability of Tervita to access government assistance
programs as needed; the ability of Tervita to execute on cost
savings measures; the ability of Tervita to execute on its business
continuity plan in connection with the COVID-19 pandemic; Tervita's
ability to maintain sufficient liquidity in the current
ever-changing economic and operating conditions; Tervita's ability
to obtain equipment, services, supplies and personnel to carry out
its business activities; Tervita's ability to successfully market
its business in the areas in which it operates; that Tervita's
current business environment will remain substantially unchanged;
and Tervita's ability to secure financing on acceptable terms, if
needed.
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 Tervita described in our MD&A for Q4 2020 and
our most recent Annual Information Form ("AIF") dated March 4, 2021. These factors should not be
construed as exhaustive. The forward-looking statements included in
this news release are made only as of the date hereof and Tervita
does not undertake to publicly update these forward-looking
statements for new information, future events, or otherwise, except
as required by applicable laws. Any forward-looking statements
contained herein are expressly qualified by this cautionary
statement. For additional information relating to Tervita,
including our AIF, please see our profile on SEDAR, available at
www.sedar.com.
Any financial outlook set forth in this news release,
including expectations regarding Adjusted EBITDA for 2021 and
Tervita's capital spending program, was approved by management as
of the date of this news release to provide investors with an
estimation of the outlook for Tervita for 2021 and onwards, where
applicable, and readers are cautioned that any such financial
outlook contained herein should not be used for purposes other than
those for which it is disclosed herein. The prospective financial
information set forth in this news release has been prepared by
management. Tervita's management believes that the prospective
financial information has been prepared on a reasonable basis,
reflecting management's best estimates and judgements, and
represents, to the best of management's knowledge and opinion,
Tervita's expected course of action in developing and executing its
business strategy and growth opportunities relating to its business
operations. However, actual results may vary from the prospective
financial information set forth in this news release. See above for
a discussion of the risks that could cause actual results to vary.
The prospective financial information set forth in this news
release should not be relied on as necessarily indicative of future
results.
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 Q4 2020 available at www.tervita.com
or www.sedar.com.
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. Readers should refer to Tervita's most recently filed
Financial Statements and accompanying MD&A filed on
www.sedar.com for the definition and reconciliation of these
non-GAAP measures to the most directly comparable GAAP measure in
Tervita's financial statements for prior completed periods.
SOURCE Tervita Corporation