- 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 nearWinnipeg, Manitoba , complementing our metals recycling and rail services business and expanding our footprint inManitoba .- 2020 growth and expansion capital additions of
$33 million primarily focused on completing ourMontney 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 .
"
"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 | Twelve Months Ended | |||||||||
2020 | 2019 | Increase | % Change | 2020 | 2019 | Increase | % 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 % | ||||
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 | ||||||||||
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 |
2. | Refer to |
3. | Q4 2020 included |
4. | Refer to note 3 of the Annual Financial Statements for details regarding acquisitions. |
5. | Net Debt to Adjusted EBITDA (LTM) is at |
6. | As at |
Three Months Ended | Twelve Months Ended | |||||||||
2020 | 2019 | Increase | % Change | 2020 | 2019 | Increase | % 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 |
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 |
Outlook
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
Fourth Quarter and Year End 2020 Conference Call
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For over 40 years,
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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
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
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
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 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
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