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

CALGARY, AB, Oct. 19, 2020 /CNW/ - 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 Margin^1,3 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 Margin^1,3.
• 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 EBITDA^1,4 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.

This news release contains certain statements that may be "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws.  Forward-looking statements are statements that are not historical facts and are often, but not always, identified using words or phrases such as "expects", "plans", "anticipates", "believes", "intends", "estimates", "estimated", "projects", "potential" and similar expressions, or stating that certain actions, events or conditions "will", "would", "may", "might", "could" or "should" occur or be achieved or other similar terminology.  In particular, this news release contains forward-looking statements or information pertaining to, among other things: our preliminary estimates of our financial and operating results for the three and nine months ended September 30, 2020; our anticipated full year 2020 guidance of Adjusted EBITDA, DFCF, maintenance capital and total capital as outlined above and our guidance of 2021 Adjusted EBITDA excluding CEWS; and business strategies and objectives.  In addition, the closing of the amended and restated credit facility referenced in this news release are conditional on certain events occurring, including, among other things, the refinancing of our outstanding senior secured notes.  There is no guarantee that these conditions will be met in a manner acceptable to the Company, or at all, and thus no guarantee that the amended and restated credit facility will close.  By their nature, forward-looking statements and information involve known and unknown opportunities, costs, risks, and uncertainties that may cause actual results to differ materially from those anticipated.  Risks and uncertainties that may affect actual results include, without limitation: current economic and operating conditions in light of the Covid-19 pandemic, including commodity prices, interest rates, and environmental and regulatory matters; decreases in exploration, drilling, and production activity levels in the markets where we offer our services; customers may decide to no longer outsource their waste management and other environmental service activities; risks related to non-compliance with environmental laws or delays resulting from such non-compliance; legislative and regulatory initiatives that impact our business; competition; fluctuations in commodity prices and exchange rates; and volatility in global financial conditions.  For a more detailed discussion of risks relating to Tervita see our most recent Annual Information Form and our Q2 2020 Management's Discussion and Analysis ("MD&A"). With respect to the forward-looking statements and information contained in this news release, Tervita has made assumptions regarding, among other things: the ability of the Company's customers to recover from the current economic and operating conditions, the ability of the Company to continue to access government assistance programs; the ability of the Company to execute on cost-savings measures; the Company's ability to maintain sufficient liquidity in the current economic and operating conditions; the stability of the industries in which we operate; the creditworthiness of our customers; commodity prices; no material changes in the legislative and operating framework of our business; our ability to access capital in the debt capital markets on terms satisfactory to us; our ability to successfully market our business in the areas in which we operate; conditions of the oil and gas industry in our current and proposed market; general economic, business, and market conditions; our future debt levels; and the impact of increasing competition. Although Tervita believes the expectations expressed in such forward-looking statements and information are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Forward-looking statements and information are based on the beliefs, estimates and opinions of Tervita's management made as of the date hereof, and Tervita does not undertake any obligation to update publicly or to revise any of the included forward-looking statements or information, whether as a result of new information, change in management's beliefs, estimates, or opinions, future circumstances or events or otherwise, except as expressly required by applicable securities law. The forward-looking statements and information included in this news release are expressly qualified in their entirety by this cautionary statement. Tervita cautions that the foregoing list of assumptions, risks, and uncertainties is not exhaustive. 

Any financial outlook in this document, as defined by applicable securities legislation, including estimates of our Q3 2020 Adjusted EBITDA, DFCF, capital additions and Net Debt as well as our guidance for full year 2020 Adjusted EBITDA of approximately $210 million, and our guidance that Adjusted EBITDA excluding CEWS for 2021 will exceed Adjusted EBITDA excluding CEWS for 2020, are based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available and has been approved by management of Tervita as at the date of this news release. Such financial outlook is provided with the purpose of providing information about management's current expectation and management's plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes and actual results may vary from the financial outlook information set forth in this press release and should not be relied on as necessarily indicative of future results.

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.

SOURCE Tervita Corporation

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

Related Links

http://www.tervita.com