- Revenue Up 3.9%, Adjusted EBITDA 6.2% Higher-
OAK BROOK, IL, Oct. 26 /PRNewswire-FirstCall/ - Primary Energy Recycling Corporation (the "Company" or "Primary Energy") (TSX :PRI ), a clean energy company that generates revenue from capturing and recycling recoverable heat and byproduct fuels from industrial processes, today announced its financial and operational results for the third quarter ended September 30, 2010.
|(in 000's of US$)||Q3 2010||Q3 2009||Change||9-Months 2010||9-Months 2009||Change|
|Revenue||$15,010||$14,449||+ 3.9%||$45,812||$42,133||+ 8.7%|
|Operations and maintenance expense||$ 3,987||$ 2,518||+ 58.3%||$10,935||$8,073||+ 35.5%|
|Operating income (loss)||$ 83||$ 1,250||($ 1,167)||$ 1,866||$365||$ 1,501|
|Net income (loss) and comprehensive income (loss)||$(1,601)||$21,035||$(22,636)||$( 4,365)||$10,516||$(14,881)|
|Adjusted EBITDA||$10,155||$ 9,566||+ 6.2%||$30,083||$27,383||+ 9.9%|
|Net cash provided by operating activities||$ 8,426||$ 2,144||+293.0%||$23,941||$7,143||+235.2%|
|Adjusted Cash Flow||$10,155||$ 9,566||+ 6.2%||$30,083||$27,383||+ 9.9%|
|Cash & cash equivalents||$22,690||$ 2,716||+735.4%||-||-||-|
|Credit facility debt||$79,461||$131,000||- 39.3%||-||-||-|
Third Quarter Highlights
- Continued to make progress in contract renewal discussions for the North Lake Energy project with completion possible this fall;
- Reached agreement with its largest customer to extend the Ironside Energy contract nine months, to April 2020;
- Announced the appointment of a major shareholder representative to its Board of Directors, which supports Primary Energy's objective of further aligning the mutual interests of the Company and its shareholders;
- Subsequent to the end of the quarter, received notification from Corporate Knights Magazine, a prominent corporate social responsibility publication, that it chose Primary Energy to be one of its 2010 Cleantech 10™ companies;
- Third quarter results show increased revenue of 3.9% over the same period last year;
- Interest expense decreased by $2.4 million in comparison to prior year due to reduced level of debt outstanding;
- Adjusted EBITDA increased 6.2% over the same period last year.
"We continued to build momentum on several fronts this quarter," said John Prunkl, President and Chief Executive Officer of the Company. "The steel industry maintained its solid performance, which supported an increase in our revenues. The Company's facilities had a good quarter from a physical production perspective except for the previously disclosed 14-day forced outage at the beginning of the quarter at North Lake. Negotiations on North Lake steadily moved forward with completion possible this fall. We continue to pay down our debt at a rapid rate, making an $8.5 million principal payment during the third quarter. We are looking forward to the coming quarters as an opportunity to further strengthen Primary Energy."
|Q3 2010||Q3 2009||Change||9-Month 2010||9-Month 2009||Change|
|1Total Gross Electric Production Megawatt Hours (MWh)||311,417||270,604||+15.1%||860,479||776,291||10.8%|
|2Total Thermal Energy Delivered (MMBtu)||885,418||1,079,328||-18.0%||3,749,156||3,920,693||-4.4%|
|3Harbor Coal Utilization (%)||89.3%||74.0%||+15.3%||87.2%||63.9%||23.3%|
Third Quarter and Year to Date Financial Results
In the third quarter of 2010, the Company earned revenue of $15.0 million, an increase of $0.6 million, or 3.9%, compared with revenue of $14.4 million for the third quarter of 2009. For the first nine months of 2010, the Company earned revenue of $45.8 million, an increase of $3.7 million, or 8.7%, compared with revenue of $42.1 million for the same period in 2009. The increase in revenue for the three and nine month periods is primarily due to the variable portion of the Company's Energy Service revenue. Market conditions in the steel industry improved in the third quarter of 2010 versus the same period in 2009 and resulted in increased steel production and product utilization at the Company's site hosts.
Operating and maintenance expense for the third quarter of 2010 was $4.0 million compared to $2.5 million for the third quarter of 2009, an increase of $1.5 million or 58.3%. For the first nine months of 2010, operating and maintenance expense was $10.9 million compared to $8.1 million for the same period in 2009. The increase in expenses for both the three and nine month periods is largely due to additional maintenance costs incurred for periodic boiler repairs and bag house component replacements that did not occur in 2009 and a scheduled steam turbine overhaul. The Company previously announced it was planning to spend $2.1 million in additional scheduled outage and major maintenance work in 2010.
General and administrative expense for the third quarter of 2010 was $2.5 million compared to $2.2 million for the third quarter of 2009, an increase of $0.3 million. For the first nine months of 2010, general and administrative expense was $7.7 million compared to $8.2 million for the same period in the prior year, a decrease of $0.5 million. The decrease is primarily due to a reduction of $1.4 million in professional and management fees related to the restructuring efforts in 2009, offset by increased accrued property taxes of $0.9 million which had one-time accrual reductions of $2.2 million in 2009.
Operating income for the third quarter of 2010 was $0.1 million compared to $1.3 million for the third quarter of 2009, a decrease $1.2 million. Operating income for the first nine months of 2010 was $1.9 million compared to $0.4 million for the same period in 2009, an improvement of $1.5 million. The improvements noted are driven by the net effect of the items discussed above.
Interest expense for the third quarter of 2010 was $2.3 million compared to $4.7 million for the third quarter of 2009, a decrease of $2.4 million. Interest expense for the first nine months of 2010 was $7.6 million compared to $14.0 million for the same period in 2009, a decrease of $6.4 million. The decreases noted are primarily due to the reduced level of debt outstanding in the respective periods.
At the end of the third quarter, the Company had cash and cash equivalents of $22.7 million, a fully funded $3.4 million debt service reserve account and an outstanding loan balance of $79.5 million. Since November 2009, $25.5 million has been paid down on the Company's senior credit facility.
Conference Call and Webcast
Management will host a conference call to discuss the third quarter results on October 27, 2010 at 10 am ET. Following management's presentation, there will be a question and answer session. To participate in the conference call, please dial (888) 231-8191 or (647) 427-7450.
A digital conference call replay will be available until midnight on November 3, 2010 (ET) by calling (800) 642-1687 or (416) 849-0833. Please enter the passcode 17815388 when instructed. A webcast replay will be available for 90 days by accessing a link through the Investor Information section at www.primaryenergyrecycling.com.
When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to operating performance, regulatory parameters, weather and economic conditions and other factors discussed in the Company's public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect new events or circumstances except as required by applicable securities laws.
About Primary Energy Recycling Corporation
Primary Energy Recycling Corporation owns a majority interest in Primary Energy Recycling Holdings LLC ("PERH"). PERH, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 per cent interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8M lbs/hour. PERH creates value for its customers by recycling recoverable heat and byproduct fuels from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for resale back to its customers. For more information, please see www.primaryenergyrecycling.com.
1 Total Gross Electric Production means the aggregate amount of electricity produced by all of the Company's facilities during the period. The amount is gross generation and is not reduced by internal electric usage of the facilities' auxiliary equipment. The unit of measure is megawatt hours (MWh). Due to the fixed and variable nature of customer contracts, MWh production cannot be directly tied to financial performance.
2 Total Thermal Energy Delivered means the aggregate amount of heat energy contained in the steam and heated water delivered to customers by all of the Company's facilities during the period. The unit of measure is million of British Thermal Units (MMBTU). Due to the fixed and variable nature of customer contracts, MMBTU production cannot be directly tied to financial performance.
3 Harbor Coal Utilization is a factor that incorporates the production level of a blast furnace and the amount of coal utilization per unit of blast furnace production as compared to a reference blast furnace production level and coal utilization rate per unit of blast furnace production. The measurement unit is a ratio expressed as a percentage.
Management believes that Adjusted EBITDA, Adjusted Cash Flow, Total Gross Electric Production, Total Thermal Energy Delivered and Harbor Coal Utilization provide useful supplemental information regarding the performance of the Company, facilitate comparisons of historic periods and are indicative of the Company's operating results. Note however, these items are performance measures only, and do not provide any measure of the Company's cash flow or liquidity, and are not a substitute for GAAP financial measures. (See the Company's Management Discussion and Analysis for definitions of Adjusted EBITDA and Adjusted Cash Flow.)
|Primary Energy Recycling Corporation|
|CONSOLIDATED BALANCE SHEETS|
|(In thousands of U.S. dollars)|
|ASSETS||September 30, 2010||December 31, 2009|
|Cash and cash equivalents||$ 22,690||$ 24,536|
|Spare parts inventory||1,015||991|
|Current portion of future tax asset||881||1,003|
|Other current assets||1,030||833|
|Total current assets||35,099||36,895|
|Property, plant and equipment||212,237||219,377|
|Interest rate cap contract||2||186|
|Other non-current assets||-||34|
|Total assets||$ 333,508||$ 361,185|
|LIABILITIES, NON-CONTROLLING INTEREST|
|AND SHAREHOLDERS' EQUITY|
|Accounts payable||$ 970||$ 253|
|Due to affiliates||468||478|
|Accrued property taxes||2,467||2,520|
|Total current liabilities||43,939||34,223|
|Net long-term portion of future tax liability||16,185||14,680|
|Asset retirement obligation||2,559||2,426|
|Commitments and contingencies|
|Non-controlling common interest||82,875||85,925|
|Accumulated shareholders' deficit||(124,800)||(120,435)|
|Total shareholders' equity||149,679||154,044|
|Total liabilities, non-controlling|
|interest and shareholders' equity||$ 333,508||$ 361,185|
|Primary Energy Recycling Corporation|
|CONSOLIDATED STATEMENTS OF OPERATIONS AND|
|ACCUMULATED SHAREHOLDERS' DEFICIT|
|(In thousands of U.S. dollars, except share and per share amounts)|
|Three Months Ended September 30,||Nine Months Ended September 30,|
|Capacity||$ 9,018||$ 9,018||$ 27,054||$ 27,054|
|Operations and maintenance||3,987||2,518||10,935||8,073|
|General and administrative||2,512||2,178||7,727||8,214|
|Depreciation and amortization||8,428||8,503||25,284||25,481|
|Other (expense) income|
|Gain on cancellation of debt||-||32,609||-||32,609|
|Realized and unrealized (loss) gain on derivative|
|Realized and unrealized loss on foreign|
|(Loss) income before income taxes and non-controlling interest||(2,281)||22,433||(5,957)||11,335|
|Income tax expense||(389)||(2,187)||(1,458)||(2,720)|
|(Loss) income before non-controlling interest||(2,670)||20,246||(7,415)||8,615|
|Non-controlling preferred interest||-||(237)||-||(970)|
|Non-controlling common interest||1,069||1,026||3,050||2,871|
|Net (loss) income and comprehensive (loss) income||$ (1,601)||$ 21,035||$ (4,365)||$ 10,516|
|Accumulated shareholders' deficit - beginning of period||(123,199)||(138,646)||(120,435)||(123,040)|
|Adjustment to opening shareholders' deficit due to adoption|
|of new accounting standard||-||-||-||215|
|Accumulated shareholders' deficit - end of period||$ (124,800)||$ (117,611)||$ (124,800)||$ (117,611)|
|Weighted average number of shares outstanding||134,118,561||18,172,628||134,118,561||7,394,982|
|Basic and diluted net (loss) income per share||$ (0.01)||$ 1.16||$ (0.03)||$ 1.42|
SOURCE Primary Energy Recycling Corporation