Tervita Corporation Announces Strong First Quarter 2021 Results

• 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.

CALGARY, AB, April 27, 2021 /CNW/ - Tervita Corporation ("Tervita" or the "Company") (TSX: TEV) announced today the results for the three months ended March 31, 2021. All financial figures are in millions of Canadian dollars unless otherwise noted.

"Tervita's strong performance to start the year demonstrates the upside in our Energy Services business and the stability and growth potential of our Industrial Services business. Our disciplined focus on executing commercial customer strategies, managing costs, and achieving business efficiencies resulted in an eight percentage point increase in Q1 Adjusted EBITDA Margin excluding CEWS despite a decrease in revenue," said John Cooper, President and CEO.

"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 mid-May 2021, followed by the special securityholders meeting expected to be held June 15, 2021 to approve the transaction. In addition to the Competition Bureau and securityholders, other approvals required include the TSX and Alberta Court of Queen's Bench.

"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 March 31
		2021	2020	Increase (Decrease)	% 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%
Canada Emergency Wage Subsidy^(3)		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 March 31 (000's of shares)^(5)
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 Tervita's market capitalization of $590 million as at April 27, 2021.
2.	Refer to Tervita's Q1 2021 Management's Discussion and Analysis ("MD&A") and Interim 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 Q1 2021 MD&A.
3.	Q1 2021 included $2 million related to employees in Energy Services, $1 million in Industrial Services, and $1 million in Corporate. Refer to Tervita's Q1 2021 MD&A for further information on CEWS.
4.	Net Debt to Adjusted EBITDA (LTM) is at March 31, 2021 and 2020 and is based on the Last Twelve Months at that date. See Tervita's Q1 2021 MD&A for further definition and reconciliation.
5.	As at April 27, 2021, the Company had 115,663,218 common shares and 3,036,269 stock options outstanding. Each option outstanding is exercisable for one common share.

Tervita's results for the three months ended March 31 excluding CEWS were as follows:

		Three Months Ended March 31
		2021	2020	Increase (Decrease)	% 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 Tervita's Q1 2021 MD&A.

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 Tervita Corporation at www.SEDAR.com or on our website at www.tervita.com on the Investor Relations page.

First Quarter 2021 Conference Call
Tervita will host a conference call on Wednesday, April 28, 2021 at 7:00 a.m. MST to discuss the first 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 Wednesday, May 5, 2021 by dialing 888-390-0541 and using the pass code 073422#.

Annual and Special Meeting
Tervita will hold its Annual and Special Meeting (the "Meeting") in a virtual only format, which will be conducted via live audio webcast. Shareholders will have an equal opportunity to participate in the Meeting online regardless of their geographic location.

Meeting Date: May 6, 2021, 2:00pm MST
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. Tervita's Management Information Circular is available at www.tervita.com or www.sedar.com.
Record Date for Notice of Meeting: March 25, 2021

For those unable to attend the annual meeting, the AGM presentation will be subsequently available on Tervita's website.

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: anticipated strategic and economic benefits arising out of the arrangement with SECURE for Tervita's shareholders; expectations regarding the joint information circular and securityholder meetings in respect of the arrangement with SECURE and the anticipated timing of the same; anticipated regulatory approvals required pursuant to the arrangement with SECURE; expectations relating to ongoing economic recovery in the Western Canadian oilfield and the associated impact on Tervita's business performance; anticipated progress on Tervita's Environment, Social and Governance initiatives; expectations relating to commodity pricing and the associated impact on Tervita's business performance; 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 expectations regarding capital addition levels as compared to prior years; reopening following COVID-19 pandemic-related shutdowns and the impact of reopening on industry activity levels as well as Tervita's business performance; 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; and anticipated benefits from the well abandonment and site rehabilitation program.
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 Tervita after giving effect to the arrangement; current economic and operating conditions including commodity prices, interest rates, and environmental and regulatory matters and expectations of economic recovery; the ability of Tervita and Tervita's customers to recover from the current economic and operating conditions; the ability of Tervita to continue to access government assistance programs as needed; 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 Q1 2021 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 Q1 2021 available at www.tervita.com or www.sedar.com.

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

Investor Relations, 1-866-233-6690, [email protected]

Related Links

http://www.tervita.com