CALGARY, ALBERTA -- (Marketwired) -- 02/03/15 -- Newalta Corporation ("Newalta") (TSX: NAL) today announced a number of cost reduction and rationalization initiatives that are underway to maximize business efficiencies and drive improved margins.
As of today, Newalta has reduced its headcount by approximately 180 people across General and Administrative (G&A) and operations positions, representing 15 percent of the workforce. The headcount rationalization was the result of a comprehensive review of Newalta's organization post the planned divestiture of its Industrial Division with a view to driving improved bottom line performance and overall speed and agility as well as aligning the business with market conditions in 2015.
In terms of the divestiture of the Industrial Division, applications have been made with various regulatory agencies in order to satisfy all closing conditions and Newalta remains firmly on track to close the transaction in the first quarter of 2015.
Newalta has also taken action on a number of other cost control initiatives including corporate and regional office space consolidation. As well, effective March 2015, Newalta is suspending its matching contributions to the Employee Savings Plan in Canada and the 401k Plan in the U.S. Newalta has also implemented general reductions in all expense items across the board.
Together with the headcount reductions, these cost saving initiatives represent in excess of $25 million in annualized Adjusted EBITDA, over and above the approximately $15 million in overhead costs that are included with the Industrial Division divestiture.
These actions are in addition to a hiring freeze and tightened controls over discretionary expenditures implemented in early December 2014 and the subsequent suspension of salary increases in January 2015. A full review of annualized savings, 2015 calendar year impact, and associated one-time costs will be provided with Newalta's fourth quarter and year-end 2014 results on February 19, 2015.
Newalta has committed $50 million of capital to support carryover projects initiated in 2014 with the balance of the growth capital to be released to support contract opportunities or when market conditions improve.
"We made some very difficult decisions today that we believe position us for ongoing success. Our priorities include driving performance from 2014 investments, controlling fixed and variable costs, improving speed and agility across the organization and maintaining a strong balance sheet to maximize financial flexibility," said John Barkhouse, President and CEO of Newalta. "We will remain disciplined and measured in assessing investment opportunities and deployment of capital in the quarters ahead. Our focus is on strengthening our business as we deal with market challenges in the short term and position Newalta for improved long term performance."
Newalta will continue to review initiatives for cost reduction and margin efficiencies. Further updates on the progress and targets for these initiatives will be provided with Newalta's fourth quarter and year-end 2014 results, as well as throughout the year ahead.
Newalta is North America's leading provider of innovative, engineered environmental solutions that enable customers to reduce disposal, enhance recycling and recover valuable resources from oil and gas exploration and production wastes. We serve customers onsite directly at their operations and through a network of locations in Canada and the U.S. Our proven processes and excellent record of safety make us the first choice provider of sustainability enhancing services to oil and gas markets. With a skilled team of people, two decade track record of profitable expansion and commitment to commercializing new solutions, Newalta is positioned for sustained future growth and improvement. Newalta trades on the TSX as NAL. For more information, visit www.newalta.com.
This press release contains forward-looking information. More particularly, this press release contains forward-looking information relating to Newalta's business prospects and strategy including related capital expenditure programs and timelines; debt leverage levels and other expectations, and the realization of anticipated benefits of cost reduction initiatives, growth capital investments, potential divestitures and acquisitions. Although Newalta believes that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on it because Newalta can give no assurance that it will prove to be correct. Forward-looking information is based on current expectations, estimates and assumptions that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Newalta and described in the forward-looking information contained in this press release. Among the various factors that could cause results to vary materially from those indicated in the forward-looking information include: general market conditions of the industries we service; strength of the oil and gas industry, including drilling activity; fluctuations in commodity prices; the availability of financing alternatives; debt service and future capital needs; and the success of our growth, divestiture and acquisition strategies including integration of businesses and processes into our operations and potential liabilities from acquisitions. Readers should also be aware that the forward-looking information is affected by the risk factors described in Newalta's annual information form and those set forth from time to time in Newalta's other continuous disclosure filings with Canadian securities regulatory authorities, which are available under Newalta's SEDAR profile at www.sedar.com.
Adjusted EBITDA does not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS or GAAP) and may not be comparable to similar measures presented by other corporations or entities. Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to how these activities are financed, assets are amortized or impaired, or how the results are taxed in various jurisdictions. In addition, Adjusted EBITDA provides an indication of the results generated by our principal business activities prior to recognizing stock-based compensation and restructuring and other related costs.
The forward-looking information contained in this press release is made as of the date hereof and Newalta undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
Contacts:
Investors:
Newalta Corporation
Anne M. Plasterer
Executive Director, Investor Relations
(403) 806-7019
Media:
Newalta Corporation
Stephen W. Lewis
Executive Director, Corporate Communications
(403) 806-7012
