Canexus Corporation (TSX:CUS) (the "Corporation" or "Canexus") today announced
its financial results for the first quarter ended March 31, 2013.
Highlights:
-- Cash Operating Profit was $30.3 million for the three months ended March
31, 2013 ($40.3 million in the first quarter of 2012, and $35.3 million
for the fourth quarter of 2012). Distributable Cash was $21.9 million
($0.16 per common share), resulting in a payout ratio of 85%.
-- As expected, first quarter results reflect weakness in both caustic soda
and chlorine prices in North America and the delay in ramp-up of truck-
to-rail transload capacity at Bruderheim. Price increases announced for
the second quarter for both caustic soda and chlorine were unsuccessful.
The Corporation also experienced nine days of production loss (about
5,700 metric electrochemical units ("MECU")), following the attempted
start-up of the North Vancouver chlor-alkali facility from its planned
shutdown in April, due to equipment failure (which has since been
repaired and the plant is operating at capacity). Although it is still
expected that caustic soda prices will increase in the third quarter
(supported by price increases implemented in Asia in March),
hydrochloric acid prices are currently under pressure from lower
seasonal demand in Alberta and competition for business in the U.S. As a
result, it is prudent to lower our full year guidance for Cash Operating
Profit to $135 to $145 million for a payout ratio of 85 to 90%.
-- The first of two hydrochloric acid capacity expansion projects at the
North Vancouver chlor-alkali facility has been successfully
commissioned, increasing the current capacity to 260,000 wet metric
tonnes ("WMT"). Canexus is on track to add an additional 110,000 WMT of
capacity at the end of the third quarter. There is optimism that
drilling activity will improve with higher oil prices and improved
netbacks and in support of proposed west coast liquefied natural gas
("LNG") projects, that will lead to higher hydrochloric acid demand in
Western Canada. The output from our most recent expansion is sold out
under multi-year contracts.
-- Canexus' low-cost Brandon sodium chlorate plant is on track to set
another production record in 2013, with first quarter production of
77,300 metric tonnes ("MT"). Full year production is expected to be
between 305,000 and 310,000 MT's and the Corporation is currently
analysing additional de-bottleneck opportunities.
-- Canexus' Brazil operations continue to be very stable with solid demand
from its primary customer as well as from the merchant market for both
chlorine and chlorine derivatives.
-- In December, Canexus announced the expansion of its North American
Terminal Operations ("NATO") at Bruderheim, Alberta to include pipeline
connected unit train operations. The Corporation also announced that
formal agreement had been reached with MEG Energy Corp. ("MEG") to
connect the Canexus Bruderheim terminal ("Bruderheim" or "Bruderheim
terminal") with pipelines which interconnect with the MEG Energy
Stonefell Terminal, and to provide terminalling services to MEG for the
loading of bitumen blend for transport by rail and the receiving of
diluent shipments by rail. The Corporation is making solid progress on
this project and expects to commission this expansion late in the third
quarter of 2013. Significant progress is also being made on both a
potential second pipeline/terminal connection to Bruderheim and on
contract negotiations with strategic customers for unit train shipments
from Bruderheim under multi-year, take-or-pay terms. Contracts in
negotiation for unit train shipments, if completed, will exceed the
capacity of the initial phase of development. This project was designed
to readily accommodate staged expansion of the rail loading
infrastructure and the loop tracks to be able to load two unit trains
simultaneously and more efficiently stage inbound and outbound unit
trains, to increase capacity of the Canexus Bruderheim Terminal from 7
to 13 unit trains per week. The capacity expansion is ready to proceed
upon receiving sufficient customer commitment and could be operational
by mid-2014. If this next stage of expansion is approved, it would bring
the total estimated cost of the pipeline connected unit train facility
to approximately $190 million through mid-2014.
-- The Corporation continues to advance its other initiatives at the
Bruderheim terminal. The expansion of diluted bitumen and crude oil
("DBCO") truck-to-rail transload capacity to 30,000 bbls/day is expected
to be completed by the end of the second quarter. In the months of March
and April, we transloaded about 16,000 bbls/day of diluted bitumen and
crude oil. Temporary outages on the various transloading tracks will be
required in the second quarter to tie in the remaining storage tanks.
The addition of tanks and the recently completed West rail yard (capable
of storing approximately 360 railcars) should significantly increase
capacity and alleviate bottlenecks. Canexus is also on track to increase
its hydrochloric acid transloading capacity in the second quarter, to
coincide with the recent start-up of the hydrochloric acid capacity
expansion at our North Vancouver chlor-alkali facility.
-- The Board of Directors declared the regular quarterly dividend of
$0.1368 per common share payable July 15, 2013 to shareholders of record
on June 30, 2013.
"In the first quarter of 2013, market headwinds, plant outages and project
delays at NATO hampered our financial performance and this will extend into the
second quarter," said Gary Kubera, President and CEO. "We continue to expect to
deliver record Cash Operating Profit in the second half of the year as major
capital projects are completed and the challenges associated with establishing
and ramping-up our NATO truck-to-rail transloading business are put behind us.
The market fundamentals for oil-by-rail movements are solid and we are making
excellent progress in establishing strategic long-term relationships with both
producers and with end-use customers unlikely to be served by major pipelines."
"Both our North American sodium chlorate business and Brazil operations are
performing well and market conditions are expected to support strong business
performance over the balance of the year. Over the next few quarters, we will
see the successful implementation of major projects and delivery of the cash
flow expectations that we have set for these initiatives," he added.
Distributable Cash
Distributable cash of Canexus Corporation was $21.9 million ($0.16 per common
share) for the quarter resulting in a payout ratio of 85%.
Three Months Ended
March 31
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CAD thousands 2013 2012
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Cash Operating Profit 30,273 40,303
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Interest Expense (3,485) (5,670)
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Realized Foreign Currency Translation Gains 825 39
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Maintenance Capital Expenditures (4,557) (4,054)
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Provision for Current Income Taxes (1,236) (1,912)
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Technology Conversion Project ("TCP") Severance Costs
Paid (211) (888)
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Other 331 (506)
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Distributable Cash 21,940 27,312
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Distributable Cash Per Share 0.16 0.23
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Dividends Declared Per Share 0.1368 0.1368
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Payout Ratio 85% 60%
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Below is a reconciliation of net cash generated from operating activities to
Distributable Cash of the Corporation for the three months ended March 31, 2013
and 2012.
Three Months Ended
March 31
-------------------
CAD thousands 2013 2012
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Net Cash Generated from Operating Activities 25,169 14,552
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Changes in Non-Cash Operating Working Capital 2,311 18,969
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Non-Cash Change in Income Tax Payable and Interest
Payable (1,696) (1,631)
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Interest Income 90 57
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Maintenance Capital Expenditures (4,557) (4,054)
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Realized Foreign Currency Translation Gains on Cash 534 35
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TCP Severance Costs Paid (211) (888)
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Purchase of Foreign Exchange Options 512 -
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Amortization of the Purchase Cost of Foreign Exchange
Options - (378)
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Expenditures on Decommissioning Liabilities (148) (136)
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Operating Non-Cash Items (64) 786
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Distributable Cash 21,940 27,312
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Segmented Information for the Three Month Periods Ended March 31, 2013 and 2012
Canexus has a total of six manufacturing plants - four in Canada and two at one
site in Brazil - organized into three business units. Canexus also provides
fee-for-service hydrocarbon transloading at its NATO terminal in Bruderheim,
Alberta as a separate business unit. Below is our first quarter performance by
segment.
North America
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Three Months Ended Sodium Chlor- South
March 31, 2013 Chlorate alkali America NATO Other Total
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Sales Revenue
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Total Segment 58,937 53,551 24,246 5,359 - 142,093
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Inter-Segment 77 - - 781(1) - 858
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Total Sales Revenue
from External
Customers 58,860 53,551 24,246 4,578 - 141,235
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Cost of Sales 35,291 30,209 18,822 4,169 75 88,566
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Distribution, Selling
and Marketing
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Total Segment 7,840 15,752 226 1,701 650 26,169
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Inter-Segment - 858 - - - 858
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Total External
Distribution,
Selling and
Marketing 7,840 14,894 226 1,701 650 25,311
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General and
Administrative 2,953 3,601 1,032 140 1,767 9,493
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Operating Profit
(Loss) 12,776 4,847 4,166 (1,432) (2,492) 17,865
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Add:
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Depreciation and
Amortization 3,255 5,558 1,817 899 236 11,765
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Share-based
Compensation Expense - - - - 643 643
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Cash Operating Profit
(Loss) 16,031 10,405 5,983 (533) (1,613) 30,273
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Cash Operating Profit
(Loss) Percentage 27% 19% 25% (12%) - 21%
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Note:
(1) NATO charges a transloading fee (an approximation of market rates
charged by third party terminals) to the North America Chlor-alkali
("NACA") business unit for hydrochloric acid and caustic soda
transloaded from railcars into trucks for delivery to NACA customers
that is eliminated for financial reporting purposes.
North America
-----------------
Three Months Ended Sodium Chlor- South
March 31, 2012 Chlorate alkali America NATO Other Total
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Sales Revenue
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Total Segment 59,904 60,012 27,904 2,141 - 149,961
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Inter-Segment 86 - - 897(1) - 983
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Total Sales Revenue
from External
Customers 59,818 60,012 27,904 1,244 - 148,978
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Cost of Sales 34,047 32,545 21,511 1,868 153 90,124
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Distribution, Selling
and Marketing
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Total Segment 6,910 13,606 354 527 692 22,089
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Inter-Segment - 983 - - - 983
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Total External
Distribution,
Selling and
Marketing 6,910 12,623 354 527 692 21,106
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General and
Administrative 2,756 3,362 952 131 2,269 9,470
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Operating Profit
(Loss) 16,105 11,482 5,087 (1,282) (3,114) 28,278
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Add:
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Depreciation and
Amortization 3,183 5,385 1,736 549 221 11,074
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Share-based
Compensation Expense - - - - 951 951
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Cash Operating Profit
(Loss) 19,288 16,867 6,823 (733) (1,942) 40,303
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Cash Operating Profit
(Loss) Percentage 32% 28% 24% (59%) - 27%
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Note:
(1) NATO charges a transloading fee (an approximation of market rates
charged by third party terminals) to the North America Chlor-alkali
("NACA") business unit for hydrochloric acid and caustic soda
transloaded from railcars into trucks for delivery to NACA customers
that is eliminated for financial reporting purposes.
Highlights for each business unit are as follows:
-- North America Sodium Chlorate:
-- Q1 2013 versus Q4 2012: Sales revenue for the North America sodium
chlorate segment decreased 3% to $58.9 million for the three months
ended March 31, 2013 from $60.5 million for the three months ended
December 31, 2012. The decrease in sales revenue was due to lower
sales volumes (4%) on consistent realized netback prices. Cash
Operating Profit percentage decreased from 30% for the three months
ended December 31, 2012 to 27% for the three months ended March 31,
2013 as a result of lower production volumes at our Brandon and
Nanaimo facilities due to unplanned maintenance shutdowns, higher
purchase product costs and a higher corporate allocation of general
and administrative costs.
-- Q1 2013 versus Q1 2012: Sales revenue for the North America sodium
chlorate segment decreased 2% to $58.9 million for the three months
ended March 31, 2013 from $59.8 million for the three months ended
March 31, 2012 as a result of a 3% decrease in sales volumes on
consistent realized netback prices. Cash Operating Profit percentage
decreased from 32% for the three months ended March 31, 2012 to 27%
for the three months ended March 31, 2013 primarily as a result of
lower production volumes (4%), higher electricity and salt costs,
and slightly higher fixed costs. Fixed costs were higher during the
three months ended March 31, 2013 due to unplanned maintenance
shutdowns at our Brandon and Nanaimo production facilities.
-- North America Chlor-alkali:
-- Q1 2013 versus Q4 2012: Sales revenue for the North America chlor-
alkali segment decreased 7% to $53.6 million for the three months
ended March 31, 2013 from $57.5 million for the three months ended
December 31, 2012. The decrease in sales revenue was primarily due
to lower caustic soda sales volumes (7%) and realized netback prices
(10%); lower chlorine sales volumes (5%) and realized netback prices
(3%); partially offset by higher hydrochloric acid sales volumes
(40%). Cash Operating Profit percentage decreased from 22% for the
three months ended December 31, 2012 to 19% for the three months
ended March 31, 2013 as a result of lower MECU realized netback
prices (3%) and a higher corporate allocation of general and
administrative costs to this segment, partially offset by, lower
caustic soda purchased product costs and lower fixed costs.
-- Q1 2013 versus Q1 2012: Sales revenue for the North America chlor-
alkali segment decreased 11% to $53.6 million for the three months
ended March 31, 2013 from $60.0 million for the three months ended
March 31, 2012. This was due to lower caustic soda sales volumes
(8%) and realized netback prices (7%); lower chlorine (76%) and
hydrochloric acid (26%) realized netback prices; partially offset by
higher hydrochloric acid (21%) and chlorine (14%) sales volumes.
Cash Operating Profit percentage decreased from 28% for the three
months ended March 31, 2012 to 19% for the three months ended March
31, 2013 as a result of lower MECU realized netbacks prices (15%),
partially offset by lower caustic soda purchased product costs and
lower fixed costs.
-- South America:
-- Q1 2013 versus Q4 2012: Sales revenue for the South America segment
increased 2% to $24.2 million for the three months ended March 31,
2013 from $23.8 million for the three months ended December 31,
2012. The increase in sales revenue was primarily due to higher
caustic soda sales volumes (14%) and higher caustic soda (8%),
sodium chlorate (2%) and sodium hypochlorite (9%) realized netbacks
prices, partially offset by lower sodium chlorate sales volumes
(9%). Cash Operating Profit percentage decreased from 28% for the
three months December 31, 2012 to 25% for the three months ended
March 31, 2013 primarily as a result of higher caustic soda
purchased product costs (for producing sodium hypochlorite), higher
fixed costs and slightly lower production, partially offset by
higher realized netback prices for products sold into the merchant
market.
-- Q1 2013 versus Q1 2012: Sales revenue for the South America segment
decreased 13% to $24.2 million for the three months ended March 31,
2013 from $27.9 million for the three months ended March 31, 2012.
The decrease in sales revenue was primarily due to lower sodium
chlorate (9%), caustic soda (10%) and hydrochloric acid (13%)
realized netback prices and lower sodium chlorate (7%), hydrochloric
acid (8%) and caustic soda (2%) sales volumes. Cash Operating Profit
percentage increased marginally to 25% for the three months ended
March 31, 2013 from 24% for the three months ended March 31, 2012 as
a result of lower electricity costs, partially offset by lower
realized netback prices for products sold into the merchant market,
lower sodium chlorate production and higher salt costs.
-- North American Terminal Operations:
-- Q1 2013 versus Q4 2012: Cash Operating Profit for the three months
ended March 31, 2013 was $0.25 million, inclusive of transloading
services for inter-segment chlor-alkali products, as compared to
$Nil for the three months ended December 31, 2012. External sales
revenue increased 20% for the three months ended March 31, 2013 as
compared to the three months ended December 31, 2012, primarily as a
result of an increase in the number of railcars transloaded (18%).
Cost of sales comprises employee costs and other costs of operating
the Bruderheim terminal. The increase in cost of sales for the three
months ended March 31, 2013, as compared to the three months ended
December 31, 2012, is primarily due to an increase in the number of
employees as a result of an increase in transload volumes in the
quarter and in anticipation of capacity increases in our manifest
business (truck-to-railcar or railcar-to-truck) expected in the
second half of the year. Distribution, selling and marketing costs
comprise selling and marketing employee costs and amounts paid to
customers to compensate for extended truck wait times to unload
($0.6 million in Q1/13 and Q4/12). Process improvements were
implemented late in the first quarter of 2013 to minimize customer
truck wait times.
-- Q1 2013 versus Q1 2012: Cash Operating Profit for the three months
ended March 31, 2013 was $0.25 million, inclusive of transloading
services for inter-segment chlor-alkali products, as compared to
$0.16 million for the three months ended March 31, 2012. External
sales revenue increased 268% for the three months ended March 31,
2013, as compared to the three months ended March 31, 2012,
primarily as a result of an increase in the number of railcars
transloaded (261%). The increase in cost of sales for the three
months ended March 31, 2013, as compared to the three months ended
March 31, 2012, is primarily due to an increase in the number of
employees as a result of an increase in transload volumes in the
quarter and in anticipation of capacity increases in our manifest
business (truck-to-railcar or railcar-to-truck) expected in the
second half of the year. The increase in distribution, selling and
marketing costs was due to an increase in the number of selling and
marketing employees and to amounts paid to customers to compensate
for extended truck wait times to unload (Q1/13 - $0.6 million vs.
Q1/12 - $Nil). Process improvements were implemented late in the
first quarter of 2013 to minimize customer truck wait times.
Market Fundamentals
North America Sodium Chlorate: Market pulp fundamentals remained relatively
stable for the three months ended March 31, 2013, improving modestly in the
period. Combined producer inventories were higher than historical averages for
January and February, due mainly to reduced purchases from China during the
Lunar New Year. As of February, producer inventories were at 35 days, slightly
above a balanced level of 33 days. Softwood pulp inventories were stable from
the previous month at 32 days, similar to hardwood inventories that were flat
for the past two months at 39 days. Recent advances in pricing for most grades
suggest that pulp shipments to China accelerated in March. Demand for pulp is
expected to remain strong in most regions of the globe, as new demand coming
from the start-up of several tissue machines will require market pulp.
Inventories are expected to decline over the next few months due to the spring
maintenance season now commencing in both North and South America. As a result
of strong demand and reduced inventories, pulp prices should hold their current
levels, and potentially continue their modest upward trend throughout the first
half of the year.
Demand for sodium chlorate in North America was stable for the first quarter of
2013, and is expected to remain strong for the remainder of the year. Sodium
chlorate exports from North America for the first two months of 2013, suggest
another strong year with volumes that should mirror those of 2012. Operating
rates for the North American sodium chlorate industry are expected to remain at
strong levels, between 93 and 95%, for 2013.
North America Chlor-alkali: The North American chlor-alkali industry operated at
an estimated 82% of capacity in the first quarter of 2013, compared with 82% in
the previous quarter and 85% in the same quarter of 2012. Domestic Polyvinyl
Chloride ("PVC") demand is gradually improving and export demand for PVC and
isocyanates remains strong. Utilization rates are expected to be approximately
85% for the second quarter of 2013 due to increased demand from seasonal water
treatment consumers.
North American caustic soda supply was balanced with demand for the first
quarter of 2013, while export supply from Asia to the west coast remained strong
due to weakness in domestic demand in China and Japan.
North American hydrochloric acid supply outpaced demand for the first quarter of
2013 due to strong byproduct and burner production. Hydrochloric acid demand
from oil well fracturing in Western Canada was strong and balanced with supply
but is expected to decline for the second quarter of 2013, consistent with
reduced activity due to seasonal spring thaw conditions.
North American MECU prices held stable for the first quarter of 2013 with the
exception of the west coast, where caustic soda prices declined due to the
impact of lower cost imports from Asia. Downward pressure on PVC prices in Asia
is resulting in higher caustic soda price nominations for export cargo booked
for the second quarter of 2013. Several North American producers have announced
price increases for both chlorine and caustic soda for implementation in the
second quarter of 2013. Hydrochloric acid prices experienced some erosion in the
first quarter of 2013 and are expected to stabilize in the second quarter of
2013.
South America: Brazilian pulp production in the first quarter was 1.8% higher
than the same period in the prior year. Exports were 0.4% higher than the same
period in the prior year. The Eldorado mill is now exporting and 100% capacity
utilization was expected by April. Significant producers have announced price
increases to be implemented May 1, 2013.
Canexus Brazil's major sodium chlorate customer demonstrated lower than expected
sodium chlorate demand due to process issues but is expected to recover these
production losses by the end of the year. Canexus Brazil's sodium chlorate plant
operated close to planned volumes for the first quarter of 2013 due to higher
sales to the merchant market.
In the first quarter of 2013, the Brazilian chlor alkali capacity utilization
rate was 84%, approximately 3.0% lower than the same period in 2012. The
reduction was due to manufacturing issues associated with two key producers.
Canexus Brazil's chlor-alkali capacity utilization was 99% during the first
quarter and was in line with expectations.
Oil & Gas: Benchmark crude oil prices (Brent, WTI) eased slightly, while Western
Canadian prices ("WCS") improved gradually during the first quarter of 2013.
Ongoing infrastructure bottlenecks continued to hold back regional prices in
North America. Price differentials between Western Canadian grades and other key
benchmarks narrowed modestly during the first quarter of 2013 but remain wide
enough to support strong demand for rail-based oil transportation services.
Natural gas prices rose modestly during the first quarter of 2013 but high
inventory levels continued to constrain prices. Natural gas inventories remain
solid and prices are expected to remain stable in the short term. Production is
expected to continue to gradually fall in North America in 2013 and prices are
expected to begin increasing modestly in the longer term.
Drilling activity picked up significantly in Western Canada in the first quarter
of 2013 as well-service companies took advantage of frozen ground conditions to
access well sites. Drilling remains predominantly focused on oil production,
however gas related drilling also increased during the first quarter of 2013.
Increased levels of drilling activity support continued demand for hydrochloric
acid.
Financial Updates
-- Long-term Debt and Finance Income (Expense):
-- We borrow in US dollars, which creates unrealized currency
translation gains as the Canadian dollar strengthens. A substantial
portion of our revenues are denominated in or referenced to the US
dollar. During the first quarter of 2013, we recorded an unrealized
currency translation loss of $6.2 million as a result of the
weakening of the Canadian dollar at the end of the quarter compared
to year-end 2012 (Q1/12 - $4.8 million unrealized gain). These
amounts are included in finance income (expense).
-- Interest expense in the quarter was $3.5 million (Q1/12 - $5.7
million). Interest capitalized on major projects was $1.4 million in
Q1 2013 (Q1/12 - $0.2 million).
-- Other Income (Expense):
-- In the first quarter of 2013, mark-to-market fair value losses of
$0.2 million (Q1/12 - $0.3 million) and realized losses of $0.2
million (Q1/12 - $0.4 million gains) were recorded on foreign
exchange option contracts. In January, we purchased foreign exchange
options protecting US$5.0 million per month for both Q2 2013 (at
US$0.99) and Q3 2013 (at US$0.97).
-- In the first quarter of 2013, we recorded mark-to-market fair value
gains of $0.4 million (Q1/12 - $0.3 million) and realized losses of
$0.4 million (Q1/12 - $0.3 million) on interest rate swaps.
-- Other income also includes $0.9 million of foreign currency
translation gains on working capital in Q1 2013 (Q1/12 - $0.2
million losses).
-- In the first quarter of 2013, we recorded mark-to-market fair value
losses on a cross currency swap of $0.3 million as a result of the
weakening of the Canadian dollar at the end of the quarter compared
to year-end 2012 (Q1/12 - $0.2 million gains). In Q3 2011 we entered
into a cross currency swap to effect the payment of interest in US
dollars on the Series IV Convertible Debentures issued on June 30,
2011.
-- Capital Expenditures: Capital expenditures for the three months ended
March 31, 2013 were $53.5 million, of which $4.6 million was spent on
maintenance projects, $1.4 million on continuous improvement projects
and the balance on expansion projects ($47.5 million). Expansion capital
was spent on the continued development of our NATO site and hydrochloric
acid expansions at our North Vancouver facility.
-- Provision for Income Taxes: Provision for income taxes is lower in the
first quarter of 2013, as compared to the same period in 2012, due to
lower net income. As of March 31, 2013, the Corporation had
approximately $552 million of future tax deductions resulting from
capital expenditures which can be used to shelter future taxable income
in Canada.
-- Liquidity: As of March 31, 2013, total borrowings under committed credit
facilities were $264 million with remaining available undrawn capacity
of approximately $120 million. Cash on hand at March 31, 2013 was $4.3
million. On May 1, 2013, the US$50 million Senior Secured Notes were
repaid from committed credit facilities which had no impact on
liquidity.
Operating Results for the Three Months Ended March 31, 2013 and 2012
CAD thousands 2013 2012
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Sales Revenue 141,235 148,978
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Cost of Sales (1) 88,566 90,124
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Gross Profit 52,669 58,854
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Distribution, Selling and Marketing 25,311 21,106
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General and Administrative (2) 9,493 9,470
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Operating Profit 17,865 28,278
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Finance Expense (13,956) (11,929)
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Other Income 613 361
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Income Before Income Taxes 4,522 16,710
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Provision for (Recovery of) Income Taxes
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Current 1,236 1,912
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Deferred (111) 4,746
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1,125 6,658
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Net Income 3,397 10,052
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Notes:
(1) Depreciation and amortization included in the three months ended March
31, 2013 - $11.5 million; Depreciation and amortization included for the
three months ended March 31, 2012 - $10.8 million.
(2) Depreciation and amortization included for the three months ended March
31, 2013 - $0.3 million; Depreciation and amortization included for the
three months ended March 31, 2012 - $0.2 million.
Financial Statements, Conference Call and Webcast
Financial Statements and Management's Discussion and Analysis will be posted on
the Canexus website at www.canexus.ca and filed on SEDAR. Management will host a
conference call at 9 a.m. ET on May 9, 2013, to discuss the results. A Q1 2013
presentation will be available on our website to facilitate the conference call.
Please call 416-644-3416 or 1-800-814-4861. The conference call will also be
accessible via webcast at www.canexus.ca. A replay of the conference call will
be available until midnight May 16, 2013. To access the replay, call
416-640-1917 or 1-877-289-8525, followed by passcode 4613570#.
Non-GAAP Measures
Cash Operating Profit, Cash Operating Profit Percentage, payout ratio,
distributable cash and gross profit are non-GAAP financial measures, but
management believes they are useful in measuring the Corporation's performance.
Readers are cautioned that these measures should not be construed as
alternatives to net income or loss or other comparable measures determined in
accordance with GAAP as an indicator of the Corporation's performance or as a
measure of the Corporation's liquidity and cash flow. The Corporation's method
of calculating non-GAAP measures may differ from the methods used by other
issuers and accordingly, the Corporation's non-GAAP measures are unlikely to be
comparable to similarly titled measures used by other issuers. Readers should
consult the Corporation's 2012 MD&A filed on SEDAR for a complete explanation of
how the Corporation calculates each such non-GAAP measure.
Forward-Looking Statements
This news release contains forward-looking statements and information relating
to expected future events relating to Canexus and its subsidiaries, including
with respect to: anticipated cash operating profit for the second half of 2013
and full year; caustic soda and hydrochloric acid prices in the third quarter of
2013; full year production of sodium chlorate from Canexus' Brandon plant;
timing of the commissioning of the Bruderheim Terminal interconnection with the
MEG Energy Stonefell Terminal; potential capacity constraints for unit train
shipments based on anticipated incremental customer contracts and the
feasibility and timing of staged unit train expansion opportunities as
necessary; anticipated timing of completion of DBCO; the implementation of major
capital projects and the delivery of cash flow; anticipated increases in the
manifest business in the second half of 2013; hydrochloric acid expansions at
Canexus' North Vancouver chlor-alkali facility; sodium chlorate demand and
industry operating rates; hydrochloric acid demand and pricing in North America;
cost of the pipeline connected unit train facility at Bruderheim; the impact of
additional storage tanks and West rail yard capacity and bottlenecks on DBCO
transload capacity and anticipated outages on transloading tracks required to
implement; demand for pulp and its impact on inventories and prices; demand for
and industry operating rates; chlor-alkali industry capacity utilization; North
American hydrochloric acid supply; Canexus' North American chlor-alkali
utilization rates; natural gas production, pricing and inventory expectations
and expectations regarding drilling activity, oil prices and LNG projects and
their impact on hydrochloric acid demand in Western Canada.
The use of the words "expects", "anticipates", "continue", "estimates",
"projects", "should", "believe", "plans", "intends", "may", "will" or similar
expressions are intended to identify forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results to differ materially from those anticipated in such
forward-looking statements for a variety of reasons, including market and
general economic conditions, future costs, treatment under governmental
regulatory, tax and environmental regimes and the other risks and uncertainties
detailed under "Risk Factors" in the Corporation's Annual Information Form filed
on the Corporation's SEDAR profile at www.sedar.com. Management believes the
expectations reflected in these forward-looking statements are currently
reasonable but no assurance can be given that these expectations will prove to
be correct and such forward-looking statements should not be unduly relied upon.
Due to the potential impact of these factors, Canexus disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, unless required by
applicable law. Financial outlook information contained in this press release
about prospective results of operations, financial position or cash flows is
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. Such financial outlook information should not
be used for purposes other than those for which it is disclosed herein.
About Canexus
Canexus produces sodium chlorate and chlor-alkali products largely for the pulp
and paper and water treatment industries. Our four plants in Canada and two at
one site in Brazil are reliable, low-cost, strategically-located facilities that
capitalize on competitive electricity costs and transportation infrastructure to
minimize production and delivery costs. Canexus also provides fee-for-service
hydrocarbon transloading services to the oil and gas industry from its terminal
at Bruderheim, Alberta. Canexus targets opportunities to maximize shareholder
returns and delivers high-quality products to its customers. Canexus' common
shares (CUS) and debentures (Series I - CUS.DB; Series III - CUS.DB.A; Series IV
- CUS.DB.B) trade on the Toronto Stock Exchange. More information about Canexus
is available at www.canexus.ca.
FOR FURTHER INFORMATION PLEASE CONTACT:
Canexus Corporation
Gary Kubera
President and CEO
(403) 571-7300
Canexus Corporation
Richard McLellan
CFO
(403) 571-7300
www.canexus.ca
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